Update 667 — Biden’s SOTU Serenade
Clarion Call to Get Economic Job Done
Displaying a mastery of the venue and appealing directly to Americans watching, President Biden delivered his second State of the Union to an animated joint session of Congress last night, making a convincing case for his economic record and direction. In a performance exceeding expectations, Biden rope-a-doped the House GOP for equivocating on Social Security and Medicare, renewed calls for a greater corporate tax share, asked Congress to help him finish the job of implementing laws passed “and I’ll see you at the [bipartisan] ground breaking.”
Addressing “forgotten Americans” in the “hollowed out” middle class far outside the chamber, Biden acknowledged the economic pain felt especially in older manufacturing communities in the Midwest, where record low unemployment goes unnoticed. He attacked creeping junk fees afflicting consumers and non-compete agreements restricting labor. The breadth of his appeal served as a political challenge to a GOP having trouble articulating a coherent alternative economic vision.
Last night, President Biden delivered his annual State of the Union address. Biden emphasized unity and bipartisanship at a key moment in his presidency. Biden was both navigating a Republican-controlled House for the first time and setting up his own re-election campaign, reminding his audience that he is a president for all Americans, not just his base.
The current economic moment was also a major factor in yesterday’s speech. Although Biden said that the “state of the union is strong,” Americans don’t seem to believe him. A recent poll found that a mere 39 percent of Americans believed the state of the union to be either “strong” or “somewhat strong.” Rising prices over the last year have outweighed a strong labor market, falling gas prices, and a quick recovery from the pandemic recession in the public consciousness. Biden’s address sought to turn the narrative around, highlighting his successes over the past two years and calling for further reforms to help up middle class families and hold corporations fiscally accountable.
Let’s Look at the Record and Results
President Biden touted his administration’s achievements, with an emphasis on “investing in places and people that have been forgotten.” Biden reminded viewers that in addition to economic investments that have yet to reach communities, economic milestones under his administration include:
- 12 million new nonfarm payroll jobs over the two years
- 800,000 new manufacturing jobs created
- Falling inflation figures driven by falling gas prices
- 3.4 percent unemployment– the lowest unemployment level seen since 1969
Raising these successes to a Republican House majority that campaigned largely on the burden of rising prices on families reinforced the point that the administration’s efforts to quell economic pressure are working. While this address provided a strong opportunity to elevate current wins, these figures represent an early claim to success.
Highlighting Historic Investments
Biden pointed to his efforts to revitalize U.S. manufacturing and increase investment in the United States economy through the passage of the Inflation Reduction Act (IRA) and CHIPS and Science Act for the strong economic numbers. The signature legislative achievements represent a renewed energy and direction for American industrial policy.
The president underlined the impact of the $369 billion IRA and the $52 billion in investment and incentives for domestic manufacturing of semiconductors provided by the CHIPS Act in shoring up the supply chains that were disrupted due to during the height of the pandemic, and positioning the nation on it’s future competitive path with China. Biden highlighted the domestic impact of the forward-looking strategy. “For too many decades, we imported products and exported jobs. Now, thanks to all we’ve done, we’re exporting American products and creating American jobs.”
Biden called the Bipartisan Infrastructure Law, “the largest investment in infrastructure since President Eisenhower’s Interstate Highway System.” A proportionally large spotlight now moves from the success of the passage of these historic investments to the implementation of the projects they fund.
Biden Addresses “Forgotten” Workers
Looking ahead, President Biden outlined a number of economic policies to protect workers and force the wealthy and corporations to pay their fair share, including:
- Combatting junk fees and non-compete clauses
- Renewing the Child Tax Credit Expansion
- Passing the billionaires minimum income tax and quadrupling the excise tax on stock buybacks
- Capping the cost of insulin for everyone at $35
- Investing in quality, affordable education and child care
- Guaranteeing a living wage and with sick days and paid family medical leave
The president also highlighted a proposal by the CFPB to cut credit card late fees to eight dollars, saving consumers up to $9 billion a year, as well as the CFPB’s efforts to tackle overdraft fees, illustrating the administration’s longstanding commitment to protecting consumers and holding corporations accountable.
- Tax Policy
Biden also made notable references to a number of tax policy items, which we should expect to see included in the president’s budget next month but not to see on his desk any time soon.
Last night, the president renewed his calls to restore the Child Tax Credit (CTC). The CTC expansion, which drove a historic drop in child poverty, has been a major component of Democrats’ plans to help families stay afloat amidst rising prices and exorbitant child care costs. Biden’s reference to the policy indicates that the expired policy will remain central to Democrats’ agenda this Congress.
Last year, Democrats passed a one percent excise tax on stock buybacks as part of the Inflation Reduction Act. The tax addressed preferential tax treatment for buybacks over dividends, which primarily benefits foreign shareholders of US corporations. Some – including the president – have also claimed that a tax on buybacks would encourage corporations to reinvest their profits rather than pay them out to wealthy shareholders, although the evidence to support this is limited. In his speech last night, the president called for quadrupling the tax on stock buybacks to further discourage the practice.
Biden also renewed his calls for Congress to pass his version of a billionaires minimum tax. The Billionaire Minimum Income Tax Act, which was modeled after President Biden’s proposal and introduced last year, would impose a 20 percent minimum tax on the full income– including unrealized gains– of taxpayers worth over $100 million.
The billionaires tax would also raise $360 billion over the first ten years, an important rebuttal to Republican accusations that Biden and Democrats simply want to spend recklessly and grow the national debt. The president highlighted his agenda’s fiscal responsibility last night, pointing out how policies like allowing Medicare to negotiate drug prices cut the deficit.
- Fiscal Policy
Where Republicans want to slash funding for discretionary programs back to FY22 levels– choking off funding for critical government programs– Biden and Congressional Democrats want to make the wealthy and corporations pay their fair share. In his address Monday night, McCarthy made clear that Republicans would not support tax increases of any kind. Where Republicans simply want to take things away, the president made clear that he wants to make sure that average Americans don’t have to pay the price for the wealthy not paying what they owe.
Biden did take a moment last night to call out some Republicans for their threats to Social Security and Medicare. When he was met with outrage and calls of “liar” from the right side of the chamber, Biden shot back with “so folks, as we all apparently agree, Social Security and Medicare is off the books now, right? They’re not to be — all right. We’ve got unanimity.” This put all the Republicans in attendance – including the fringe members of the party – on the record on entitlement cuts with the American people watching.
“Let’s Finish the Job”
President Biden’s address last night included perhaps the most comprehensive and yet thematic statement of his economic plans to date. The atmosphere in the chamber served as a stark reminder of the uphill battle he and Democrats in Congress will face for the next two years. President Biden touted his bipartisan successes, reminding Congress that he has already signed over 300 bipartisan pieces of legislation, and called on Congress to work together again in the 118th Congress. But those successes came during a time when it was Nancy Pelosi, not Kevin McCarthy sitting behind Biden.
As Biden spoke, the realities of governing in a divided Congress were impossible to ignore. The president’s ambitious agenda to create a fairer tax code and develop the economy from the bottom up was placed in concrete terms that people watching from outside the chamber could readily understand. The public support will be essential if we are not to move from here to debates about draconian budget cuts in exchange for not throwing the federal government into default, Biden and the Democrats will need to continue to use the bully pulpit and popular appeal to lay the groundwork for a fairer, more equitable economic agenda this Congress.