Biden's breakthrough climate and healthcare bill could reverse his fortunes

Even with polls far from favouring him, the US president has just had a big win

US President Joe Biden after being handed a note stating that Congress passed the semiconductor chips bill while Biden was speaking with CEOs on the economy in the Eisenhower Executive Office Building in Washington, on July 28. EPA
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A week ago, conventional wisdom in Washington held that Joe Biden's presidency was in a profound crisis. A drumbeat intensified for the ageing president not to run for a second term. But by the weekend, that narrative was upended as it once again became clear that he is accumulating a remarkable set of legislative achievements in short order and under difficult circumstances.

The sudden jolt was the announcement late last week that Senate Majority Leader Chuck Schumer and the most conservative Democratic senator, Joe Manchin of West Virginia, agreed to major spending on healthcare, taxation and climate change. If the bill passes – as seems highly likely since Republicans cannot block budgetary measures – Mr Biden will endure the paradox of having passed a vast array of popular legislation while retaining dismal poll numbers.

Republicans are outraged the agreement was kept completely secret, including from most Democrats and the press. For weeks, Democratic leaders insisted internal negotiations were ongoing, but carefully crafted the impression of an impasse.

The US President is handed a note stating that Congress passed the semiconductor chips bill while Biden was speaking with CEOs on the economy in the Eisenhower Executive Office Building in Washington, on July 28. EPA
Joe Biden holds the note given to him saying that the "CHIPS-plus" bill has received enough votes to pass the House, in the Eisenhower Executive Office Building, next to the White House, in Washington, on July 28. AFP

Not wanting to allow Mr Biden too many successes, Republicans relied on this misdirection in supporting a $280 billion spending package to bolster American microchip manufacturing and other technological development. Aimed primarily at competition with China, it is the largest US industrial policy initiative in decades. It is also so evidently in the national interest that it should have been adopted without controversy or subsequent recriminations.

As soon as it passed, Democratic leaders announced that not only were their internal negotiations successful, Mr Manchin had agreed to a far bigger package than he lead people to believe he might. It is the latest chunk of Mr Biden's fraught programme, Build Back Better, a transformational agenda so sweeping it could not be passed in its totality, but much of which is instead being implemented piecemeal.

Last year, a huge infrastructure bill was broken away and adopted. When Mr Manchin insisted on a large reduction in overall spending on the rest of the package, and ruled out several key features including childcare, the project was generally given up for dead.

Now Democrats seem poised to pass another major chunk of the original highly ambitious agenda, and it will have a gigantic impact. Most strikingly, it will put the US on track to meet globally crucial climate change goals that had been considered politically unachievable.

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Much of what Democrats want remains undone, but this massively exceeds any rational expectations

Reversing decades of severe underfunding, the package provides major support to the beleaguered Internal Revenue Service, and that should finance the collection of untold billions in unpaid taxes. It imposes a minimum 15 per cent tax on the wealthiest corporations, many of which pay nothing at all, and higher taxes on "carried interest" exemptions enjoyed by the likes of private equity and hedge fund managers. Former president Donald Trump will surely be infuriated at the elimination of "pass-through" loopholes that apparently allowed him to often pay virtually no income tax.

Government health providers will finally be allowed to negotiate prices with pharmaceutical companies, saving billions and greatly reducing drug costs. And the US would get closer to universal healthcare coverage.

Some Republicans, infuriated at being thus gulled – although only into supporting obviously necessary legislation – are retaliating by withdrawing support for aid to military veterans exposed to toxic burn pits in Afghanistan and Iraq, and for legislation guaranteeing marriage equality. Both bills are overwhelmingly popular, so Republicans are being provoked into irrational and self-destructive retribution.

Comedian Jon Stewart walks away after voicing his anger at Republican senators after they stalled a bill aimed at giving greater healthcare access to US  military veterans exposed to toxic burn pits, at the US Capitol, on July 28. Reuters

Democrats not only completely outfoxed the Republicans, by cannily marketing the bill – accurately enough – as the “Inflation Reduction Act of 2022,” they have emphasised how overwhelmingly popular virtually all its provisions and their impacts are likely to be.

Build Back Better was an ineffective legislative programme not because its provisions were largely unpopular – although it originally included regressive forms of student loan relief, and state and local tax benefits that favour the better off. Rather, it was simply too vast and sprawling to be comprehensible and, as a unified bundle, provoked powerful sticker shock at its total costs.

But broken into discrete chunks, and with some key elements, both good and bad, jettisoned, much of the original plan seems likely to be eventually enacted. Only Arizona Senator Kyrsten Sinema, another frequently uncooperative Democrat, might prevent passage, but it seems unlikely that she would ultimately oppose Mr Manchin’s breakthrough.

Senator Kyrsten Sinema walks to a vote at the US Capitol on July 28, in Washington. Getty / AFP

The biggest question is what impact this sprawling legislation and dynamic governance will have in both the November midterms and the next presidential election in 2024.

Inflation, and the economic slowdown now being engineered to control it, will certainly prove a millstone. But Democrats can and should run on this extraordinary record of legislative achievement: $1.9 trillion in pandemic relief, $1.2 trillion for hard infrastructure, $280 billion for industrial investment, and now apparently, $700 billion for healthcare, taxation and climate change.

Add to that the first gun control legislation in decades, an upcoming measure to repair the badly-worded Electoral Count Act (which Mr Trump tried to exploit to retain power despite losing the 2020 election), plus another to protect marriage equality, and the legislative checklist is extremely impressive and, in theory at least, highly popular.

Much of what Democrats want remains undone, of course, but this massively exceeds any rational expectations. However, as I recently noted in these pages, Mr Biden has been atrocious at messaging.

In November, Republicans will be running primarily on inflation and racial and cultural grievances, which are powerful emotional motivators. Yet they have nominated so many extremists in key Senate races that Democrats may well retain control. But Republicans seem equally poised to regain a majority in the House of Representatives.

Mr Biden's legislative agenda would then surely be frozen, especially since many Republicans are now so enraged, they claim to regret having supported almost anything he proposed. But he would still go into a re-election campaign with an outstanding list of first-term legislative accomplishments.

If Americans want their government to function, provide services and strengthen the country, at present Democrats have an unassailable case. They can bolster that by stoking fears that Republicans are stripping citizens of fundamental freedoms, particularly given the sudden and shocking wave of near-total abortion restrictions in many states.

But if voters prefer emotional release and high-octane entertainment, Republicans could regain power through the potent and resonant performative theatrics on which they now generally focus.

Americans are going to have to decide if they really want good government or a good show.

Published: August 01, 2022, 2:00 PM
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