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Joe Biden’s real opponents are special interests

The legislative process is often compared to watching a sausage being made. A better metaphor for US president Joe Biden’s Build Back Better agenda would be placebo-making. Adjectives such as “historic”, “massive” and “sweeping” are still applied to his plans, even as they are being whittled into simulacra of where they started. The fate of Biden’s presidency may yet hang on their passage — but that is a far cry from the once-in-a-generation overhaul they were meant to be.

The gap between that promise and reality is explained by the enduring power of the big lobby groups. Biden wanted to give Medicare the authority to negotiate lower prescription drug prices, which are on average two and a half times higher than in other wealthy countries. Fierce lobbying by the pharmaceutical industry has put paid to that — and, with it, a rare chance for Washington to leverage its clout to make medicines more affordable.

America’s fossil fuel industry is also winning. Attempts to debate a carbon tax keep being strangled in the cradle. Now Biden’s $150bn to give electricity companies an incentive to dump coal and gas for renewable energy is being removed from the bill. That will rob Biden of diplomatic high ground in the upcoming COP26 climate change summit in Glasgow. If the US — with per-capita carbon emissions 70 per cent higher than the rich country average — cannot quit coal, how can it persuade China and India?

The financial services sector also has reason to celebrate. Biden’s plans to give the Internal Revenue Service modest scope to monitor gross inflows and outflows from certain bank accounts is also on the retreat. The banking industry depicts it as a licence to subject Americans to continuous surveillance. The bill proposes no such authority. Its aim is to reduce some of the $1tn in estimated annual tax US evasion. The goal of reducing “leakage” under the existing system becomes more critical as Biden’s wider tax proposals are watered down.

Some of the president’s setbacks are self-created. Democrats have marketed their bills poorly. The most basic mistake is to talk in 10-year numbers, which makes the $3.5tn American Families Plan sound gargantuan. In reality, the two bills — including the $1.2tn infrastructure one — would cost just over 1 per cent of US gross domestic product a year in new spending. Using large numbers gives the government’s critics an opening to depict them as inflationary. There is scant evidence of that. Compared with the impact of the US Federal Reserve’s monthly $120bn purchases of financial assets since the start of the pandemic, Biden’s reforms are modest.

Voters could be forgiven for thinking otherwise. The US media has not helped matters. When there is a process battle to dramatise, political reporters have less interest in the content. They are doing their audience a disservice. Such dramas require two sides — in this case, centrists versus progressives. Yet, in reality, almost every Democrat in Congress supports both bills. The important exceptions are West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, each of whose votes is essential in a 50:50 Senate. Manchin is funded by coal interests and has personal stakes in the industry. Sinema is a leading recipient of big pharma donations. That is the more instructive story. The other is that Republicans unanimously oppose the larger bill.

Yet old habits die hard. It is easier to talk of “moderates” versus “leftists” than to point out the ease with which lobbyists can chip away at modest upgrades to America’s safety net and shifts to a clean energy economy. Most of the main items in Biden’s proposals are popular with both Republican and Democratic voters. This includes the child tax credit, parental leave, universal pre-school education and lower drugs prices.

But US political wisdom is refracted through multiple lenses and what voters want is rarely visible on the other side. Washington is enmired in ritual agony about government over-reach and fiscal irresponsibility. Both sides are complicit in this. Biden’s supporters began by describing his reforms as the biggest since Lyndon Johnson’s Great Society and even Franklin Roosevelt’s New Deal. That made it easier for his opponents to warn of a socialist takeover.

In reality we are witnessing a familiar tale: medium-sized proposals get watered down by big lobbyists. Is it any surprise voters are so cynical?

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