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Biden’s New Runoff Economy – POLITICO

White House administration officials and Biden say the president’s first overseas trip was aimed at establishing his credibility with his partners: laying the groundwork for plans on everything from trade to tax rates , which will ultimately benefit America’s middle class and its counterparts in other democracies.

It’s a set of hopes that looks a lot like a new form of spinoff economy. Only this time, instead of tax cuts for the rich, it is social transformation and international agreements that are supposed to ultimately bring gains to the middle class.

“The intentions are clearer right now than the result,” said Ashley Tellis, co-author of a 2020 article with Jake Sullivan – now Biden’s national security adviser – on how to apply foreign policy and commercial for the benefit of the American middle class. .

Sullivan, in a call with reporters Thursday, rebuffed the sighting. “It has been a series of exceptionally productive cross-country summits with real, tangible results,” Sullivan said. He highlighted the US commitment of half a billion Pfizer vaccines to the 100 lowest-income countries, which he said helped galvanize the vaccine commitments of other G members. -7. With Biden mandating US production of those doses, the plan also serves as a minor boost to domestic manufacturing.

But other benefits for the middle class from World Summit Week are less straightforward.

Perhaps the most tangible political result of Biden’s first overseas venture as president was the G-7’s agreement to a 15% global minimum corporate tax. The administration was quick to trumpet the commitment of neighboring countries, but it’s unclear what an advantage this will have for American jobs or wages – over, say, a minimum wage of $ 15 – or whether it will even come true.

Biden’s ancestral home, Ireland, is the most vocal opponent of the proposed 15% minimum corporate tax rate, and it may take the president’s personal intervention to change their position. Even if Biden is successful, the new tax will go into effect in 2023 at the earliest.

Treasury Secretary Janet Yellen told the Senate Finance Committee on Wednesday that she was determined to stay the course as negotiations continue among more than 130 countries. “We would not accept any kind of exception that would significantly weaken a global minimum tax regime – neither from China nor from other countries,” she said.

Even Biden’s domestic political allies aren’t convinced the deal goes far enough. As unions hailed the announcement of the 15% tax rate, Cathy Feingold, who heads the AFL-CIO’s international department, said it was too low to fund the programs needed to overcome inequalities induced by Covid. “A rate of 15% could bring in 150 billion dollars in the world each year. But with a rate of 20%, you are raising $ 300 billion a year, and with a rate of 25%, it’s $ 580 billion, ”she said.

While U.S. companies may soon face stricter tax rules, the administration is keen to note that they will benefit from new market opportunities. The White House says there is a $ 40 trillion market for new infrastructure in the developing world, a market that China currently dominates. Bidens’ Build Back Better World plan, agreed with G-7 leaders, is designed to complement national infrastructure ambitions by creating, as the plan notes, “new opportunities to demonstrate the competitiveness of states- United abroad and create jobs in the country “.

The administration wants to finance and build infrastructure to high green standards around the world – betting wealthy democracies can do it better than their Chinese competitors. But even if the administration achieves its goal of raising “hundreds of billions of dollars” for these projects, that’s only a fraction of expected national infrastructure spending, and not all of these jobs will go to Americans: the benefit for domestic workers will be marginal. .

In some cases, Biden’s approach abroad so far has simply been to keep Trump’s policies in place, such as with the tariffs being levied – under the guise of national security – on European steel and aluminum. .

Steel tariffs are popular in swing states and among affected workers, although there is little evidence that they have had a major impact on domestic production and sales. The US steel industry has created several thousand jobs since tariffs were put in place in 2018: a modest increase but a mere jolt among the 160 million national workforce.

One area where Biden’s foreign policy could have a more direct impact on America’s middle class is commerce. In a speech to unions on the eve of Biden’s overseas trip, US Trade Representative Katherine Tai evangelized the end of a global “race to the bottom” – which for 40 years drove countries to compete to limit wages and regulations to attract business investment.

Sullivan said on Friday that a deal to end a 16-year dispute between Airbus and Boeing was a victory for workers on both sides of the Atlantic and a sign the race was over.

“The United States and the EU will work together to protect jobs and protect technology in Europe in the United States” by turning their collective political power “against predatory practices by China,” Sullivan said. “Ultimately, this will help secure and develop jobs in our own aviation industry by easing tariffs and protecting against predatory competition from China,” he said.

Boeing supports approximately 10,000 US companies in its supply chain and directly employs over 140,000 US workers. The unions pushed Boeing, Congress and the administration to limit the company’s planned job cuts and expressed support for the USTR’s attention to Chinese business practices.

But based on the Airbus-Boeing dispute, it could be a decade or more before China changes what Tai called “non-market practices.” And as airlines scramble to recoup losses from the pandemic, lower sticker prices for large planes are unlikely to spill over to the average American’s return flight for Thanksgiving.

More broadly, the administration’s economic confrontation with China remains a long-term project and not something the president could put away on his first trip.

As this long-term project unfolds, Secretary of State Antony Blinken takes a broad approach to the challenge of the middle class. Speaking in March, Blinken said he would use “every tool to stop countries from stealing our intellectual property or manipulating their currencies to gain an unfair advantage. We will fight against corruption, which does everything against us. “

For the Biden administration, everything from anti-corruption networks to vaccine donations is seen as a boost to the middle class. And while international summits in 5-star resorts and 18th-century European villas may seem far removed from the concerns of working families, the administration sees them as relays of a stable political approach.

“Europe is the most promising place to test a foreign policy for the middle class,” said former Ambassador Dan Baer, ​​Obama administration envoy to the Organization for Economic Co-operation and Security in Europe.

“If you are considering negotiating a next wave of globalization, it makes sense to start with negotiations with other democratic governments that are committed to protecting the social well-being of their citizens. It doesn’t just mean Youngstown or Bakersfield, but also Stuttgart and Marseille. Baer said.

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