Congress Says “No” to Biden, Workers say “No” to the Office
President Biden left the country for a meeting with two very different world leaders, in two very different cities, first the Pope in Rome and then Boris Johnson in Glasgow. He delayed his departure to deliver a television address describing “a framework agreement” aimed to persuade congress to pass his $1.2 trillion infrastructure bill while his $1.85 trillion package of new entitlements wends its way through the senate. Unfortunately, the “framework” is vague, the “agreement” isn’t. Commentators on CNN, usually an advocacy medium for Biden, sum it up, “He does not have a deal…. A victory lap before he gets to the finish line.”
Progressives Follow Bernie, Not Biden
Members of the Democrat’s progressive faction reacted with “bamboozled”, “hell no”. Alexandria Ocasio Cortez, a telegenic leader of the House progressives, dismissed the President’s appeal, “We need something a little bit more than just something on the back of an envelope.”
Most important, Bernie Sanders, lately and properly dubbed the Godfather of the progressive movement urged House progressives not to vote for the bipartisan $1.2 trillion infrastructure bill until the senate drafts and passes legislation that puts flesh on the bare bones of the $1.85 trillion social policy framework, which includes expanded benefits for kids and seniors, massive spending ($555 billion) on green projects, higher taxes on big corporations and billionaires. Until then, the Biden Build Back Better agenda is on hold.
House Speaker Nancy Pelosi had begged her Dems to pass the infrastructure bill before Biden’s plane landed in Rome so as not to embarrass the President. This from a Speaker who made a career of embarrassing Trump – tearing up his State of the Union speech while on the podium, and initiating two impeachment proceedings she knew could not result in convictions.
Workers Aren’t Rushing Back To The Office
Meanwhile, two dramatic changes are occurring in America, one produced by markets, the other by the 2020 election. Changes in the labor market have made this country a less congenial place for employers that it once was. Almost every business is complaining about a worker shortage. Wages are rising, although only by enough, or less than enough, enough to keep pace with the current 5 percent inflation rate. Benefits on offer include free college tuition, health care coverage and increased flexibility. Workers who used the lockdowns to acquire new skills are not willing to wait tables or tolerate erratic schedules.
Parents who found that work-at-home allowed them to care for their children or elderly parents are unwilling to re-enter the work force on the old terms. There are over 10 million job openings. Over 4 million workers, confident that better jobs await, quit their jobs in August, setting a record. Chief financial officers rate quality and availability of labor their number one problem, and are now competing with co-working spaces springing up in suburbs for workers seeking serenity close to home.
This means that tough, hard-line, five-days-a-week-in-the-office employers are in retreat as bargaining power in labor markets switched to workers. Some, most notably in the financial community, are holding the tough-guy line in the interests of the creativity and cultural solidarity that full-time office attendance generates. But I have yet to speak to a high-level manager who believes the firm’s offices will be fully staffed on Fridays, at least not until a recession returns bargaining power to employers. Markets, not managers, not politicians, will determine workers’ whereabouts.
Inflation Up, GDP Not So Much
Whether this shift in bargaining power will survive the slowdown in the economy remains to be seen. Third quarter GDP growth slowed to a mere 2 percent from its second quarter rate of 6.7 per cent, as the Delta virus surged and supply bottlenecks prevented the flow of supplies needed by the construction, manufacturing and retail sectors. Consumer spending rose at an annual rate of only 1.6 percent, a shadow of the 12 percent rate of the second quarter. Most economists are putting these problems in their “this too, shall pass” category – “a temporary set of impediments” is the way Carl Tannenbaum, chief economist at Northern Trust put it.
Perhaps. But lurking in the wing are several other impediments. Supply constraints will not disappear this year or next, as chip factories and port dredging are multi-year ventures. Announcements by Amazon, Procter & Gamble, Dannon, Nestlé and others make clear that inflation, which hits the poor and food banks especially hard, has not yet run its course, and that the Federal Reserve will be forced to raise interest rates sooner rather than later, creating a drag on the economy. Add the impact of higher natural gas prices on the many industries that depend on it as an input, and we have the combination of a slowing economy and inflation running at its hottest rate in thirty years. That is generally called stagflation.
The National Mood Sours
The second change is in what for want of a better term we might call the national mood. The President’s approval rating has plunged to 42.6 percent (33.4 on immigration), as 60 percent of Americans say they believe the country is headed in the wrong direction. Hope that Biden would unite a divided country has given way to astonishment as it turns out unity means to him agreeing with his positions. Hope that he would provide the administrative skills that the chaotic Trump lacked crumbled in the face of a border crossed illegally by 1.7 million immigrants, a botched retreat from Afghanistan, high inflation, and a foreign policy emboldening our enemies. Denuded supermarket shelves and seemingly runaway inflation make Americans worry that things are out of control. Dems are betting that their ”tax the rich” plan will woo back disaffected voters.
President Biden will return to America from Glasgow weakened politically by Democrats’ refusal to do his bidding in support of his agenda, a nation in a sour mood. As he likes to say, he’s got a lot of work to do.