Last night, the House passed, overwhelmingly, a bipartisan tax bill 357-70. The opposition was from 23 progressives who didn’t like the tax breaks for the rich and 70 knee jerk obstructionist MAGAts— like Matt Gaetz (R-FL), Lauren Boebert (R-CO), Bob Good (R-VA), Matt Rosendale (R-MT), Scott Perry (R-PA), Andy Ogles (R-TN)— because it expanded the child tax credit for working families. Chris Deluzio (D-PA) voted for it and told his constituents that “The expansion of the Child Tax in this package is a step in the right direction for the 21,000 eligible children in Pennsylvania’s 17th Congressional District, but it is not enough. We must do more to help working families keep up with the cost of everyday items like food and prescription drugs as corporations price gouge and gobble up small businesses. Unfortunately, massive corporations are winning big in this package, which cuts their taxes. We know the fairytale of trickle-down economics does not work, and has never worked, for working people. It's time to build a government that serves all of us, not just the rich and powerful. I hope we can make more progress toward that vision soon.”
Will it pass the Senate? In this clip, Iowa Senator Chuck Grassley signaled why Republicans like himself are going to oppose it— and it’s not because he disagrees with anything in the bill. Watch this:
Yesterday, Noah Smith recommended that Biden run for reelection based on how well his policies have turned the economy around after Trump’s 4 disastrous years. Trump may lie his ass off about how the economy was doing when he was president, but no one believes it but his brainwashed MAGA cult. Here’s the union buster/scab begging the Teamsters for an endorsement by claiming, falsely, that he was creating jobs “at a level like nobody had ever seen.” Watch:
The Biden campaign reminded voters that “Trump, who left office with the worst jobs record since the Great Depression, claims he was creating jobs when he was president. Fact check: Job creation in every year under President Biden has been higher than job creation in ANY year under Donald Trump.” The Teamsters National Black Caucus reminded the union leadership who Trump really is: "We will not allow the working class labor movement to be destroyed by a scab... after doing everything in his power to destroy the very fabric of unions."
In fact, Trump hs gone on TV (Fox) to lie about the working class. Watch this clip in which Trump talks about unions: “They get their little 5%, they get another 2%, they get another 3%, 4%… All of a sudden they’re making more money than the people that own the company!” That’s what Trump thinks about unions.
OK, back to Noah’s suggestion to the Biden campaign: “Forty years ago, Ronald Reagan ran for reelection on a platform of sunny economic optimism. This was typified by his famous “Morning in America” ad, in which he trumpeted falling inflation and falling interest rates.”
Biden can’t yet brag about falling interest rates. But he can brag about an economy that in most ways outshines the one Reagan enjoyed in 1984. For example:
In 1984, inflation ran at about 4.36%. In 2023, it was 3.4%, and headed lower due to falling rent.
In 1984, unemployment was 7.5%; in 2023, it was less than half as high, at only 3.6%.
In 1984, interest rates were over 10%; as of today, they’re 5.33%.
In 1984 the S&P 500 returned only 1.4%, after 17.3% in 1983. In 2023 it returned 24.2%.
Objectively, 2024 is morning in America.
Subjectively, Americans are starting to recognize this. While it’s too early to say the electorate is feeling optimistic, it’s clear that excessive pessimism is fading:
The University of Michigan’s consumer sentiment index rose 9.1 points, the biggest monthly advance since 2005, to 78.8…[T]he pickup in optimism was broad, with improvements across age, income and political affiliation. More than half of households expect their incomes to grow at least as fast as inflation…Consumers’ perception of their current financial situation rose to a two-year high, while expectations for future finances climbed to the highest since 2021.
…Biden has a huge chance here to play the part of Reagan, and remind people that the economy is good. The alternative, of course, would be to play to part of Carter, dolefully lamenting a “crisis of confidence” that may already be passing.
Of course Biden will naturally want to take credit for the improvements, as any candidate would. How much does it make sense for him to do so? Basically, Biden has done four things that might have given the economy a nontrivial boost:
He kept Jerome Powell as Fed Chair, instead of appointing a more dovish chair who might have allowed inflation to run rampant.
He allowed a lot of oil drilling on public lands and encouraged some other countries to start pumping more oil. This helped push down oil prices, giving a boost to the real economy while helping restrain inflation.
He enacted major industrial policies (the CHIPS Act and the IRA) that resulted in a boom in factory construction and hiring in the manufacturing sector.
He kept fiscal deficits fairly large, which might have counteracted the drag on aggregate demand from higher interest rates, and thus keeping the real economy healthy.
If I were Biden, I wouldn’t brag about #4 here, because most people are pretty scared of federal budget deficits. But the other three are good to talk about.
The factory construction boom should especially be a point of pride. In inflation-adjusted terms, this is the most that U.S. businesses have spent on new factories in quite a while.
This boom is in large part a result of the CHIPS Act and the IRA, both of which subsidized investment by the private sector in specific strategic technologies— semiconductors and batteries, respectively. The boom is providing construction jobs today, and in a couple of years when the factories are completed, it’ll provide manufacturing jobs and— most importantly— a flood of real goods.
Those current and future benefits are certainly worth trumpeting. But perhaps even more important is what the factory building boom represents— it represents an administration that actually gets things done.
If you look at the chart above, you’ll notice that there was no factory construction boom at all under Trump— in fact, spending declined in real terms. That was despite the overall strong economy. And it was despite the fact that Trump had come into office explicitly promising to return manufacturing to American shores. Despite tariffs and a whole lot of bluster, he never managed to make any sort of actual progress toward reshoring American manufacturing.
But Biden has. Biden is a lot quieter about manufacturing promotion than Trump was, but it turned out that he was speaking softly and carrying a big stick. Trump talked a big game about reshoring factories; Biden simply went and did it.
So if I were Biden, my campaign message would probably go something like this: After years of stress, Americans deserve a break. Instead of being told that society is crumbling and everything is horrible and we can only fix it by electing a bellowing demagogue, they deserve to treat themselves a bit. They deserve cheap electricity, cheap gas, and cheap housing. They deserve jobs, rising incomes, and rising wealth. And finally, thanks at least in some small part to the policies of the Biden administration, they’re getting what they deserve.