Biden, Dems Have Chosen Surprisingly Smart Battles But Still Have a Culture War Minefield To Navigate

At the beginning of 2021, when the shrunken Democratic House majority first convened, their first order of business was to declare an end to the usage of "gendered language" and to end every House prayer with "amen and awomen".  When I heard this, I was extremely pessimistic about Democrats' ability to seize the moment and maintain the discipline needed to govern.  It seemed as though the growing woke caucus within the party was bound to quickly hijack the national conversation with frivolities and squander their already modest quantity of political capital.  But I gotta say, Biden and his party have gotten off to a better start than seemed likely back in January.

Very few things unite the Democratic coalition these days, but the two domestic issues that do are economic stimulus and infrastructure, both of which Biden and Congress have been laser-focused on in his first 100 days.  The Democrats annihilated the GOP on the stimulus debate, putting Republicans in a position where they unanimously opposed legislation with approval ratings north of 60%.  And now Democrats are promoting an infrastructure bill that is also polling well.  There are a lot of left-populists in the Trump coalition and if there's any hope of Democrats winning them back, they need to promote the meat and potatoes issues while keeping the Republicans on defense as they steadfastly reject investment in the parts of the nation that need it most....and where most of their voters live.

To be sure, it's no sure thing that Biden and the Democrats will be entirely vindicated by their priorities.  There are compelling arguments that too much was spent on the stimulus and risks overheating an economy that was already poised for a comeback.  Likewise, popularity for the infrastructure bill could easily crumble (no pun intended) if the GOP makes a convincing case that too little of the $2 trillion price tag will be spent on actual roads and bridges while too much will be spent on what Biden calls "human infrastructure" but what Republicans will simply call "welfare".

I certainly have some hesitation about the kind of money that we're spending these days, all put on the national credit card.  We're certainly doing a real-time experiment on the bipartisan "deficits don't matter anymore" philosophy of Modern Monetary Theory, and it's hard to believe it won't come with a painful day of reckoning.  Still, Biden and the Democrats are making a correct calculation that the status quo isn't working any more for increasing percentages of Americans, that every terrible ongoing trend has accelerated because of COVID, and that trillions of dollars of investment are needed to disburse resources in a way where they won't all simply get captured by Wall Street as has been the case for a generation now.  With interest rates as close to zero as they will ever get, the cost of doing this stuff will never be less than it is right now.  Seeing Biden make that case while the Republicans continue to argue on behalf of the status quo sets up the best ideological contrast the Democrats can hope for.

As such, Biden's honeymoon is ongoing nearly 100 days in.  And maybe it's mostly because of fortunate timing having taken the reins just as vaccination distribution was beginning to accelerate, but he's also looking very competent for his stewardship of the vaccine rollout, cleverly setting conservative benchmarks in the beginning (100 million shots in his first 100 days) and thus making himself look like a wizard by inevitably exceeding those benchmarks.  If the current pace of vaccinations manages to smother the latest COVID mini-surge in the coming weeks, the country's probably gonna be in a pretty good mood heading into summer.

Still, my prognosis from January hasn't changed much in predicting a strong Republican year for 2022, because as sagely as Biden has walked the tightrope thus far, events along with the radicalization of both the left and right in America's culture wars still seem poised to present an insurmountable minefield where a single wrong step can blow everything up.

Even though taxes aren't at the top of the list of things that could go wrong for Biden, I'll start with that since it's what he plans to fund the proposed infrastructure plan with.  Biden plans to raise the corporate tax back to 28% after Trump slashed it from 35% to 21%, and he also plans to increase income taxes on those earning more than $400,000 per year.  Both of these are popular, but the dirty little secret is that neither will produce the critical mass of revenue needed to fund $2 trillion in infrastructure improvements.  Corporations are savvy enough to dodge increased corporate taxes while income tax hikes on those earning more than $400,000 per year only manage to hit a very select group earning high salaries such as surgeons, CEOs, and professional athletes.  

Most of "the rich" earn their money through stock dividends and carried interest, and nobody has come up with an effective way of tapping into that revenue stream yet.  Trump and Bannon flirted with the idea in 2016, and earned some populist street cred for saying so, but ultimately did nothing when it came time to craft the 2017 tax bill.  Until the wheelers and dealers on Wall Street have to pay more than 15% in taxes on their investment earnings, revenue will perennially lag what is needed for government to pay its bills.  Furthermore, the top income tax rate needs to be lowered well below $400,000.  Revenue would surge if the top income tax rate was applied at, say, $150,000 per household, and it really wouldn't be that painful for most of the upper middle class since that top rate would only apply to dollars earned beginning at $150,001.  Nonetheless, neither will happen.  An income tax increase on the upper middle class would be political suicide....and the workability of any kind of carried interest tax on the investor class remains tactically elusive.

And insofar as revenues are very unlikely to match expenditures, the same phony concern about the deficit that Republicans trot out every time the Democrats take the reins of government will likely gain traction.  As soon as one national concern begins to abate, another gains resonance.  With the Democratic coalition having trended suburban and upscale during the Trump years, it's a safe bet that this faction of Democratic voters, currently most concerned about COVID and the economic recovery post-COVID, will be amenable to a fiscally conservative pitch on reducing the deficit once the economy is seen to be in full recovery mode, meaning that a lot of 2012 Romney-2020 Biden voters will be vulnerable to the GOP's budgetary arguments in a post-Trump era.  Democrats at this point probably can't win more than about 12 states without outsized support from this demographic of voters.

 And while optimism currently fills the air about the pandemic being in its final throes, I'm increasingly convinced we're about to have the mother of all culture wars as it pertains to vaccine passports.  The U.S. is getting deservedly high marks for its current vaccination rollout, but I suspect we're weeks away from supply exceeding demand and rapidly diminishing returns of vaccination compliance.  Some states are already there, with the Governor of Kentucky pleading residents of his extremely Trumpy state to get vaccinated as 42% of vaccination appointments in the state are going unfilled this past week. This suggests vaccination compliance is poised to fall dramatically short of the 75-85% that epidemiologists say is needed for herd immunity, and that localized jurisdictions will probably fall well short of 50%.  

What will this all mean?  We won't be able to go back to normal as scores of millions of unvaccinated Americans will spend several additional months spreading infection to one another.  This past week, the Ohio State Fair canceled for the second year in a row based on continued pandemic uncertainty, and I suspect it's a canary in a coal mine for trillions of dollars of projected economic growth that will be much slower to materialize that was planned.  Either businesses and event planners insist upon vaccine passports from would-be customers and lose business from those who can't or won't attend....or businesses and event planners cancel because they're forbidden from mandating vaccine passports and don't want to be on the hook for hosting a super-spreader event.  Whichever way it goes, it portends a summer of bitter cultural strife with the anti-vaxxers furious about being persecuted and the vaccinated furious that the anti-vaxxers' recalcitrance leads to another canceled summer.

The always explosive issue of immigration once again looms large as well.  Easily Biden's biggest fumble thus far has been the situation on the Mexican border, where he appears to be completely incapable of restoring order.  I won't pretend that this situation isn't complicated, or that the stories coming from these Central American refugees aren't next-level heartbreaking, but the surge of refugees heading to our southern border once Biden took office was as predictable as the sun rising in the east, yet Biden still managed to get caught flat-footed when record numbers of refugees kept coming.  Revoking Trump's agreement with Mexico to stop the refugees at Mexico's southern border was completely indefensible.  And to most voters, this issue isn't complicated.  They want order on the border and they're not gonna prioritize immigrants and refugees over their own families and communities, particularly in a time of a pandemic and mass joblessness.  Even if Biden manages to find his footing on the border crisis, I don't sense that he and his party have yet come to terms with the aforementioned self-interest principle that will always make the immigration issue a political loser.  One of these next elections will be a referendum on immigration, and it will be a really bad night for Democrats when that election comes.

And lest we forget the powder keg of racial grievance that's always one stray spark away from thermonuclear eruption in this country, with a media increasingly determined to ignite a full-blown race war.  I suspect the odds of Derek Chauvin being acquitted are not much worse than 50-50.  If that happens, the unrest ignited by George Floyd's death last May will probably pale in comparison to what's coming.  And even if Chauvin is convicted, it's still gonna be a daily walk on eggshells for the foreseeable future in a hypersensitized nation where every news story gets framed within the context of tectonic racial struggle completely without nuance.  With this kind of backdrop, there's nothing that Biden will be able to do on old-school matters of infrastructure or COVID relief to stop the Trump-era cultural fault lines from continuing to dyspeptically cleave along racial and class lines.

Beyond that, the vagaries of cancel culture continue to lurk in the background, with semiregular reminders of our vulnerability at the hands of McCarthyites on Twitter that have more recently found their way into the corporate boardroom.  While individual examples of people getting fired for something they wrote on social media in high school, or even more frivolous matters like the canceling of Mr. Potato Head and Dr. Seuss, come and go from the public's radar pretty quickly, every new headline serves as a reminder to most people that they file into their folder of mental notes....a reminder that something is very, very wrong with the frontier justice of this cancel culture.  I don't think it's a coincidence that even in liberal New York, a majority of voters is circling the wagon in support of Governor Andrew Cuomo despite a long list of highly credible sexual harassment claims against him.  My suspicion is voters know he's as big of a sleaze as his accusers suggest, but don't want to see cancel culture claim another scalp.  Polls back this up generally, and despite Democrats laughing off Fox News' obsession with Dr. Seuss and Pepe le Pew falling out of fashion, I think public sentiment is on Republicans' side and that they will prevail if they can make the election a referendum on cancel culture.

As Biden approaches the end of his first 100 days in office, I'll give him a B+ so far.  That's quite a bit better than I expected to give him on January 20th.....so far so good.  If the election was held next week, I think the Democrats would have another good night.  I hope to continue to be pleasantly surprised by the administration's deftness and knack for choosing the right battles at the right time.  But moving forward, I think Biden will need to be just as savvy about choosing some battles within his own party when unpopular factions threaten to hijack his policy agenda and the general political narrative.  I'm far less confident he'll be able to effectively take on radicals on his own side when the situation demands it than he's been in taking on Republicans, but time will tell.