Biden’s populism and the stupid debt ceiling


In March 2020, Joe Biden and Bernie Sanders had a rough debate in a sealed CNN studio without a live audience to avoid contagion during a raging pandemic. There had been many candidates but, at that point, Biden was destined to be the party nominee. A populist fever had overtaken the race and Bernie reminded people of Biden’s long record, pointing out that Biden’s populism was rather inadequate.

Later, a Biden-Sanders Unity Task Force was formed and they released an impressive progressive agenda. Biden was responding to pressure but also to the reality of crisis after crisis from grotesque economic inequality, the pandemic, climate chaos and systemic racism. 

In 2020, Jared Bernstein, Biden’s former chief economic adviser in the Obama administration and a member of the economy task force, told Vox: “Much like FDR faced a structural crisis of economic insecurity, we’re at a similar place. The vice president recognizes that the extent of market failure here is not something you can fix with a Band-Aid, and that structural reforms are necessary.”

The “Build Back Better” agenda would emerge. It wasn’t as good as the “Green New Deal,” but it was a break from Clintonism, which gave us NAFTA, welfare “reform” and broad financial deregulation. 

The Congressional Progressive Caucus now has 103 members, which is nearly half of the 212-member Democratic roster. They are planning to work with more moderate Democrats and the Biden administration to promote workers’ rights, immigration reform and solutions to the climate crisis.

These days, you don’t hear too much from Democrats about the Clintons. Ironically, Bill Clinton’s labor secretary, Robert Reich, has become a prominent progressive voice. Reich tried to get the Clinton administration to deal with growing economic inequality but had no success.

Reich, an economist, thinks the feigned Republican hysteria about the federal debt is an idiotic spectacle. In a recent opinion piece for The Guardian, Reich noted: “A half century ago, America’s wealthy financed the federal government mainly through their tax payments. Tax rates on the wealthy were high: Under Republican President Dwight Eisenhower, they were over 90%. Even after all tax deductions, the wealthy typically paid half of their incomes in taxes.

“Since then — courtesy of Ronald Reagan, George W. Bush, and Donald Trump — the effective tax rate on wealthy Americans has plummeted. Even as they’ve accumulated unprecedented wealth, today’s rich are now paying a lower tax rate than middle-class Americans. (The 400 richest American families paid a tax rate of just 3.4% between 2014 and 2018, while the rest of us paid an average tax rate of 13.3%.)

“One of the biggest reasons the federal debt has exploded is that tax cuts on wealthier Americans have reduced government revenue.”

Then there’s the controversy over raising the debt ceiling. Congress has to vote a second time to authorize the borrowing that results from already enacted spending. If Congress refuses to do that, it is like refusing to pay for your credit card purchases for the previous year. It would guarantee a recession, or something worse.

The debt ceiling was raised each year that Trump was president without any protests. According to ProPublica, “The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration.”  

In the Working Economics Blog, Josh Bivens, of the Economic Policy Institute writes, “The debt limit needs to be abolished — either formally or effectively.” The overwhelming majority of rich nations don’t have a statutory debt limit. Bivens argues, “The debt limit measures nothing coherent and has no relationship to any serious measure of the economic burden imposed by the nation’s debt. It has as much relevance to the nation’s objective economic health as today’s horoscope.”

Republicans are demanding big cuts in spending in exchange for raising the debt ceiling. But they can’t agree on what they want to cut. They claim they don’t want to undermine Social Security or Medicare. Economist Paul Krugman calls them “blackmailers without a cause.” 

Krugman stresses that “the federal government is basically an insurance company with an army. Social Security, Medicare, Medicaid and the military dominate spending, and it’s impossible to do much about deficits unless you either raise taxes — which is obviously not part of the GOP playbook — or make major cuts to these programs.”

For many decades, the righ twing has tried to repeal the civilizing accomplishments of the New Deal and the Great Society. Many other Americans want to go in the opposite direction.

This opinion column does not necessarily reflect the views of Boulder Weekly.

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