Biden’s relief package: A look at its economic objectives


After the passage of the coronavirus relief plan a few weeks ago, the Biden administration is setting its sights on an even bigger spending package, this one targeted at U.S. infrastructure. It is no secret that infrastructure in this country, including roads, water, and public transportation systems, has been decaying since the 1960s; the population of the United States has nearly doubled since then, without any corresponding increase or upgrade to its infrastructure systems. This is a reflection of the process of uneven and combined development, where both public and private investment in things that could be considered public goods—that is, things that everyone can use—are directed toward regions that are the most profitable, while investments in unprofitable areas are left to decay.

As profitability declines in a general sense in most regions in the United States, it makes sense that more and more regions are left with decrepit, declining infrastructure. The American Society of Civil Engineers reports that one in nine bridges in the United States are considered “structurally deficient.” When doing research for this report, I found that on average, a whopping 128 bridges failed per year over the past 25 years.

Details of the plan were released on March 30. The majority of the spending will be devoted to what we can think of as “classic” New-Deal style infrastructure projects—highways, bridges, airlines, water systems and transit. Another significant section of the bill is devoted to health care, specifically for community-based elder and disability care. The rest of the bill will likely focus on the construction of affordable housing, manufacturing subsidies, research and development, electric grid upgrades, high-speed broadband, and investments in electric vehicle infrastructure.

Keynesian policies

Three major issues become clear from the details of the bill. The first point is that Biden is styling his economic policy, at least in the wake of the pandemic recession, as an FDR-esque, broadly Keynesian one, relying on significant levels of public expenditure to take up the slack of declining profitability and investment in the private sector. This is actually a marked contrast from Biden’s Democratic predecessors, Obama and Clinton, who followed very closely to the neoliberal austerity playbook, which involved large-scale privatizations and cuts in both taxes and social spending. Trump, in fact, also governed as a big-spending Keynesian.

I think that this signals a broader shift in the structure of the U.S. economy, similar to the one that brought about the era of neoliberal capitalism in the 1970s. In my view, this bill is emblematic of the final stages of the transition away from neoliberal capitalism that began in the wake of the 2008 recession. This will be marked by a shift to neo-Keynesian policy, in which government expenditures are generously applied to supplement private investment in industrial production. Keynesian state policy is not new in the United States. We have seen two major Keynesian periods in the country’s history—the first, immediately after the Great Depression, and the second, after World War II. These periods are hailed by Democratic-aligned folks as the golden age of American capitalism, and it is clear that Biden is calling back to these eras in both a policy and propagandistic sense.

Keynesian policy holds that periodic economic crises are the result of fluctuations in investment due to uncertainty, and that crises can be mitigated by government expenditures that are sufficient to cover the shortfall in investment that occurs during a recession. That explains the eye-popping price tags of both the infrastructure bill and the preceding stimulus packages. Both Trump and Biden are following the neo-Keynesian playbook to a tee by injecting trillions into the economy during a downturn, with the hopes of keeping unemployment low and substituting public investment for private investment until such time as confidence in private investment can be restored.

It is important to note here that the New Deal did not, strictly speaking, end the Great Depression. In fact, unemployment did not really recover until World War II. The reason for this had to do with the fact that crises are ultimately rooted in the rate of profit, which general increases in public expenditure will fail to influence. In the end, the profitability crisis that heralded the Great Depression was actually only solved much later—by the widespread and rapid obliteration of invested capital in the bombing campaigns of World War II.

The New Deal did have an effect on wages, but the direction of causation was precisely backwards—the era was defined by a remarkable upsurge in radical labor activity, through organizations such as the CIO. The expanded power of organized labor was able to wring concessions from the FDR administration in the form of higher wages, labor protections, and the expansion of social programs.

This last point is important in the modern context. Keynesian policy does not require expenditures on social programs. Although in popular imagination it is designed to increase consumption, the goal is actually to increase investment. This could be done by expanding social services, but it could also be done by cutting taxes, increasing military spending, subsidizing industrial production, or a dozen other methods. There is no universal health care, for example, in either the stimulus or infrastructure bills; no universal child care; and very little in the way of any other expansion of health-care access.

Of course, the end of neoliberalism does not mean the end of capitalism, but if such a transformation is occurring, we need to be at the forefront of understanding why it is happening and how socialists must orient toward it.

Biden’s package on climate

The second point has to do with climate. The infrastructure bill comes out hard on the issue of climate change, although it is not exactly clear precisely how this is going to happen. Most of the discussion in the press has been around the construction of electric vehicle infrastructure, such as charging stations, as well as funding for research and development in the electric vehicle space and zero-emissions public transit. It will also include significant investments in renewable energy, as well as nuclear power.

Going by Biden’s campaign promises, these measures are mostly on the consumption side, rather than the production side. They rely on subsidies for communities to take up housing upgrades, electric vehicles, and wind and solar power, rather than forcing immediate transitions from fossil fuels used for transportation and electricity generation, or even a marginal penalty on fossil-fuel producers like a gas tax or carbon tax. To head off climate disaster, the world needs an extremely rapid phase-out of all fossil fuels, and a shift to truly renewable energy sources, rather than the promulgation of nuclear energy that Biden’s plan will likely rely on.

Saber rattling against China

The third point, and the most ominous one, starkly underlies every development of the Biden infrastructure plan—indeed, it is emerging as a theme of the administration’s policy in general. White House Chief of Staff Ron Klain said that the country needs to invest more in infrastructure to “beat China in the global economy” and “create the kinds of jobs we need.” This kind of economic saber-rattling against China has remained unchanged since the Trump administration, and is likely the reason why the Biden plan says little about industrial climate policy, both for industrial consumers and extractors of fossil fuels. The fossil-fuel game is a key piece of the conflict between the West and China as they scramble for influence in areas with key resources, such as oil and natural gas in Central Asia and the South China Sea and rare earth minerals in Africa, as well as the rapidly expanding consumer markets in Latin America, Africa, and South East Asia.

It’s quite clear that one of the underlying motivations of the Biden administration’s economic policy is the ramping up of inter-imperialist rivalry with China. For all of the Democrats’ snickering about the economic illiteracy of Trump’s trade war against China, it’s worth noting that Biden has not repealed a single one of those policies and tariffs, and has not even signalled an intention to do so. This is a very obvious revelation about the global context of Biden’s domestic economic policy.

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