As Biden tackles inflation and shapes a green economy for the US, Britain lags | Carys Roberts

OOver the weekend, US Democrats overcame months of political struggle to pass the Inflation Reduction Act in the Senate, marking a major victory for President Joe Biden and for “Bidenomics” ahead of the US midterm elections.

The bill is the largest climate investment in US history, with $369 billion for climate and clean energy. It is expected to enable the US to get two-thirds of the way to the Paris Agreement commitments while cutting energy costs. It lowers health costs for millions of Americans. It seeks to address inflation by directly cutting costs for individuals and by reducing the deficit by closing tax gaps and increasing taxes on corporations and the wealthy.

The act is far from perfect. It’s the diminished descendant of the failed Build Back Better Act, a $2 trillion package that would have radically expanded childcare, free community college, and subsidized health insurance, but ultimately failed to gain the support of Democratic Senator Joe Manchin (a necessity). given the equally divided Senate). To gain political support for the law, it was necessary to backtrack on climate ambition and expanded plans to cut costs for families; enable further drilling for fossil fuels; and carve-outs to protect private equity gains from the corporate tax element of the law. For this reason, the law will and has already come under fierce criticism from activists and climate groups.

Despite fierce political opposition, however, it is a significant – even milestone – achievement. It’s also a win for the activists and economists who have continuously urged the Biden administration and provided ideas to pursue an alternative approach to the economy and the environment: market-building green industrial strategy to create good, green jobs; social investment; empowerment of workers and incentives for employers to offer decent wages, apprenticeships and profit sharing with communities; higher taxes on the rich to reduce inflation and contribute to costs, including through a new share buyback tax, which only serves to increase investor income. These ideas no longer linger on the couch.

Historically, the US and UK have shared leadership roles in the intellectual development and political implementation of new ideas and policy paradigms. Whether we think of the post-war Keynesian consensus, the neoliberal revolution of Thatcher and Reagan, or the third-way politics of Clinton and Blair, both countries tend to fall in line. But right now, in the context of the Inflation Reduction Act in the US and the Conservative Party leadership race in the UK, our policy paths diverge.

The US has to go further than the UK when it comes to reducing climate emissions and building economic equity. The US has significantly higher emission levels (absolute and per capita) than the UK and the US is also the world’s largest producer of fossil fuels. Similarly, inequality in the US is greater and poverty is deeper than in the UK. Simply put, the land of opportunity doesn’t produce too many American citizens.

But Democrat leaders are pushing a bold agenda to break deep political polarization and reshape the shape and direction of US economic success. The irony in comparing this to the UK is that the conditions here are much more favorable for action commensurate with the magnitude of the climate and wildlife crisis, an economic strategy that prioritizes ordinary people and places over wealth and profit, and for expanding collective provision of the things and services we all rely on. We have a head start on the basic principles of social democracy. In stark contrast to the US, there is more consensus between parties about the need for government to take action against climate and wildlife crises. Measures taken now would be far less likely to be wiped out by an opposition victory than the fragile progressive gains in the US.

The Conservatives, who have been in power for more than a decade, have flirted with some of those ideas in recent years — from May’s mission-oriented industrial strategy to Johnson’s net zero and raising pledges — recognizing the electoral benefits of doing so. But right now, conservatives are diving in the opposite direction of their American counterparts, debating — amid soaring inflation and a cost of living emergency — policies that are catnip for Tory membership, such as high school and corporate tax cuts, instead of looking around the world or looking for evidence of how to tackle the pressing problems of our time. Truss, widely regarded as the frontrunner, has reverted to outdated tropes of financial support as handouts and has virtually nothing to say about how she would reach net zero, both for its own sake and in response to the cost of living crisis. . Nothing substantial is being suggested to tackle the creeping real privatization of the NHS as those who can go private rather than languish on a waiting list.

It would be wrong to point to the US and claim that they have their house in order or that lessons can be read in a simplistic way. But Biden and the activists and researchers around him are ambitiously forging a new kind of economic policymaking that aims to rapidly decarbonise, reduce pressure on household portfolios through public utilities, and tax wealth and profits. to finance this and suppress inflationary pressures. The British government – whoever it is headed – should take note of the new economy rather than be left behind.

Leave a Comment