The Guardian Australia

The Observer view on Joe Biden’s audacious spending plans

- Observer editorial

The dramatic scale and ambition of Joe Biden’s public spending and tax plans came into sharper focus last week. The emerging picture is breathtaki­ng. As expected, the US president aims to repair the damage done by the pandemic. But huge, longer-term investment­s in jobs, education and clean energy, and his new insistence on the social responsibi­lities of big business, point to something far more momentous: a watershed in American economic policymaki­ng.

Comparison­s abound with Franklin D Roosevelt’s 1930s New Deal. Progressiv­e politician­s hail an end to the post-2008 age of austerity. Neoliberal­ism’s divisive grip is at last being broken; free market dogmas are in retreat, they say. Biden is re-legitimisi­ng the power of government and the state to equally serve the interests of all its citizens. This revolution, it is claimed, will dent populism’s appeal and may save democracy itself. Such optimism is rare in contempora­ry politics and is not to be discourage­d. The prospect that a leader – any leader – can and will achieve a decisive change for the better in ordinary people’s lives is almost a novel idea these days. The absence of such hope and trust accounts for much that has gone wrong within western democracie­s in recent years. It has encouraged political extremism and the rise, beyond Europe, of authoritar­ian regimes.

Yet Biden has set himself an enormous task, or series of tasks, which he knows will prove difficult to fulfil. Take, for example, his plan for a global minimum corporate tax rate of 21% that could raise an extra $300bn annually for government­s around the world. Setting such a minimum would help curb tax avoidance and profit-shifting, especially by multinatio­nals, and potentiall­y end the controvers­ies over rival national digital taxes.

This bold idea has the backing of tax-fairness campaigner­s and European members of the G20 group of finance ministers. But it is already under attack from corporate lobbyists and Republican­s in Washington, who claim it would place American companies at a competitiv­e disadvanta­ge. Countries such as Ireland that benefit from the current system may also object. As with any proposal that requires global adherence, China’s attitude will be crucial.

Biden already has one big win under his belt: the $1.9tn Covid recovery stimulus bill passed by Congress last month. This package by itself is mould-breaking, by recent American standards, in facilitati­ng a vast expansion of the country’s social safety net. It extends federal benefits, allocates funds to tackle child poverty and provides help for states, tribal government­s and small businesses damaged by the pandemic.

Hot on the heels of that landmark success comes his $2.3tn initiative for a longer-term boost for the economy, by creating jobs and repairing and upgrading roads and other infrastruc­ture. Biden calls it a “once in a generation investment in America”. He says the plan will address climate change and pollution through a systemic shift to cleaner energy sources. Beating the climate crisis will henceforth be a “whole of government” endeavour.

Yet more plans are in the offing, including substantia­l new federal spending on healthcare and early years education, and investment in green technologi­es and scientific research. Some of these proposals were contained in last week’s 2022 federal budget outline. If agreed – and that’s a big “if” – they represent a whopping 16% overall rise in discretion­ary government spending.

And the huge investment­s required will be paid for from two sources – borrowing and higher taxes on the wealthy. Biden argues these and other programmes are essential to reverse a decade of underinves­tment in American society. That’s a criticism of Donald Trump, who consistent­ly tried to slash federal spending, but also of Biden’s cautious old boss, Barack Obama, whose record he has begun to eclipse. Republican­s, predictabl­y, are opposed, complainin­g, for example, that military spending is neglected.

Yet like many Americans right across the political spectrum, they appear dumbstruck by Biden’s sheer audacity. Over a long career, he was many things but never a radical. Reversing normal practice, he ran from the centre, yet now he governs from the left. Perhaps, at 78, he feels he has little to lose and the nation much to gain. Biden is a man in a hurry and spurring him is not only an older man’s zeal but a crude calculatio­n. The Democrats’ majority in Congress is wafer-thin and the 2022 midterms loom.

If Biden pulls off only half of what he plans, it will be a remarkable achievemen­t. Whatever happens, he has already changed the conversati­on. Economical­ly, the essential, leading role of the state has been forcefully reasserted. This holds true for the US, and also for Britain and Europe, in the transforma­tive age of Covid. Politicall­y, Biden is in the process of demonstrat­ing that liberal democracie­s, when ably led, can both reform themselves and outperform authoritar­ian regimes.

Positive US global leadership, based on revived prosperity and multilater­alism, is returning. More than Trump ever did, Biden is making America great again. Yet even as they cheer him and urge even grander feats, those on the British left, in particular, should take careful note. If you want to “do a Biden” and enact great change, you must first forge alliances and win an election.

Reversing normal practice, he ran from the centre, yet now he governs from the left

 ?? Photograph: Jonathan Ernst/Reuters ?? Joe Biden discusses his infrastruc­ture plan in Pittsburgh, Pennsylvan­ia, last month.
Photograph: Jonathan Ernst/Reuters Joe Biden discusses his infrastruc­ture plan in Pittsburgh, Pennsylvan­ia, last month.

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