President Biden offers himself as champion of the working class and minorities, but his policies will leave more jobless and enable Donald Trump or another populist from the right in 2024.
The pandemic is accelerating changes in where we work and what we buy. That makes obsolete many storefronts, movie theaters, aircraft and even factories, and is laying wreck to real estate markets in poorly run progressive cities like New York and Chicago.
Mr. Biden’s $1,400 stimulus payments to unaffected households will be mostly saved or spent on Pelotons and imports from China, And not create many jobs for the 10 million, mostly lower-paid Americans rendered permanently unemployed or pushed into part-time work by the pandemic.
Often, those folks have the wrong skills, are in the wrong places and are too poor to relocate. The American Rescue Plan does virtually nothing to aid reskilling and relocation.
With the productive potential of the U.S. economy downsized, the stimulus will create too much demand chasing too few goods, lots of imports and inflation and leave the structurally unemployed unable to pay rent or put food on the table.
Rebuilding better requires smart investments — green policies that encourage carbon-use-reducing investments that doesn’t outrun scientific advances. Otherwise government mandates create buildings too expensive to attract tenants, electricity too expensive or unreliable for factories to compete with Asian imports and more working-class unemployment.
Canceling the Keystone XL Pipeline expansion and new drilling on federal lands destroys jobs in the petroleum, construction, machinery and steel industries. And kills lower-paying service employment in communities dependent on those activities.
Climate Change Czar John Kerry telling displaced workers that good jobs await in green industries was cynical. Those folks don’t have solar panel or windmill making skills, and his comments only serve to further cultivate heartland suspicions that the Washington’s progressive intelligentsia don’t give a tinker’s damn about blue-collar America.
Curtailing oil production simply shifts demand to foreign sources, because it does nothing to hasten factory construction for Tesla, the introduction of electric vehicles by GM and Ford or improvements in battery technology that would make EVs truly viable.
The return to catch and release at the Mexican border will swell the ranks of illegal immigrants, and drive down wages for less-skilled workers in crowded labor markets. Aren’t those the people Democrats want to help?
Instead, we must rely on high tech — particularly the semiconductor, artificial intelligence, biotechnology and software industries — and an emerging advantage in EVs — read Elon Musk — to drive growth. And create demand in their communities for services that employ low-wage workers and minorities disproportionately impacted by the pandemic.
That requires trillions more in intellectual property investments, but federal support for R&D has been declining for years. The private sector has compensated by relying on federal income tax breaks.
By expanding the child, dependent care and earned income tax credits and other welfare benefits, Mr. Biden’s $1.9 trillion stimulus will raise the incomes of the lowest two quintiles by 15%, but only for 2021. Tax increases will be required to continue those and become a major campaign plank for Democrats.
A good deal of U.S. innovation is by small startups, funded by venture capitalists and then initial public offerings. Many fail but those that succeed yield huge capital gains for investors when they go public and get preferential tax treatment. That’s how we counter China’s massive R&D subsidies.
Mr. Biden and congressional Democrats want to dramatically boost taxes on high income earners and capital gains. Senate Finance Committee Chair Ron Wyden wants to tax those annually — making untenable investments in startups that are succeeding, growing in value but not yet ready to go public.
Often the objective of startups is to create a viable product and then get purchased by a behemoth like Google, Apple or Verizon. Technology entrepreneurs are good at solving difficult design problems but lack Mr. Musk’s flair for marketing or Tim Cook’s skills at government-business and international diplomacy.
Senate Antitrust Committee Chair Amy Klobuchar wants to make those mergers nearly impossible. As the Clayton Act is applied, the Justice Department or Federal Trade Commission (FTC) must prove a merger will lessen competition to stop it. Instead, she wants to place the burden on merging companies to prove there is virtually no chance of that happening.
That would be like requiring Minnesota farmers to prove they have no bomb-making intensions when purchasing fertilizer and displays the same contempt toward business as Vladimir Lenin. We all know how well the working class did under socialism in Eastern Europe.
• Peter Morici, @pmorici1, is an economist and emeritus business professor at the University of Maryland, and a national columnist.