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Biden embraces “big government” role as US transitions to a low-carbon economy

29 April 2021 Amena Saiyid

US President Joe Biden made no bones in his first address to joint session of the US Congress about embracing the federal government's role and higher taxes on the wealthiest Americans to help the nation deal with a looming climate crisis as it emerges from the worst economic crisis since the Great Depression and the worst pandemic in decades.

In doing so, Biden openly rejected the notion of a limited government spending that President Ronald Reagan championed and other Republican presidents have since adopted as their governing mandate. Instead, political analysts say Biden is following the playbook of Franklin D. Roosevelt who rushed emergency legislation through Congress to stave off the Great Depression in 1933.

Flanked by Vice President Kamala Harris and House Speaker Nancy Pelosi, an historic sight in its own right, Biden reminded the socially distanced Democrat and Republican lawmakers of public investment's role in linking the country with a network of highways, developing the internet, discovering vaccines, scientific breakthroughs "that took us to the moon," among others.

"These are the investments we make together, as one country, and that only government can make. Time and again, they propel us into the future," Biden said, as he exhorted the lawmakers to support the $2.3 trillion American Jobs Plan, which is intended to boost the country's manufacturing base and outcompete China, and to rebuild the nation's infrastructure as it transitions to a low-carbon, clean energy economy.

Climate crisis as an opportunity

Biden reminded lawmakers as well as the American public that the climate crisis should be viewed for the opportunities it presents to create jobs for people belonging to all walks of life, and for achieving parity with China in clean energy technology.

"For too long, we have failed to use the most important word when it comes to meeting the climate crisis: jobs, jobs, jobs," Biden said, drawing a standing ovation from Democrats while all but one Republican lawmaker sat quietly. That was Senator Mitt Romney of Utah, who was seen enthusiastically clapping.

Calling the jobs plan "a blue-collar job blueprint," Biden said it would fund research & development to build better and cheaper clean energy technologies while employing people with all levels of educational qualifications. For instance, the plan would require electrical workers to modernize the grid to handle extreme weathers, such as the polar vortex Texas experienced in February; farmers to plant cover crops to absorb more CO2; and construction workers to build energy-efficient buildings.

"There's no reason the blades for wind turbines can't be built in Pittsburgh instead of Beijing. No reason why American workers can't lead the world in the production of electric vehicles and batteries," Biden said.

Who will pay?

The question on the minds of most political pundits, though, was how Biden would pay for this plan that promises so much opportunity.

The $14 billion that the White House has requested to fund climate-related programs at federal agencies in fiscal year 2022 is one option, while another option is to secure additional funds through the budget reconciliation process for the upcoming budget cycle. The latter approach was used by Democrats to push through a $1.9 trillion American Rescue Plan in late January, much to the chagrin of Republicans who could be seen smarting about it during the speech.

At the end of the day though, it may all come down to Senator Joe Manchin, Democrat-West Virginia, who is seen as the swing vote, if Republicans continue to oppose Biden's jobs plan as a block. Democrats and Republicans have a 50-50 tie in the Senate.

But these two approaches may still not be enough to raise the billions of dollars needed for the jobs plan to be successful.

For that Biden had an answer: He said he would raise taxes on corporate America and the wealthiest 1% of Americans, who he said should "pay their fair share."

And then Biden delivered his coup de grace to the idea that Republican presidents and lawmakers have held dear since the 1980s.

"My fellow Americans, trickle-down economics is not working, and it is time we grow the economy from the bottom and the middle," he said, drawing a standing ovation from Democrats, but silence from the Republicans, who after the speech were quick to call his plans socialist.

'True counter' to GOP agenda

This is the first time a Democratic president has presented "a true counter" to the Republican agenda that Reagan articulated 40 years ago, Jennifer Victor, an associate political science professor with George Mason University Schar School of Policy and Government, told IHS Markit after Biden's speech.

Democrats -- President Bill Clinton, and even President Barack Obama -- did not fully oppose the limited government idea that Reagan championed, she said. Biden might be able to do it, she said, because he comes across as "a folksy, old, white man who is not afraid to use his white privilege to fully embrace political liberalism compared to his predecessors."

"Tonight, Biden did, laying out an argument about the good things that we can do as a country, from child care, to clean water, to healthcare, to assessing gun violence," Victor said. "He directly called out the myth of 'trickle down' economics, which Reagan promoted. In that moment, Biden fully embraced the opposite position that Reagan used to build a powerful political coalition."

From a political angle, Victor said, "making traditional conservatism and Reagan's ideals the foil instead of Donald Trump, is a clever reset of US politics."

'Big government waste'

In contrast, GOP's lone Black Senator, Tim Scott of South Carolina, who was brought in to rebut the president's speech, launched right into accusing Biden of dividing the country with its "big government waste."

Scott didn't even acknowledge the climate crisis, let alone the impacts of climate change that have begun to affect his state: Hurricane Dorian struck that South Carolina in 2019, costing $40 billion in damages; or the fact that sea-level has risen 10 inches in Charleston due to ice melts since 1950, leading to more frequent flooding.

Scott said Biden is pushing a "liberal wish list" through his American Jobs Plan for infrastructure that includes less than 6% in funding for roads and bridges.

"Republicans support everything you think of when you think of 'infrastructure.' Roads, bridges, ports, airports, waterways, high-speed broadband — we're all in!" Scott said.

"But again, Democrats want a partisan wish list. They won't even build bridges... [we want] to build bridges!"

GOP counterproposal

Scott was alluding to the $568 billion infrastructure plan that four Republican Senators — Shelley Moore Capito of West Virginia, John Barrasso of Wyoming, Pat Toomey of Pennsylvania Roger Wicker of Mississippi — introduced on 22 April as their counterproposal to Biden's jobs plan.

These senators pointed out that the lion's share of the American Jobs Plan would be spent on unrelated climate initiatives that they said they do not consider infrastructure initiatives, according to a 26 April release from Wicker's office.

As examples they pointed to the $213 billion to convert homes and buildings to being "climate friendly," $174 billion to subsidize electric cars, $35 billion to support green innovation (which is already doing well), and $10 billion to launch a Civilian Climate Corps.

Prior to Biden's speech, Senate Minority Leader Mitch McConnell, Republican-Kentucky, said Biden's plans engaged in false advertising and were "catnip for the liberal left."

GMU's Victor said Scott was couching infrastructure in purely "red meat" terms for the GOP base.

Posted 29 April 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit

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