Update 589 —SOTU Too Much?
Unity in Wars vs. Putin, Inflation
In this historical moment, the State of the Union speech would ideally convince Americans that the pain of price hikes at the pump, due to Putin’s brutal invasion, is a small price for seeking to defeat him – certainly compared to the sacrifices Europeans and the Ukrainian people themselves are paying. By this very high measure, the President succeeded partly.
President Biden addressed the crisis in Ukraine in forthright terms, earning bipartisan standing ovations. He also addressed inflation, the top economic concern of Americans. But the opportunity to connect them and establish a priority was missed. Biden is in a bind. The war in Europe worsening by the day is causing a new round of inflation out of our control. A difficult decision lies ahead.
Last year, Joe Biden made a speech before Congress that progressives had been waiting years to hear. He laid out an agenda so ambitious that it would remake America if enacted. Last night, we heard a different tune, aimed at independents and moderates ahead of the 2022 midterms. But there were tantalizing progressive policy proposals aplenty. But, in all, we saw an hour-long speech that didn’t go quite offer enough to tie it together and left room for doubt about the administration’s priorities.
President Biden tried to provide the reset that Democrats badly need politically. Gone were the bold proclamations that Washington, under Democratic control, would seek to remake America. No mention was made of BBB. Instead, Biden recited a catalog of what Democrats were able to deliver for the American people, to get the rest done, and addressed inflation in a similarly catalog fashion.
Sanctions: Carrot and Stick Together
President Biden opened with praise for the courage of Ukrainians, outlining the US effort to mobilize the world against Russia. Ukraine got the most bipartisan applause, but got an incomplete explanation as to why Americans should care about the war and humanitarian crisis in Europe,
Ironically, the Biden administration has led the West in imposing the toughest and most effective sanctions perhaps ever, clamped on Putin, the oligarchs, on Russians themselves. They cut Russia’s central bank from the US and its allies have frozen their international reserve holdings. Russian banks were removed from the Society of Worldwide Interbank Financial Telecommunication (SWIFT), preventing international money transfers. Biden assured he would use all tools at his disposal to protect American businesses and consumers. Ezra Klein, New York Times journalist, put it best in his analysis, emphasizing that “no tool would be enough if Biden is as committed to stopping Putin as he says.”
The sanctions on Russia have already crippled its economy. Unfortunately, the sanctions are also sending shockwaves in the US as drivers are facing higher costs at the gas pump and will see higher prices on some commodities, like wheat; Ukraine and Russia are responsible for over 25 percent of the global wheat market. Biden assured the sanctions will weaken the Russian economy, but not result in any blowback here at home. As Ezra Klein put it in his op-ed this morning, “This was, in the end, the unfulfilled promise of Biden’s speech. Russia’s invasion and America’s economy were merely neighbors in the address, but no such borders exist. And connecting them, explicitly, would bring more coherence and force to Biden’s agenda.”
Then, almost as quickly as he began, Biden moved on and went through his plans to ensure our economy stays strong.
The Honest Economist
With both foreign and domestic pressures on the economy, President Biden detailed the successes of his presidency so far and his vision to grow the economy in the next year.
Since Biden took office, GDP has grown 5.7 percent. Unemployment dropped to under four percent from 6.7 percent at the start of his presidency as the economy added over six million jobs, the highest amount during a single year. Biden praised legislation like the American Rescue Plan and the Bipartisan Infrastructure Law, which have both alleviated strains on the economy. Noting the accomplishments of the infrastructure bill, the President said “we’re done talking about infrastructure weeks and now talking about an infrastructure decade.”
The President also recognized the strains on the economy with inflation at levels not seen in 40 years. He noted that Americans are feeling the effects of higher costs and his top priority is “getting prices under control.” He stated that his priorities to lower costs and elevate the economy are to make more things in America, reduce costs and the deficit, promote fair competition and small businesses, and eliminate barriers to good-paying jobs. To quote Ezra Klein again, this is “the tension Putin is exploiting.”
Biden announced that the FMC and DOJ are introducing a new initiative to promote competition in the ocean freight transportation industry. He recommended Congress take away the antitrust exemption for ocean shipping alliances due to concentration in the industry exacerbating the supply chain crisis. Just three alliances run by foreign entities control a majority of the ocean carrier system. This is a great step forward to promote competition in the economy and lower prices. Congress should follow the administration’s lead and pass legislation.
Without mentioning the Build Back Better Act once, Biden offered a deconstructed laundry list of the policy priorities he’d like to see get passed. But in doing that, Biden also offered a harsh reminder to Democrats about just how much of his agenda has been left undone, stymied by a Congress he can neither convince nor control. Here’s a list of the priorities Biden rattled off that remain stalled:
- the Paycheck Fairness Act
- lowering prescription drug price
- paid family leave
- expanding background checks on gun sales
- the Freedom to Vote Act
- John Lewis Voting Rights Act
- immigration reform
He also called for increasing the minimum wage to $15 per hour and setting aside more money to fight climate change. Biden still wants universal pre-K, higher taxes on corporations and the rich, and more affordable housing and better health care. He scolded CEOs to “lower your costs, not your wages.” Biden’s plan to fight inflation is to increase the productive capacity of our economy.
Optimism on the Horizon: Biden’s Supreme Court Pick
President Biden addressed his nomination to the Supreme Court last week, Judge Kentaji Brown Jackson, to replace the retiring Justice Breyer, whom she clerked for. He applauded her qualifications and hoped for a smooth confirmation process. Judge Jackson has broad experience across the legal profession – as a federal appellate judge, a federal district court judge, a member of the U.S. Sentencing Commission, an attorney in private practice, and as a federal public defender. She has been confirmed by the Senate on a bipartisan basis three times – most recently last year for her current seat.
We can expect hearings the week of March 21 and votes on her nomination in early spring. Senate Democrats hope to have Jackson confirmed before their April recess. She is expected to receive support from all Democrats and some Republicans. Jackson’s nomination is critical with the current conservative majority court making decisions on issues like abortion, voting rights, antitrust, and the environment.
Just a Moment or Momentum for Midterms?
Democrats face challenges this midterm cycle and need something to reset the current chessboard to galvanize voters. At the end of the speech, President Biden proposed a “unity agenda”. The agenda consists of four items that he urged Congress to pass on a bipartisan basis: Addressing the opioid epidemic, providing resources for children’s mental health, supporting veterans, and ending cancer.
The Senate is also moving toward passage of a bipartisan U.S. Postal Service reform bill this week. Congress will then turn to the FY 2022 omnibus. They also have a major technology bill Biden dubbed the Bipartisan Innovation Act to help the United States compete with China on advanced research and bring manufacturing home, especially semiconductor chips. This is another critical bill that could bring big benefits to the U.S. economy in the long run. Can these be the political game changer Democrats need for success in November? Maybe, if they get the messaging right.
With the election seven months away, the President and his party have time to improve their standings and deliver on their promises. Congress must get to work to translate Biden priorities’ into law. The first choice may be between fighting inflation and fighting Putin. Either way, we have at least one fight ahead heading into the primary season that started yesterday.