Who are the populists? | The hill

You won’t go wrong if you assume that Republican politicians are opposed President BidenJoe BidenHouse Democrats Push Social Spending Plan Vote To Friday Fauci Says All Adults Should ‘Go Get Boosted’ Senate Confirms Park Service Director After Years As Acting Head MOREThe Infrastructure and Build Better programs because the rich and businesses want cheap labor. Grassroots Republicans, largely working-class on the other hand, are happy to have some leverage and see their wages go up. What Republican politicians hide from these working-class voters behind the attacks on minorities and conspiracy theories are the GOP’s relentless efforts to keep labor cheap, the very antithesis of the genre. economic populism that American workers want.

This is nothing new. Republican leaders during the Great Depression opposed all of the key Democratic programs that still help ordinary people like social security, unemployment insurance, government employment programs, investments in dams and public works , efforts to strengthen agricultural prices and a minimum wage. They opposed these programs on the grounds that they would be inflationary, increase debt, and be socialist, the same arguments they use today against Biden’s programs. The consumer price index had fallen by more than 30 percent compared to 1929 to 1933 and unemployment stood at 25 percent but Republican saw inflation around the corner because they understood that the rich and corporations would have to pay workers more if unemployment fell and people had a safety net to fall back on. When Republican leaders today say that Biden’s Infrastructure and Build Back Better programs will cause inflation and increase debt, they are making the same argument for the same hidden reasons.

One question today is whether there is any reason to believe Republican claims about the dangers of inflation and debt that have been wrong for so many decades. The real gross domestic product (GDP) of the United States will exceed $ 23 trillion in 2021. Over the next ten years, it will total nearly $ 300 trillion if real GDP grows by 2.5% per year and that there is only low inflation.

President Biden’s $ 1.8 trillion Build Back Better program, a ten-year program to fund better and cheaper health care and support for families with children, will account for just 0.6% of those few. $ 300 trillion.

Even though Biden’s programs cost $ 4 trillion as some say, $ 4 trillion is only 1.3% of GDP for those 10 years, 0.13% each year. This amount of additional government spending is eclipsed by private spending and probably can’t lead to the terrifying inflation Republicans would make Americans fear.

It’s also clear that Biden’s programs will add little to public debt. Much, if not all, of the $ 1.8 trillion or $ 4 trillion is not additional spending. It would be paid by taxes from people earning more than $ 400,000 a year and from corporations that pay less tax today than a few decades ago.

Raising taxes to previous levels for people and businesses who can afford it transfers money that would have been spent by the rich to middle-class and low-income people. This will add little to total spending which might otherwise drive inflation up a bit. What a better safety net does is empower workers and make it harder to find cheap labor.

Americans are right, however, to ask why prices rose so significantly last year. This is because of the bottlenecks linked to COVID-19, the rapid reopening of the economy and the reluctance of workers to return to old, low-paying jobs. Gasoline prices are on the rise because Americans are driving again instead of staying at home, and OPEC joined by Russia refused to increase the offer. The price of natural gas is on the rise as drilling and hydraulic fracturing fell sharply during COVID-19 and increases in the price of fuel are also showing up in electricity bills.

Another reason for the rise in prices is the growing demand for imported goods. Consumers are spending the money they saved when millions of people stayed at home during the outbreak. Demand for computer chips has outstripped supply, pushing up the prices of automobiles, appliances, phones and

electronics and pushing buyers to raise used car prices. It will take time for new chip factories to be built in the United States and abroad.

In the early 1970s, OPEC has raised oil prices from about $ 3 a barrel to $ 9 then to $ 12. It was a shock and American homeowners responded by insulating their homes. This has driven up the price of insulation. Eager people demanded a price control, but insulation manufacturers increased their capacity and within a year or two the price of insulation plummeted because Owens Corning and other manufacturers called in. new factories.

Free market adjustments to deal with bottlenecks will take place with chips and other things that are rare, but they will take time. Republican politicians want Americans to be angry with the government for these COVID-related price increases because it could help them torpedo Biden’s programs that will improve the position of workers and cut the veils of the rich titans. The virus has kept people at home and shut down large sectors of the economy. Today entertainment, hospitality, child care, schools and travel are making a comeback, but workers are reluctant to return to their old jobs at old wage levels. Raising wages is a good thing, but not for people who want cheap labor to do laundry, care for children, and look after grandparents.

The economic rebound and changes in spending patterns are clogging ports and driving up ocean freight and trucking costs. Driving a truck is hard work and it has become more difficult with the delays at ports and inland terminals. Turnover among drivers was a serious problem before COVID, but now drivers have employment options and could get paid sick leave and other benefits from Biden’s programs. This is generally a good thing, but Republicans who want cheap and soft labor try to convince voters that it is inflationary and socialist.

The big question about inflation going forward is whether employers can pass on the higher costs in the form of higher prices. If most cannot, workers’ share of income will rise to the fairer levels of the 1950s, 1960s and 1970s. My bet is that competition will prevent further sharp price hikes once things calm down. and Biden will try to use the government to further encourage this price-limiting competition, for example in health care. Republicans, steadfast since the Great Depression, will try to stop the government from influencing the working side by convincing voters that everything government does is inflationary and corrupt. This is the battle between Democrats and Republicans currently underway, for better wages and working conditions against cheap labor. Things about inflation and debt, socialism and conspiracies are a smokescreen. Biden and the Democrats are the economic populists.

Paul A. London, Ph.D., was Senior Policy Advisor and Assistant Under Secretary of Commerce for Economics and Statistics in the 1990s, Deputy Assistant Administrator in the Federal Energy Administration and Energy Department, and Visiting Fellow at the ‘American Enterprise Institute. . Legislative Assistant to Senator Walter Mondale (D-Minn.) In the 1970s, he was a Foreign Service Officer in Paris and Vietnam and is the author of two books, including “The Competition Solution: The Bipartisan Secret Behind American Prosperity “(2005).