Dissenting Democrat shows why US can’t compete with China
Joe Biden’s gargantuan $1.9tn ‘Build Back Better’ economic stimulus plan has been scuppered by a politician from his own party. It just demonstrates how divided Americans are.
One Democrat senator has thrown a spectacular spanner in the works. Sen. Joe Manchin of West Virginia, representing a deeply Conservative state (and the only national-level-elected Democrat from there), has hurled Biden's astronomical spending act, known as the ‘Build Back Better Act’, on ice by publicly declaring he won’t vote for it, weaponizing his leverage in the evenly divided senate.
The bill, starting off at an initial $3.5 trillion, later negotiated down to $1.9tn trillion, is seen as one of the fundamental pillars of Biden’s domestic agenda (no slogan has been so closely affiliated with his presidency so far) and pledges to throw billions at clean-energy initiatives, affordable housing, education, child tax credits, and so on.
It proposes to pay for all this through across-the-board tax rises. It might be described as an Roosevelt new-deal-style initiative that endeavors to drive forwards the US economy in a textbook progressive fashion. But it is controversial, even among some Democrats, hence why it’s already been dramatically trimmed, only for Manchin’s opposition to effectively kill it. The Senate – locked at 50-50 between the two parties – means it takes only one dissenting Democrat to give Republicans a veto over Biden’s plans.
The blocking of the bill, however, goes far beyond party political disagreements and is of such a significance that it’s led Goldman Sachs to downgrade America’s pending GDP by 1%. In other words, it’s dealt a hammer blow to Biden’s vision for the economy, which was floated on the idea of non-stop spending, having already forced through a stimulus payment, a big infrastructure bill, and more.
He thought he had the political space to do so through the need to kickstart the national recovery after Covid-19, while controlling the House and relying on his vice president’s casting vote in the divided Senate. But with soaring inflation taking its toll, it was always a matter of time as to when “enough would be enough” among centrist Dems, and he has incurred the wrath of fiscal conservatives, who oppose the “big government” agenda of “tax and spend.” With midterm elections on the horizon, it won’t get any better for the president.
But the bigger implication? It’s a demonstration of why the United States won’t be able to outcompete China on an economic level in the way Biden had hoped, in spite of the difficulties Beijing, too, is now facing. Why? The US is pitting a gridlocked multi-party political system that is captured and obstructed by private interests against a centralized communist state that mixes top-down economic and social governance with market principles and effectively does whatever it deems to be necessary in order to continue growth.
‘Build Back Better’ is not the only integral piece of economic legislation that has stalled in Congress. The United States Innovation and Competition Act – another titanic spending bill that pledges over $52 billion in subsidies for semiconductor manufacturers in the US, aimed squarely at Beijing – has also come up against the brick wall of the Congressional gridlock. Again, the obstacle is primarily ideological: why should the US government pour extortionate amounts of taxpayers’ money into private industry?
In contrast, Beijing effortlessly plows billions and billions into its own semiconductor industry development, with no arguments, delay, or controversy. Although the long-term results of this effort are yet to be seen, China’s system allows it to do what it wants, when it wants, such as building a hospital in just a matter of days or enacting a rigorous and militant zero-Covid policy while the US is left with a death toll now exceeding 800,000.
The critical mistake Biden and his allies are making here is that they are trying to compete with China by attempting to copy elements of Chinese-style economic management and place them in an American context. It just doesn’t work. The United States remains a more competitive economy than most countries in the world because of its ruthless commitment to free-market fundamentalism propped up by the US dollar, and that gives it strengths that are different to China’s. Yet, seemingly, the urgency to compete with Beijing and the fear of its rise has pushed the decision in DC that the rules of the game going forward ought to be to respond to China’s specific successes, such as infrastructure, and thus the idea has been set in motion to mimic the things China is doing.
Biden’s infrastructure bill was one such example of this copycat strategy, and ‘Build Back Better’ is another. Biden has tied geopolitical urgency to the need to force through more and more spending. As he said in April: “America is moving – moving forward – but we can’t stop now. We’re in competition with China and other countries to win the 21st century. We’re at a great inflection point in history. We have to do more than just … build back. We have to build back better. We have to compete more strenuously than we have.”
Playing the China card in America is extremely powerful, and fear-mongering about foreign adversaries has always been a defining aspect of US politics. It goes without saying that especially applies when, on foreign policy matters alone, there is pretty much no dissent and no disagreement in Congress.
But when Biden’s bills attempt to use China as cover for domestic topics, then this strays into controversy and the terrain of deep political divides, such as on taxation and climate. He may argue these provisions are needed to compete with Beijing and, in many areas, he’s probably right. But this is a whole different ball game, and America continues to be more politically polarized than ever before – something anti-China hysteria can make you forget. Therefore, the structural reality is that America can’t just coordinate its growth like China can, with one senator able to bring the whole stack of cards down.
Compete with China militarily? Sure, spending trillions on weapons and overseas military assets is great. But spend trillions on progressive schemes to help boost the US economy, drive renewable energy, and raise taxes? No way.
The need to confront China was never a green light for a controversial progressive agenda that both Republicans and right-leaning Democrats despise. Next year will be the defining year of Biden’s presidency. If he cannot force through his agenda then, the midterms loom in November and there will be plenty of appetite from fiscally conservative families to turn big-spending Democrats into sitting ducks and hand the Republicans majorities in both houses. This will turn Biden into a lame-duck leader for the last two years of his term and pave the way for a Republican victory in 2024.
Beijing will, in the meanwhile, watch events in Washington closely and reaffirm its calculation that America's biggest weakness continues to be, well, Americans and their sclerotic political system.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
