I will leave expert policy analysis to others. I don’t know why Senator Joe Manchin apparently decided to back down on an explicit promise he made to President Biden. Naively, I thought that even in this age of rule-breaking, honoring a deal you just made was one of the last rules to disappear, as a reputation for keeping your word is useful even to highly cynical politicians. I also don’t know what, or how much, can be saved from the Rebuild Better plan.
What I do know is that there will be huge human and, yes, economic costs if Biden’s moderate but crucial spending plans are scrapped.
Failure to pass a decent social agenda would condemn millions of American children to poor health and low adult income — because that’s what happens to people who grow up in poverty. It would condemn millions more to inadequate medical treatment and financial ruin if they fall ill, because that’s what happens when people don’t have adequate health insurance. It would condemn hundreds of thousands, perhaps more, to unnecessary illness and premature death from air pollution, even without calculating the heightened risk of climate catastrophe.
I’m not speculating. There is overwhelming evidence that children from low-income families who have received financial aid are significantly healthier and more productive when they reach adulthood than those who have not. Uninsured Americans often lack access to necessary medical treatment and face unpayable bills. And studies show that policies to mitigate climate change will also yield greater health benefits from cleaner air over the next decade.
As an aside, it’s not clear how many Americans realize the extent to which we are falling behind other countries in terms of meeting basic human needs. For example, I keep meeting people who believe that we have the longest life expectancy in the world, when in reality we can expect to live between three and five years shorter than citizens in most European countries.
Incidentally, there are also large and growing gaps between American states. In 1979, life expectancy in West Virginia was just 14 months less than in New York; by 2016 the gap had widened to six years. And yes, Manchin’s home state would benefit immensely from the social spending its Democratic senator seems determined to block.
The weakness of the US social safety net also has economic consequences. It’s true that we still have a high Gross Domestic Product per capita, but that’s mostly because Americans take much less vacation time than their counterparts abroad, which means they produce more because they work longer hours. In other ways, we are left behind. Even before the pandemic, working-age Americans were less likely to be employed than citizens of Canada and many European countries, probably in part because we didn’t help adults stay in the workforce by offering day care and parental leave.
But are we able to improve our lives? One answer is that other rich countries seem to manage this very well. Another is that Manchin’s objections to the proposed legislation evaporate under close scrutiny.
Manchin said the Congressional Budget Office determined the cost of the law to be “greater than $4.5 trillion”. No, it’s not. This was an expenditure estimate requested by Republicans — not the considerably smaller impact on the deficit — under the assumption that everything in the law would become permanent, which is not in the text of the law. And if Congress approved the extension of programs like the tax credit for children, it would likely also approve income compensations. The budget office’s analysis of the law as it stands in the text — which found it roughly deficit neutral — is a much better guide to its likely fiscal impact than this manipulated assumption.
As for Manchin’s claim that we have “scary” government debt, it’s perhaps worth commenting that federal interest payments as a percentage of GDP are only half of what they were under Ronald Reagan, and that if you adjust for inflation—like should— they’re basically zero.
And inflation? Spending proposed in Rebuild Better is spread over several years, so it would not increase overall demand much in the short term — the increase to the deficit in the first year would be just 0.6% of GDP, which is not enough to make much of a difference in the inflation in any model I know. In addition, the Federal Reserve has just made it clear that it is ready to raise interest rates if inflation does not ease, so government spending is likely to matter even less.
As I said, I will not attempt to analyze Manchin’s thought processes, and will let others speculate on his personal motives. What I can say is that the letter he released to explain why he said what he said on Fox News doesn’t sound like a carefully crafted political statement; it doesn’t even seem like a coherent ideological manifesto. In fact, it seems rushed — a hastily slurred of Republican speech points in an attempt to justify his sudden betrayal and portray him as a victim.
Sorry but no. The United States is the victim in this story, not a senator who is being criticized for breaking a promise.
Translated by Luiz Roberto M. Gonçalves
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