Can President Biden Unify America?
by Isabel V. Sawhill
President Biden campaigned on a pledge to unify the country. He also promised to help middle and working class Americans and to address racial gaps. All of this is a tall order and will be difficult if not impossible to accomplish in a very closely divided country in which his party has a one-vote margin in the U.S. Senate.
His diagnosis was right. America’s middle class has not been doing well. As Richard Reeves and I show in our mini-book, A New Contract with the Middle Class, their incomes have risen only very slowly over the past 40 years. This contrasts with families at both the top and, more surprisingly, with those at the bottom of the distribution. The more affluent have benefitted from a rising wage premium for the best-educated along with soaring returns from capital at the very top. The story at the bottom is more complicated but is primarily the result of their increased eligibility for subsidized health benefits whose price – if not their value – has soared. Whether we should count those benefits in income at all remains controversial and the American safety net, although it has some new threads, remains skimpy by European standards. Overall, income inequality has risen to unprecedented levels with most of the problem being runaway incomes and wealth at the top.
America’s middle class has not been doing well.
The only reason that middle class incomes have grown at all is because this group is working harder than ever. Most of them are now supported by two earners and virtually all of the increase in their incomes is the result of women’s entry into employment and the growth of women’s wages over this period. So, these families have paid a cost in terms of foregone time at home. Over the same period, men’s wages have declined among the working class without a college degree and many have withdrawn from the labor force. These longer-term trends were, of course, exacerbated by the pandemic-induced recession, which was especially hard on the less educated unable to work remotely as well as on women and minorities.
So far Biden is making good on his promises to help these groups. He has already pushed through a short-term relief package that provides stimulus checks to most families, bumps up unemployment insurance, provides help to states, to schools, to the health care system, and to small businesses. Included in the package was a child tax credit, similar to a child allowance, providing $3,000 per child to children 6-17 and $3,600 to children under the age of six. That provision alone reduces child poverty by about half. But even for a middle-class family, earning as much as $100,000 a year, the credit is equivalent to providing unconditional cash assistance of roughly $10,000 a year (if the family has 3 young children). In an American context, that is unprecedented and a major victory for the progressive wing of his party.
The American Rescue Plan was just a first step – a short-term effort to deal with the pandemic and restart the economy.
The American Rescue Plan was just a first step – a short-term effort to deal with the pandemic and restart the economy. The next step is, in the words of the new Administration, to “build back better.” That means making large investments in infrastructure, in clean energy and the environment, in research, and in long-term care facilities for an aging population. It also means investing in families – in their education, child care, paid leave, and making the child tax credit enacted in the relief package permanent.
The President most concrete effort to address racial injustice is to reform policing. He also wants to provide immigrants a path to citizenship.
These proposals are big and bold. And they are also expensive. The Administration’s first budget calls for spending $5 trillion over the next 10 years, with about three-quarters to be paid for by raising taxes on corporations and the wealthy, and the remainder to be charged to the nation’s credit card – adding to an already whopping debt that is over 100 percent of the U.S. GDP and projected to grow for at least another decade.
Given the large amount of fiscal stimulus already enacted with still more contemplated, some mainstream economists believe that the risk of this entire agenda being inflationary is high. True, the Fed could always step on the brakes if needed, raising interest rates and choking off some of the demand but that involves a level of fine-tuning that won’t be easy to get right.
Budget hawks are also worried about the effects on the national debt. Can we borrow our way to prosperity? A new, and quite influential, view is that it’s acceptable to borrow as long as the spending represents an investment in the future and as long as interest rates remain low. Of course, if inflation starts to get out of control, and the Fed needs to step in, interest rates will almost surely rise and the cost of sustaining a massive debt burden will escalate, possibly to unsustainable levels.
Unifying the country is far more difficult than repairing the economy.
Politically, America is badly divided and unifying the country is far more difficult than repairing the economy. One third of Americans and about two-thirds of Republicans believe that Joe Biden stole the election and should not be President. Efforts to strengthen democracy such as a proposal to secure the right to vote, and another one to investigate the violent insurrection at the Capitol on January 6, have been blocked by Republicans in the U.S. Senate. Democrats have a razor thin margin in the Senate and efforts to find bipartisan compromise had, at this writing, failed to bear fruit. The President’s pandemic relief bill was enacted without Republican support, using a special legislative procedure called “reconciliation” that can only be invoked when a bill is primarily a spending or revenue bill affecting the federal government’s budget. That special procedure cannot be used to accomplish other items on the President’s agenda such as raising the minimum wage or providing greater access to the vote or reforming immigration. Frustration with the process has led many Democrats to seriously consider doing away with the filibuster – a procedure intended to encourage bipartisanship but one that allows a minority of 41 Senators to block any proposed bill. Donald Trump may no longer be President but his hold on the Republican party seems as firm as ever, making the space for compromise almost nonexistent.
Behind the political divisions is an unravelling of social norms and civic good will that used to undergird American society.
Lurking behind these political divisions is a still more troubling epistemic and cultural unravelling of the kind of social norms and civic good will that used to undergird American society and its democracy. Epistemically, there is no longer any agreement on the facts. Trust in the mainstream media, in government itself, and in other people has declined substantially. Political identity is now as important as race or religion or gender in defining the subgroup to which one belongs. Over a third of Americans don’t want their children to marry someone from the opposite party.
Cultural battles loom large. Legislatures in Republican states have enacted laws that seem designed to deny racial minorities access to the vote, other laws that severely limit access to abortion, and still others that define what should and shouldn’t be taught in the schools about the nation’s troubled racial history. While such laws are being challenged in the courts, with a 6 to 3 conservative majority on the Supreme Court, conservatives have the upper hand. Finding compromise on these or other cultural issues is unlikely, leaving the social fabric weakened and even families divided in their personal beliefs.
President Biden’s proposals may be big and bold, but they are also pragmatic.
My view is that both economic and cultural issues are playing a role in America’s divisions. Economic problems lead those who have been left behind to lose faith in their government and to search for scapegoats. But whatever economic problems they face are exacerbated by disagreements over values. President Biden’s proposals may be big and bold, but they are also pragmatic, focused primarily on improving people’s lives while cooling their cultural passions.
Can democracy in America survive these challenges? Unfortunately, that is no longer a rhetorical question. So far, our legal system and a somewhat peaceful transition of power have prevented the worst from occurring and the current occupant of the White House has adopted a moderate tone designed to unify the country. Most ordinary Americans are moderate in their views and one can only hope that, in the end, they will not want to see their country destroyed by activists pursuing more extreme agendas. The turnout in the 2020 election was unprecedented, suggesting that citizens are increasingly aware of the stakes. On the one hand, the electorate is becoming more liberal as young people and minorities increase their share of the population. On the other hand, political rules – such as the electoral college and the disproportionate representation of small states in the Senate – work in the other direction. America’s future, and that of its friends and allies around the globe, rests on whether a pragmatic and moderate President can steer the country to a better place.
Isabel V. Sawhill is a senior fellow in Economic Studies at the Brookings Institution, working in the Center on Children and Families and on the Future of the Middle Class Initiative. Dr. Sawhill’s research spans a wide array of economic and social issues, including fiscal policy, economic growth, poverty, social mobility, and inequality. Her most recent book is “A New Contract with the Middle Class” (available for free at Brookings.edu), co-athored with Richard Reeves.