YESTERDAY, US president Joe Biden announced to a joint session of Congress his plans to unleash a massive round of government spending amounting to an extra $4 trillion (£2.9 trillion).
The two packages are the American Jobs Plan and the American Families Plan.
The American Families Plan, estimated to cost $1.8tn, promises to provide free pre-school for US children aged three to four, paid family leave and free community college. Also it would extend until 2025 a child tax credit of monthly payments to lower-income parents of around $300 per child.
The American Jobs Plan is being promoted as a bold ‘infrastructure package’ with $2.3 trillion of government money spent on investing in public transit, rail, airports, water pipes, high-speed broadband, roads and bridges, veterans’ hospitals, childcare centres and ‘combating racial disparities’.
This massive spending splurge by Biden comes less than two weeks after he signed a $1.9 trillion federal stimulus bill leaving economists fearful that this massive increase in government spending is unsustainable.
David Ditch, an economist for the Heritage Foundation, pointed out that ‘the federal government’s finances were on an unsustainable path before Covid hit. We were looking at annual deficits of 1 trillion dollars every year as far as the eye could see. Now we have layered on top of that underlying problem so far six trillion dollars in additional spending in response to Covid, and now they are talking about another nine trillion dollars.’
At present the US national debt stands at $28.1 trillion and Biden’s plans for an extra $4 trillion will certainly make the debt unsustainable, tipping US capitalism into a debt spiral from which it cannot escape.
As Ditch says, ‘there are limits to how much debt we can manage and pay the interest on.’
Biden is claiming that his plans to kick-start the economy will be financed by raising taxes on individuals earning more than $400,000 a year and increasing corporation tax from 21% to 28%.
However experts are predicting that these tax increases for the wealthy and corporations will raise nowhere near the $4 trillion Biden is promising to spend – raising the question where is the rest coming from.
If it materialises at all, it will be produced by the Federal Bank printing more worthless paper money.
Biden’s proposals face a very rocky ride through Congress with the Republicans denouncing it as ‘socialist’ and demanding that the 2017 $1.5 trillion in tax cuts for billionaires ex-president Trump brought in must remain in place.
Biden’s proposals are being heralded as a great advance for US workers with the New York Times claiming Biden was a ‘crusader for the poor’. In fact the proposed measures to help the poor will end after a year.
This is not a rescue package for US workers who have endured seeing ten million jobs disappear during the coronavirus pandemic and a national drive by employers to cut pay while forcing dangerous factories and workplaces to remain open at the cost of thousands of workers lives.
Biden dropped his pledge for a $15 minimum wage after opposition from within the Democratic Party – that’s how much he supports the working class.
Instead, the package is aimed squarely at attempting to revive a bankrupt US economy through pumping federal money into ‘infrastructure projects’. These trillions of dollars will end up in the pockets of the billionaire hedge fund owners and bankers.
The reality behind Biden’s relief packages is the fear by the US ruling class that the working class is on the move and not prepared to see its jobs destroyed and wages cut for the profit of a tiny handful of multi-billionaires. It is an attempt to buy off the anger of workers and young people against bankrupt capitalism with the promise of limited relief.
The US working class will not be fooled by Biden’s posturing as the champion of the poor. As the working class moves forward to defend its wages and conditions the pressure will become intense to force the powerful trade union movement to break with the Democrats and build a Labour Party that will fight for a socialist America.
A US section of the Fourth International must be establisheded to make this perspective a reality.