Hey, Folks, Biden Won’t Fix the Economy

by Ellen Isaacs

July 2, 2021

It is six months since our last comment on Biden, and so it is time for an update. Having replaced strident Trump rhetoric with his measured tones and having succeeded in vaccinating half of the population, Biden is seen by many as the savior of our sanity, safety and wellbeing. Although it is a relief to be free of senseless racist ranting and in less fear of Covid-19, we should have no illusions that Biden is even attempting to fill the caverns of need of millions of workers for housing, health care, education, jobs and food. Instead, he remains the servant of the wealthy, the capitalists, as he tries to assuage our fears of the future.

Even before the pandemic, the US economy was not in great shape because profitabililty was in the worst shape it had been in since World War II. Although a few companies, like Amazon and Apple, have done very well, most have not.

Only 15% of the gross domestic product (GDP) is invested in production, with the rest in property and financial speculation. Public investment is only 3%, and Biden’s proposal for a two trillion dollar plan for infrastructure and jobs, spread over 10 years, would mean only a 0.5% increase that sector. (1) And now, of course, the plan has been reduced to $1.2 trillion, infrastructure only. The wealth of billionaires has grown by over 5% during the last year, but the drive to maintain profitability will continue to push down the resources for paying and maintaining the workforce.

We cannot forget that profits come from the difference between the value of what is produced and the wages paid to workers plus the costs of equipment and technology. Due to competition, there is not only pressure for each producer to maximize his own profit in order to be able to attract investment, but overall profits tend to fall because there are always a rising number of similar products on the market. Since wages are the most flexible cost of production there is a constant downward pressure on paychecks. As profits fall, the attempt to rescue them depends on maintaining an army of the unemployed to depress wages, extending the supply chain of resources and sales, extending credit, trying to cheapen production (ie fracking vs oil drilling). More and more there is pressure to make money through financial maneuvers alone such as mergers, stock buybacks, and the sales of loans. The cycles of overproduction coupled with falling wages and implosion of the financial houses of cards bring more and more frequent financial crises.

Now Biden has to deal not only with this underlying financial downslide, but the fact that the US is on a losing trajectory compared to China added to the crisis of the pandemic. There can be no doubt that he is believer in capitalism, so his primary aim is to maintain the profitability of the US system. Although he would be willing to force the ultra-wealthy to pay a bit more in taxes to solve some of the immediate problems at hand, the rich themselves are not willing and so this proposal has been shelved. But that wouldn’t really solve the problem anyway.

You might reply by saying that Biden would do more if it weren’t for Congress, and its true he would do a little more. But, just like his Republican adversaries, he represents the interests of wealthy capitalists. His campaign raised almost $200 million from donors who gave at least $100,000 to his joint operations with the Democratic Party. Checks for over a million dollars came from the CEO of Netflix and large venture capitalist firms like Blackstone. Much of this money is raised at closed door events so the donors remain unknown(2). Within that class there are those who believe it is important to placate workers, within limits, or attack climate change, but never at the expense of maintaining profits and the military might necessary to protect them. Although Biden’s initial stimulus plan included some nice things like clean drinking water, building two million homes and commercial buildings, raising wages of home health care workers and vague promises to revitalize manufacturing, these measures have been put aside for the moment in order to get some of the infrastructure repair passed. They well may not make it through at all. But in any case, what is not even on the table are an increase in the minimum wage to $15 an hour, not really a livable wage, or a universal health care plan that would reverse the giveaway to the insurance companies that characterizes Obama care. What has been passed is the biggest military budget in history, $740 billion.Included are nuclear arms, long range weapons, and a naval buildup necessary to fight Russia and/or China(3).

The effects of the pandemic on the economy and the well being of workers have been gargantuan. The decline in employment below what would have been expected is 9.9%. The decrease was largest among workers age 25-44, accounting for half of all those who lost their jobs even though they make up only 39% of the population(4). Unemployment rates are 78% higher for black and 43% higher for Latin than white workers. 10% of adults reported in June 2021 that they did not have enough food to eat, including 12.5% of adults with children. These percentages were double for black, Latin and Native Americans as compared to whites. An estimated 11.5 million adults living in rental housing — 16% of adult renters — were not caught up on rent, according to data collected June 9–21. Here, too, renters of color were more likely to report that their household was behind on rent: 27% of black renters, 22% of Asian renters, and 18% of Latins compared to 10% of white renters. 28% of adults reported they would have difficulty meeting household expenses(5). Of course there have also been over 600,000 deaths and thousands with sequelae of their Covid-19 infections, also distributed in a highly racist manner.

Reiterating these well known figures is important in order to compare the demand for the basic means of survival for millions of Americans with the paltry offerings of the Biden administration, even if all he has proposed is passed. Moreover, as we write this, hundreds have died from the severe heat wave in the northwest and wildfires are already beginning to burn. These effects of climate change are more and more obvious and severe, but Biden has done little beyond rejoining the Paris Accord. According to Greenpeace, he has done nothing to phase out fossil fuel production or exports and has proposed ending only $35 billion out of the existing $150 billion in fossil fuel subsidies over 10 years. He has promised some funds to clean up abandoned wells and mines, implemented a temporary pause on new oil and natural gas leases on public lands and offshore, and revoked the Keystone pipeline permit but no others. Although he stated a goal of reaching net zero emissions by 2050, there is not a plan in place that could do so(6).

The lack of progress on climate change is understandable when you consider that BP, Shell, Chevron and Exxon have made almost $1.99 trillion in profits since 1990, by which time the effects of climate change were known. The five largest firms spent nearly $200 million apiece each year to block policies which would mitigate climate change(7).  In any case, their profits cannot just be tossed away. Thus it is clear that to fill the devastating caverns of need created by the pandemic to date, let alone the unmet needs of workers before 2020, the modest Biden proposals can accomplish little. Biden, like all capitalist politicians, is first and foremost dedicated to the survival of that system and maintaining its competitive place in the world. Elections only allow a choice between politicians and parties with slightly different methodologies for assuring capitalism’s survival while trying to mitigate the chance of worker rebellion. The extreme racist differences in deprivation, as always in the US, will be relied upon to hide the true amount of need and to divide workers’ opposition. Our job is to recognize that there is no way that the keepers of this system can insure the survival of the planet or a decent quality of life for workers. Instead, they will continue to build racism and patriotism to attempt to keep our loyalty and pretend to have our welfare at heart. We must recognize the essential contradiction between capitalism and our own survival and organize to fight for our right to life and ultimately do away with capitalism altogether.

1. https://thenextrecession.wordpress.com/2021/05/14/some-notes-on-the-world-economy-now/

2. https://www.nytimes.com/2020/10/20/us/politics/joe-biden-donors.html

3.  https://www.wsws.org/en/articles/2021/04/10/budg-a10.html

4.  https://www.census.gov/library/stories/2021/03/initial-impact-covid-19-on-united-states-economy-more-widespread-than-on-mortality.html

5. https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-recessions-effects-on-food-housing-and

6. https://www.greenpeace.org/usa/research/president-bidens-100-day-climate-progress-report/

7. https://www.theguardian.com/business/2020/feb/12/revealed-big-oil-profits-since-1990-total-nearly-2tn-bp-shell-chevron-exxon

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.