Republican Congress facing a Democratic White House for two years would defer economic policy change until 2025
While working Americans suffer the worst decline in real income since the waning months of the Carter Administration, America’s political parties are in disarray with internal divisions almost as intense as the issues that have polarized “red state” and “blue state” America.
Neither party has a proposal – credible or otherwise – on the political agenda to alleviate the inflation that is crushing family income. And neither has the prospect of gaining a governing mandate, as opposed to a temporary majority.
It’s a national train wreck, and no one has a plan to stop it.
Unless his legal problems interfere, Donald Trump almost certainly will run for president again in 2024 and will be his party’s nominee. The Congressional commission investigating the January 6, 2021, Capitol riot may have gathered enough information to motivate federal charges against the former president, but that remains unclear.
Trump’s obsessive belief that the Democrats stole the 2020 election damages him. More ominous is that his economic policies contributed to the present disaster, and Trump has no thoughts on the subject apart from assigning the whole of the blame to Biden.
Polling shows that 83% of Americans think the economy is in bad shape. Compounding the Biden Administration’s economic misery are two back-to-back foreign policy disasters, in Afghanistan last year and presently in Ukraine.
In a matter of a month, Washington has pivoted from intoxicated triumphalism to reassigning blame for the almost-certain collapse of Ukraine’s armed forces in the face of Russia’s massive superiority in firepower.
Biden tweeted March 26 that “the ruble was almost immediately reduced to rubble” and that “the Russian economy is on track to be cut in half.” Meanwhile, the International Monetary Fund projects a modest 8.5% decline in Russia’s GDP this year and the ruble is 20% higher than before the Ukraine invasion.
To be sure, the fate of a country most Americans can’t find on a map is of small import in American politics next to the inflation disaster – but it has a knock-on effect in American politics.
Remarkably, the progressive left vied with Republican neo-conservatives to support the Ukraine war. Only a handful of Republicans around the isolationist Kentucky Senator Rand Paul opposed Biden’s $40 billion aid package for Ukraine. Not one Democrat in the House of Representatives opposed the bill, and only 57 Republicans did.
The evaporation of the anti-war left is unprecedented. Writes Senator Bernie Sanders’s foreign policy adviser Matthew Duss in the New Republic for June 1:
We should acknowledge absolutely that skepticism toward the kind of righteous sloganeering we’ve seen around Russia’s war is entirely reasonable. Our political class advocates military violence with a regularity and ease that is psychopathic…. We should not, however, let all of this absurdity blind us to the instances when provision of military aid can advance a more just and humanitarian global order. Assisting Ukraine’s defense against Russian invasion is such an instance.
The progressives are so obsessed with their social agenda, prominently including transgender rights, that they make common cause with the neo-conservatives against civilizational opponents like Russia and China, which belong to an older world with another set of values.
Without an anti-war left to provide balance, the Democratic Party as a whole has no way to deflect blame for what appears to be yet another American military debacle overseas. President Biden’s attempt to shift the blame to Zelensky for allegedly failing to anticipate a Russian invasion is transparently disingenuous and will only make him look mendacious, as well as dull.
This matters to the extent that the Ukraine war raises the price of food and energy. The latter is the main driver of inflation during the past couple of months, and is unlikely to improve as long as Washington layers more sanctions on Russian oil exports. That effectively directs Russian oil at a deep discount to friendly buyers like India and China, leaving Western consumers to pay higher prices.
The direct impact of the war on US politics is limited. As Morningconsult.com reported June 6, “44% of U.S. voters believe the United States has an obligation to protect and defend Ukraine from Russia, down from a tracking high of 50% at the beginning of May. At 37%, Republicans are 20 percentage points less likely than Democrats to see such an obligation, just ahead of independents at 33%.”
With the bread-and-butter wing of the Democratic Party holding the bag for inflation, the Democrats will also take the full brunt of popular revulsion over the party’s progressive social agenda. Putting the transgender rights issue at the center of the progressive agenda was an act of political self-immolation. By a margin of 46-37, Americans do not believe that a “transgender woman” is a woman. But general attitudes are less important than popular outrage at the extreme reach of the progressive agenda. An Ohio state court removed a “transgender” teenager from his parents’ custody because they refused to allow him to take female hormones.
Legislative and legal battles have erupted in almost all of the fifty states about transgender teenagers competing in women’s sports. Americans oppose boys-who-say-they-are-girls playing on girls’ teams by a margin of 62% to 34%. High school sports enjoy unique popularity in America, and sports scholarships are an important path to higher education.
At the local level, meanwhile, the Pprogressive wing of the Democratic Party is pushing the envelope of social innovation to extremes. The Republican-leaning New York Post June 11 reported that the New York City public school system has spent $200,000 to fund “drag queen” shows for elementary school children.
All this leaves the Democrats’ traditional working-class constituencies in the cold. Real income is plunging, and public schools have turned into a laboratory for social experimentation that most Americans find repugnant. On gender issues, moreover, blacks and Hispanics, who typically vote Democratic, view transgender acceptance less positively than whites.
The Democratic Party will be crushed in the 2022 Congressional elections and in the 2024 presidential poll. Republican analysts who have spoken to former President Trump are sure that he wants to run again, unless legal or health problems prevent him from doing so. The last two years of a lame-duck Biden Administration will be consumed in bickering and grandstanding.
By 2024, the US probably will be in recession. Americans spent the $6 trillion the government gave them – starting with the Trump Administration. Credit card debt has jumped back to pre-COVID levels as Americans borrow to maintain expenditures in the face of falling real incomes.
Most of the impetus for inflation came during Trump’s last year in office, when the Federal Reserve expanded its balance sheet by more than $3 trillion.
Trump’s effort to shift the blame for inflation onto Biden is disingenuous. The spending orgy began on his watch. Capital spending by US nonfinancial corporations also fell during the Trump Administration – a direct result of the 2017 corporate tax cut, which made it more profitable for corporations to buy back their own stock than to invest in new plant and equipment.
The two-year moving average of corporate CapEx is still below the 2015 level in terms of constant 2010 dollars. That helps explain endemic shortages of key products, something the US has not suffered since the Second World War.
The near certainty that a Republican Congress will face off against a crippled Democratic White House for two years defers any change in economic policy until January 2025, when a Trump or other Republican Administration will try to come to grips with the damage. That’s a dangerous situation for the world-second largest economy to sustain for nearly three years.