Biden’s Political Gloom Set To Lift With Passing Of Huge Spending Bills – OpEd

By Dr. John C. Hulsman*

Thomas Fuller, a 17th-century English theologian, knew a thing or two about political risk when he shrewdly noted, “It’s always darkest before the dawn.” US President Joe Biden’s troubles of the past months — soon to be debilitating — must not obscure the equally true reality that he is on the cusp of passing the most ambitious domestic policy agenda since the days of Lyndon Johnson and the “Great Society” of the 1960s.

Biden’s travails are numerous. The American people — though they largely agree with his strategic efforts to wind down America’s “forever war” in Afghanistan — were uniformly shocked and appalled by the inept and chaotic scenes that characterized America’s incompetent withdrawal from the country. While the terror group Daesh alone is responsible for the suicide bombing that accompanied the end of the mission, America’s military leadership made US troops a beyond-tempting target. Over Afghanistan, the White House looked worse than wrong; it looked incompetent.

COVID-19, despite many false dawns, grinds grimly along, with the country neither returning to something like normal nor fully overcoming the pandemic. The beast of inflation, seemingly slain by former Federal Reserve Chairman Paul Volcker in the 1980s, is back on the march. Gas prices are skyrocketing and the supply chain crush is leading to shortages. Taken together, all these very real failures easily explain the president’s tumble in the polls. A September CNN survey found a decisive 75 percent of Americans “angry” when thinking about the present state of the nation. A Gallup poll at the end of that month found Biden’s overall approval rating at a new low of 43 percent, down fully six points in just a month from August, and a decisive 14 points since his inauguration.

Worse, the decline in Biden’s popularity is almost entirely attributable to independents — who tend to determine US elections — deserting him in droves. In June, the president had the support of 55 percent of independent voters; at the end of September, this number was underwater, with independents only supporting the president at an anemic 37 percent rate. The first midterm election, historically almost always a calamity for the new occupant of the White House, now looks like a political tsunami heading directly at the administration. The House of Representatives is overwhelmingly likely to find itself with a new Republican majority following the November 2022 vote, with the Senate also in play. Biden’s days of a congressional majority are surely numbered.

All of this is undoubtedly true, and bears much discussion. Yet so does another seminal political risk fact, one largely obscured by the dramatic plummeting in the overall fortunes of the new administration. Despite all this, and to some extent because of all this, the warring factions within the Democratic Party are about to reach a pivotal political compromise, allowing the lion’s share of Biden’s highly ambitious domestic agenda to pass both houses, despite the Democrats’ wafer-thin majorities. The most significant expansion of the federal government in a generation is about to take place, as the Democrats know that it is now or never to pass their agenda, precisely because the overall political clouds are so rapidly darkening.

While the details of the deal between Democratic moderates and progressives are still shrouded in secrecy, the outlines of the plan are clear. Progressives wanted to pass a mammoth $3.5 trillion wish-list bill, including vast expansions of social care, education and climate change spending, along with guaranteed lower drug prices and tax cuts for the working poor. Moderate Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — who hold the balance of power in the upper chamber — balked at the bill, but for different reasons.

Manchin, coming from his coal-rich state, refuses to support the $150 billion clean electricity portion of the legislation, which is designed to prod energy producers to switch to wind, solar and nuclear power, with federal penalties for those staying with fossil fuels. This, plus the vast headline price tag, was more than the moderate could bear. Sinema, on the other hand, worried about raising the corporate tax rate and the headline individual tax rate to (at least partly) pay for the bill, fearing enacting such punitive taxation would harm long-term US growth.

Biden, who this past weekend hosted Manchin at his Delaware home, has decisively moved to save his agenda. First, in order to sway Manchin, he told House progressives the final wish-list bill would come in at more like $1.75 trillion to $2 trillion, slightly more than half of what they had hoped for. Second, in order to assuage Sinema, he told progressives that new ways must be found to pay for the legislation, possibly including a new billionaire’s tax and greater Internal Revenue Service enforcement of the present tax code. Knowing that it is better to have something rather than nothing, the progressives have agreed.

As such, after the next few days, look for Biden to have secured both the $1.1 trillion bipartisan infrastructure bill and the $2 trillion wish-list bill. Whether all this new spending in the face of inflation is a good idea (it is not) is a column for another day. But, for now, for the Biden team, the policy dawn is about to break.

• John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also a senior columnist for City AM, the newspaper of the City of London. He can be contacted via johnhulsman.substack.com.