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      US banking system 'remains sound' despite bank collapses, says treasury secretary Yellen – video

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      Janet Yellen, the Treasury secretary, informed Congress that the recent collapses of two US banks, Silicon Valley Bank and Signature Bank, does not reflect on the overall strength of the US banking system. Yellen told Congress the US banking system ‘remains sound,’ claiming that the government’s swift response to the failures helped to restore public confidence in the banking system. ‘I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,’ she said More

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      Biden stresses taxpayer funds won’t be used in Silicon Valley Bank collapse – as it happened

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      Speaking at the White House, Joe Biden is attempting to reassure Americans that the banking system will hold up.“Thanks to the quick action in my administration over the past few days, Americans can have confidence that the banking system is safe,” the president said.“Your deposits will be there when you need them. Small businesses across the country that deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills. And their hardworking employees can breathe easier as well.”Washington is on tenterhooks, waiting to see if the collapse of Silicon Valley Bank, and the government’s efforts to ensure its depositors can get their money, cause wider chaos in the economy. Democratic senator and Wall Street foe Elizabeth Warren said the California-based institution’s debacle is a sign that rolling back financial regulations in 2018 was not a good idea, while Republicans are blaming everything from Twitter to the woke mob. And on the 2024 campaign trail, Nikki Haley described the government’s intervention with the most infamous b-word: bailout.Here’s what else happened today:
      Joe Biden approved a major oil and gas drilling project in Alaska while protecting the Arctic ocean and millions of acres elsewhere in the state from petroleum exploration. Environmental groups are furious.
      Social security is like Silicon Valley Bank: so says Republican senator Bill Cassidy.
      Barney Frank was a champion of financial regulation during his time in Congress, but then sat on the board of a now-closed bank and said he doesn’t think tighter rules would have stopped the recent insolvencies.
      Rupert Murdoch has not watched Succession, it turns out.
      Have you been affected by the collapse of Silicon Valley Bank? Tell us.
      The New York Times reports that after the GOP took control of the House, its oversight committee dropped an inquiry into whether Donald Trump profited improperly from his time as president.The investigation had ensnared Mazars USA, an accounting firm used by the former president until they cut ties with him a year ago, and the oversight committee’s top Democrat has alleged that its Republican leader colluded with Trump in ending it.“It has come to my attention that you may have acted in league with attorneys for former President Donald Trump to block the committee from receiving documents subpoenaed in its investigation of unauthorized, unreported and unlawful payments by foreign governments and others to then-President Trump,” Democratic lawmaker Jamie Raskin wrote to James Comer, the committee chair.In an interview with the Times, Comer confirmed that the committee had dropped the inquiry, essentially saying they were now focused on scrutinizing current White House occupant Joe Biden.“I honestly didn’t even know who or what Mazars was,” Comer said.“They’ve been ‘investigating’ Trump for six years. I know exactly what I’m investigating: money the Bidens received from China.”The consequences of the January 6 insurrection continue to reverberate across Washington, including among Republicans. Here’s The Guardian’s Sam Levine on the growing divide within the GOP over the attack:Some Republicans have rebuked efforts by Donald Trump and Fox News host Tucker Carlson to whitewash the January 6 attack on the US Capitol, underscoring a significant split in the party over attempts to downplay the events of the day.Kevin McCarthy, the speaker of the House, turned over more than 40,000 hours of security footage from the Capitol to Carlson earlier this year. This week, Carlson aired selectively edited portions of that footage, falsely claiming the rioters were “sightseers” and “not insurrectionists”. At least 1,000 people have been arrested for their role in the January 6 attack. Five people died as a result of it.More than 999 people have been arrested so far, according to the justice department. Around 518 people have pleaded guilty to federal crimes to date and 53 have been found guilty at trial.Republican response to the January 6 Capitol attack divides partyRead moreFor more on how Silicon Valley Bank’s depositors will be made whole, and whether or not what the government is doing constitutes a bailout, here’s the Guardian Edward Helmore:When is a bailout not a bailout? It’s a question many people are asking after the dramatic collapse of Silicon Valley Bank and the US’s decision to rescue depositors on Sunday.Joe Biden, elected and appointed officials all insist the emergency interventions to protect deposits in Silicon Valley Bank, Signature Bank, a second bank that failed on the weekend, or, indeed, any further bank failures, won’t come at taxpayers’ expense.On Monday, Biden was at pains to say that “no losses” would be borne by taxpayers, and the money would come from the fees that banks pay into the Deposit Insurance Fund.Avoiding the ‘B-word’: is the US response to SVB’s collapse a bailout?Read moreRepublican senator Josh Hawley has spent the day accusing Silicon Valley Bank of promoting “woke” ideology, and now he wants to undermine the Biden administration’s efforts to make its depositors whole.Based in Santa Clara, California, Silicon Valley Bank did a lot of business with the venture capital community, including startups focused on fighting climate change, according to the New York Times. To Hawley, that’s enough to earn it the amorphous “woke” moniker:So these SVB guys spend all their time funding woke garbage (“climate change solutions”) rather than actual banking and now want a handout from taxpayers to save them— Josh Hawley (@HawleyMO) March 13, 2023
      Now Hawley, who is perhaps best known outside his home state of Missouri for promoting Donald Trump’s baseless conspiracy theories about the 2020 election and later running from the mob that attacked the Capitol, says he will stop the Federal Deposit Insurance Corporation from making a special assessment on American banks so that Silicon Valley Bank depositors don’t lose money:Now we learn the Biden Admin will impose “special assessments” (= fees) on banks across the country to pay for the SVB bailout. No way MO customers are paying for a woke bailout. I will introduce legislation preventing any bank from passing these fees on to customers -— Josh Hawley (@HawleyMO) March 13, 2023
      And my legislation will exempt responsible community banks from the “special fees” to bail out the California billionaires— Josh Hawley (@HawleyMO) March 13, 2023
      The Guardian’s Edward Helmore reports on the changing fortunes of Fox News commentator Tucker Carlson, who is at the center of an increasingly intense controversy over his peddling of 2020 election conspiracy theories:Tucker Carlson was once seen as untouchable. Now the most popular TV host on American cable news is at the center of a firestorm threatening to engulf Fox News and also anger Donald Trump, whose conspiracy theory-laden political cause he has long championed and who his audience loves.Court filings attached to the $1.6bn Dominion Voting Systems defamation suit accuse Fox News of allowing its stars to broadcast false accusations about rigged voting machines in the 2020 presidential election.The documents contained numerous emails detailing the private views and concerns of senior Fox management and its stars, which often seemed at odds with what they were publicly broadcasting to their audience.Tucker Carlson firestorm over Trump texts threatens to engulf Fox News Read moreThe hit HBO show Succession is loosely based on his life as the patriarch of an unruly billionaire family, but that doesn’t mean Rupert Murdoch watches it.Though the head of the rightwing media empire is under growing pressure amid a $1.6bn defamation lawsuit against his Fox News network, Murdoch recently took time to reveal that he has never watched the comedy-drama series that is set to launch its fourth season on 24 March, the Guardian’s Martin Pengelly reports.A reporter for the media outlet Semafor got the scoop having contacted Murdoch after his email address was revealed in court filings pertaining to the lawsuit. Murdoch’s reply to the reporter’s email asking if he followed Succession reportedly was: “Never watched it.”‘Never watched it’: Rupert Murdoch answers cold email about SuccessionRead moreAn unlikely figure has found himself drawn into the recent wave of bank collapses: Barney Frank.The former House Democratic lawmaker’s name graces the 2010 Dodd-Frank Act, which tightened banking regulations following the global financial crisis. It turns out, he was serving on the board of Signature Bank, which regulators on Sunday closed, making it the third American bank to fail in five days.In an interview with Bloomberg News, he said he disagreed with the decision to shut down the New York-based institution. “I think that if we’d been allowed to open tomorrow, that we could’ve continued – we have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit.”More interestingly, he disputed that the 2018 rollback of parts of the Dodd-Frank Act played any role in the failures of Signature and other similar sized institutions – like Silicon Valley Bank. That legislation, signed by Donald Trump, raised to $250bn the level at which banks are subjected to the most strict oversight. Both Signature and Silicon Valley were below that amount.“I don’t think there was any laxity on the part of regulators in regulating the banks in that category, from $50 billion to $250 billion,” Frank said in the interview.Washington is on tenterhooks, waiting to see if the collapse of Silicon Valley Bank, and the government’s efforts to ensure its depositors can get their money, cause wider chaos in the economy. Democratic senator and Wall Street foe Elizabeth Warren said the California-based bank’s debacle is a sign that rolling back financial regulation in 2018 was not a good idea, while Republicans are blaming everything from Twitter to the woke mob. And on the 2024 campaign trail, Nikki Haley described the government’s intervention with the most infamous b-word: bailout.Here’s what else has happened today:
      Joe Biden approved a major oil and gas drilling project in Alaska while protecting the Arctic ocean and millions of acres elsewhere in the state from petroleum exploration. Environmental groups are furious.
      Social security is like Silicon Valley Bank: so says Republican senator Bill Cassidy.
      Have you been affected by the collapse of Silicon Valley Bank? Tell us.
      Louisiana’s two Republicans senators have been getting a lot of air time on Fox News lately, with John Kennedy appearing yesterday to complain about how Joe Biden recently put the GOP on the spot over social security. Here’s Maya Yang’s story:The Republican senator John Kennedy accused Joe Biden of “demagoguing” the issue of how to fund social security and Medicare and protecting the two programs from Republican proposals to cut them, calling it a “very immature thing to do”.Speaking to Fox News Sunday, Kennedy took aim at Biden for mentioning in his State of the Union address last month that some Republicans have proposed to “sunset” social security and Medicare as part of attempts to balance the federal budget.“The problem is that President Biden in his State of the Union Address decided to demagogue the issue,” the Louisiana senator said. “We all saw it.“He basically said, ‘If you talk about social security or Medicare, I’m going to call you a mean, bad person.’ And that just took the issue off the table when the president decided to demagogue it … You can only be young once, but you can always be immature, and I thought it was a very immature thing to do.”Republican John Kennedy takes aim at Biden over social security fundingRead moreRepublican presidential contender Nikki Haley is describing the US government’s efforts to stop Silicon Valley Bank’s depositors from losing their money as a “bailout”.It’s a politically loaded word, considering how deeply controversial Washington’s 2008 decision to help large banks during the global financial crisis remain.Here’s her statement, on Twitter:Joe Biden is pretending this isn’t a bailout. It is.Now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.Depositors should be paid by… https://t.co/LDmCR9NOCd— Nikki Haley (@NikkiHaley) March 13, 2023
      Meanwhile, Republican senator Bill Cassidy has compared social security – the government program credited with keeping many elderly Americans out of poverty – to Silicon Valley Bank.He made the comment in an interview with Fox News as he discussed social security’s very real problem of long-term funding:Sen. Bill Cassidy (R-LA): “Social Security is the Silicon Valley Bank of retirement systems.” pic.twitter.com/J5N8nhnXko— The Recount (@therecount) March 13, 2023
      Joe Biden today authorized a major oil drilling project in Alaska that has angered environmental groups, who see it as a setback in Washington’s fight against climate change. In an effort to temper those criticisms, the president also banned drilling in the Arctic ocean, and protected millions of acres of land in Alaska. Here’s the Guardian’s coverage of one of the Biden administration’s most significant environmental decisions, from Oliver Milman, Nina Lakhani and Maanvi Singh:The Biden administration has approved a controversial $8bn (£6bn) drilling project on Alaska’s north slope, which has drawn fierce opposition from environmentalists and some Alaska Native communities, who say it will speed up the climate breakdown and undermine food security.The ConocoPhillips Willow project will be on of the largest of its kind on US soil, involving drilling for oil and gas at three sites for multiple decades on the 23m-acre National Petroleum Reserve which is owned by the federal government and is the largest tract of undisturbed public land in the US.It will produce an estimated 576m barrels of oil over 30 years, with a peak of 180,000 barrels of crude a day. This extraction, which ConocoPhillips has said may, ironically, involve refreezing the rapidly thawing Arctic permafrost to stabilize drilling equipment, would create one of the largest “carbon bombs” on US soil, potentially producing more than twice as many emissions than all renewable energy projects on public lands by 2030 would cut combined.Biden approves controversial Willow oil drilling project in AlaskaRead moreFlorida governor Ron DeSantis is among the Republicans expected to soon jump into the 2024 presidential race, and in a Fox News interview yesterday, he blamed Silicon Valley Bank’s collapse on the liberal policies he’s built a reputation for railing against:DEI stands for “diversity, equity, and inclusion”, the sorts of initiatives DeSantis’s administration in Florida has made a point of targeting. He also blames the “massive federal bureaucracy” for letting the collapse happen – which is interesting, because during his time as a House lawmaker in 2018, he voted for the legislation that rolled back some of the 2010 Dodd-Frank financial regulations, which is now being blamed for Silicon Valley Bank’s collapse. More

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      It’s OK to be Angry about Capitalism review: Bernie Sanders, by the book

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      ReviewIt’s OK to be Angry about Capitalism review: Bernie Sanders, by the bookThe Vermont senator and former presidential candidate offers a clarion call against the American oligarchsThe Vermont senator Bernie Sanders has a predictably unsparing view of the effects of “unfettered capitalism”: it “destroys anything that gets in its way in the pursuit of profits. It destroys the environment. It destroys our democracy. It discards human beings without a second thought. It will never provide workers with the fulfillment that Americans have a right to expect from their careers. [And it is] propelled by uncontrollable greed and contempt for human decency.”Has Bernie Sanders really helped Joe Biden move further left?Read moreThe two-time presidential candidate makes his case with the usual horrifying numbers about the acceleration of inequality in America: 90% of our wealth is owned by one-tenth of 1% of the population; the wealth of 725 US billionaires increased 70% during the pandemic to more than $5tn; BlackRock, Vanguard and State Street now control assets of $20tn and are major shareholders in 96% of S&P 500 companies.Sanders recites these statistics with religious fervor, and poses fundamental questions for our time: “Do we believe in the Golden Rule? [or] do we accept … that gold rules – and that lying, cheating, and stealing are OK if you’re powerful enough to get away with it?”Bernie believes (and I strongly agree) that it’s long past the time when we should be paying at least as much attention to American oligarchs as we do to those surrounding Vladimir Putin. Our homegrown plutocrats “own” our democracy.“They spend tens of billions … on campaign contributions … to buy politicians who will do their bidding. They spend billions more on lobbying firms to influence governmental decisions” at every level. And “to a significant degree”, the oligarchs “own” the media. That is why our prominent pundits “rarely raise issues that will undermine the privileged positions of their employers” and “there is little public discussion about the power of corporate America and how oligarchs wield that power to benefit their interests at the expense of working families”.We were reminded this week of how this system works. Joe Biden released a budget with perfectly modest proposals for tax increases, like a 25% minimum tax on the wealthiest Americans and a seven-percentage-point raise in the corporate tax rate to 28%, which would still leave it seven points lower than it was before Donald Trump gutted it with his gigantic tax giveaways.Instantly, experts owned and operated by the billionaires started spewing their familiar bilge, like these moving words from the Cato Institute: “Higher tax rates on the wages of a narrow segment of the United States’ most productive executives and business leaders will have strong disincentives against their continued work and other negative behavioral effects that translate into a less dynamic, slower growing economy.“Higher taxes on investment income target the financial rewards to successful entrepreneurs who undertake risks and persevere through failure to build high return businesses that provide welfare enhancing goods and services to people around the world.”Sanders quotes one of the most prescient Americans of the mid-20th century, from 1944: “As our industrial economy expanded [our] political rights proved inadequate to assure us equality in the pursuit of happiness. We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence.”The name of that dangerous revolutionary: Franklin Delano Roosevelt.Several decades before that, Theodore Roosevelt similarly bemoaned the “absence of effective state, and, especially, national, restraint upon unfair money-getting” which “has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power”.There is something extremely refreshing about an author who assumes it should be obvious that billionaires should not be allowed to exist – and has perfectly reasonable proposals about how they should be eliminated. At the height of the pandemic, Sanders proposed the Make Billionaires Pay Act, which would have imposed a 60% tax on all the wealth gained by 467 billionaires between 18 March 2020 and January 2021.“But why stop at one year?” he now asks. After all, the 1950s were economic boom times in America – and under a Republican president, Dwight Eisenhower, “the top tax rate for the wealthiest Americans was around 92%. America thrived. Unions were strong. Working-class Americans could afford to support themselves and buy homes on a single income.” And the richest 20% controlled a measly (by current standards) 42.8% of the wealth.Bernie Sanders: ‘Oligarchs run Russia. But guess what? They run the US as well’Read moreSanders’ 99.5 Percent Act would only touch the top 0.5% of Americans. “But the families of billionaires in America, who have a combined net worth of over $5tn, would owe up to $3tn in estate taxes.” He would accomplish this with a 45% tax rate on estates worth $3.5m and a 65% rate on those worth more than $1bn.There is much more here, including a convincing case for Medicare for All and an excoriation of a for-profit healthcare system which spends twice as much per citizen as France or Germany and still manages to leaves tens of millions of Americans un- or underinsured, all while nourishing an obscene pharmaceuticals business in which profits jumped by 90% in 2021.I first toured the castles of the Loire Valley as a teenager in the company of the family of my uncle, Jerry Kaiser, a 60s radical and a very early opponent of the war in Vietnam. As we absorbed the opulence of one chateau after another, Jerry had only one question: “What took them so long to have a revolution?”The noble purpose of Bernie Sander’s powerful new book is to get millions of Americans to ask that question of themselves – right now.
      It’s OK to Be Angry About Capitalism is published in the US by Crown
      TopicsBooksBernie SandersUS politicsDemocratsUS SenateUS CongressUS economyreviewsReuse this content More

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      US could face default as soon as June if debt ceiling isn’t lifted, says thinktank

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      US could face default as soon as June if debt ceiling isn’t lifted, says thinktankExpectations are low for quick progress as Republican lawmakers push for steep spending cuts in exchange for a dealThe US could face an unprecedented default on its obligations as soon as early June if Congress does not act to lift the debt limit, a Washington thinktank said on Wednesday.The Bipartisan Policy Center (BPC), which forecasts the approximate “X-date” when the government will no longer be able to meet its financial obligations on time, said the US will reach its statutory debt limit as soon as the summer or early fall of 2023.Can a trillion-dollar coin end the US debt-ceiling standoff?Read moreThat inches up from the center’s previous prediction, in June 2022, that the “extraordinary measures” the US Treasury uses to pay the government’s bills would not be exhausted before the third quarter of 2023.Previewing the data for reporters, Shai Akabas, BPC director of economic policy, said the new projections reflect “considerable uncertainty in our nation’s current economic outlook”.“Policymakers have an opportunity now to inject certainty into the US and global economy by beginning, in earnest, bipartisan negotiations around our nation’s fiscal health and taking action to uphold the full faith and credit of the United States well before the X-date,” he said.Akabas said the December 2022 big spending bill, an extended pause on student loan repayments and high interest rates resulting in higher costs to service US debt have contributed to moving up the X-date.The treasury secretary, Janet Yellen, notified Congress in January that her agency was resorting to “extraordinary measures” to avoid default, and that “it is unlikely that cash and extraordinary measures will be exhausted before early June”.Yellen said her actions would buy time until Congress can pass legislation that will either raise the $31.4tn borrowing authority or suspend the limit for a period of time. But she said it’s “critical that Congress act in a timely manner”.Joe Biden and the new Republican House speaker, Kevin McCarthy, met earlier this month to talk about the debt limit. But expectations are low for quick progress as GOP lawmakers push for steep spending cuts in exchange for a deal.Biden has accused Republicans of plans to cut Medicare and social security. McCarthy has said those cuts are not in the picture, as has the Senate Republican leader, Mitch McConnell.The US treasury first used extraordinary measures in 1985 and has used them at least 16 times since, according to the Committee for a Responsible Federal Budget, a fiscal watchdog.Some economists have said the treasury could prioritize certain payments to bondholders in order to buy time for policymakers to resolve the issue.White House officials have said they will not prioritize payments to bondholders if the country passes the “X-date” without an agreement. Yellen has said debt payment prioritization is default by another name.“Failure on the part of the United States to meet any obligation, whether its debt holders, to members of our military or to social security recipients, is effectively a default,” she told reporters in January.TopicsUS economyUS politicsUS CongressRepublicansDemocratsnewsReuse this content More

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      US could default this summer unless $31.4tn debt ceiling is raised, CBO warns

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      US could default this summer unless $31.4tn debt ceiling is raised, CBO warnsHistoric federal debt default could occur before July, cautions non-partisan agency The Congressional Budget Office (CBO) on Wednesday said the US treasury department will exhaust its ability to pay all its bills sometime between July and September, unless the current $31.4tn cap on borrowing is raised or suspended.In a report issued alongside its annual budget outlook, the non-partisan CBO cautioned that a historic federal debt default could occur before July if revenue flowing into the treasury in April – when most Americans typically submit annual income tax filings – lags expectations.US inflation eases again for seventh consecutive monthRead moreThe pace of incoming revenue, coupled with the performance of the US economy in the coming months, makes it difficult for government officials to predict the exact “X-date”, when the treasury could begin to default on many debt payments without action by Congress.“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government would be unable to pay its obligations fully,” the CBO report said. “As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both.”Separately, the CBO said annual US budget deficits will average $2tn between 2024 and 2033, approaching pandemic-era records by the end of the decade – a forecast likely to stoke Republican demands for spending cuts.Meanwhile, the CBO estimated an unemployment rate of 4.7% this year, far above the current 3.4%.CBO director Phillip Swagel attributed the rise to higher interest rates that particularly are hitting the housing industry, coupled with slowing business investment.The sobering analysis reflects the full impact of recent spending legislation, including investments in clean energy and semiconductors and higher military spending, along with higher healthcare, pension and interest costs. It assumes no change in tax and spending laws over the next decade.“Over the long term, our projections suggest that changes in fiscal policy must be made to address the rising costs of interest and mitigate other adverse consequences of high and rising debt,” Swagel said in a statement.The need to raise the debt ceiling is driven by past spending laws and tax cuts, some enacted under Joe Biden’s predecessor, Donald Trump.Republicans, who control the House of Representatives, want to withhold a debt limit increase until Democrats agree to deep spending cuts. Democrats in turn say the debt limit should not be “held hostage” to Republican tactics over federal spending.After hitting the $31.4tn borrowing cap on 19 January, Treasury Secretary Janet Yellen said the treasury can keep up payments on debt and federal benefits and make other outlays at least through 5 June using cash receipts and extraordinary cash management measures.Year of the debt limitSo far in 2023, not a day has gone by on Capitol Hill without lawmakers jousting over the debt limit, as Democrats press for a quick, clean increase in treasury borrowing authority and Republicans insist on first nailing down significant reductions in future government spending.Social security and Medicare, the government’s popular pension plan and its healthcare program for Americans ages 65 and older, are at the center of the debt limit and government funding debate, as both parties also jockey to define the contours of the 2024 presidential and congressional election campaigns.“There has been a Republican drumbeat to cut social security and Medicare,” Senate majority leader Chuck Schumer, a Democrat, told reporters on Tuesday.Republican Senate minority leader Mitch McConnell has labored, without much success so far, to smother such talk.“Let me say one more time. There is no agenda on the part of Senate Republicans to revisit Medicare or social security. Period,” he said at a news conference.Most Americans do not closely follow Washington’s debt-ceiling saga, but they still worry it could hurt their finances, according to a Reuters/Ipsos public opinion poll conducted between 6-13 February.In that poll, 55% of US adults said they have heard little or nothing about the debate, but three-quarters of respondents said Congress must reach a deal because defaulting would add to their families’ financial stress, largely through potentially higher borrowing costs.TopicsUS economyBiden administrationJoe BidenUS politicsnewsReuse this content More

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      Biden’s State of the Union speech was in stark contrast to Britain’s dearth of economic ideas | Martin Kettle

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      Biden’s State of the Union speech was in stark contrast to Britain’s dearth of economic ideasMartin KettleThe US president’s strategy is a world away from anything the Tories have to offer. Labour needs to learn from it01:19:16Like every State of the Union address by every US president before him, Joe Biden’s speech to Congress on Tuesday was aimed squarely at the domestic audience. The United States may be a global superpower, but the rest of the world counts for little when the president makes his annual winter journey up to Capitol Hill. The Beltway rituals of the evening – the obligatory hallowed phrases, the namechecks of the guests in the gallery, the breaks for standing ovations (and this week some heckling) – all combine to label this as a 100% American occasion.Watching from across the ocean, the temptation may be to discuss a State of the Union as if we are Americans, too. Some in the British political class slip readily into the garb of voyeur participants, weighing how the Democratic president’s agenda will play in the Republican-controlled Congress, talking about Donald Trump and culture wars, speculating on the next election, and offering views on whether the 80-year-old Biden ought to run again.These are all real questions for Americans. Yet for this country they are, at best, vicarious issues. Nevertheless, for once, Biden’s message did not stop at the Atlantic’s edge. This time it vaulted across the ocean. It is hard to recall any State of the Union address this century – even in the immediate aftermath of the 9/11 attacks – in which the resonances for Britain were louder.Biden’s speech centred on a profound issue that also faces Britain. It was built around the absolutely fundamental question that confronts all modern political economies today. How, in the wake of Covid and at a time of European war, can a government in an advanced capitalist society make the economy generate growth, greater security, greater fairness and environmental sustainability?Biden’s answers were a world away from the ones that are currently aired in British politics and media. In part, that’s simply because the US and Britain are different countries. The issues look different in the UK, with an economy on the edge of recession, suffering high inflation and rising interest rates, to the way they look in the US, where inflation is falling, employment expanding and in which consumer confidence is improving.In some fundamentals, however, the two have started from the same places. Both have faced the economic shocks of Covid and high energy prices. Before the pandemic and the Ukraine war, both also faced a post-industrial working-class electorate that felt abandoned by government and the financier class, and voted for Brexit and Trump.Under Biden, however, a real difference has emerged. Although both the US and the UK responded to Covid and the energy price spike with measures to protect families, only Biden has tried to bring the full power of government to bear on the wider economic decline and to reverse it with a strategy of investment-led growth.It is not a story of unblemished success, and there have been political battles along the way, including with his fellow Democrats, but on Tuesday Biden was able to celebrate the impact of measures such as his Infrastructure Act, with its 20,000 job-creating projects in transport, utilities and cabling, and the Inflation Reduction Act, which bears down on health and energy costs and marks a major strategic response to the climate crisis.Here’s what Biden said in Tuesday’s speech about that. “I ran for president to fundamentally change things, to make sure the economy works for everyone so we can all feel pride in what we do. To build an economy from the bottom up and the middle out, not from the top down. Because when the middle class does well, the poor have a ladder up and the wealthy still do very well. We all do well.”And here’s what Biden said about raising taxes to pay for these programmes. No one earning less than $400,000 a year should pay more. But no billionaire should pay a lower tax rate than a school teacher or a firefighter. Oil companies should not be able to make billions of dollars out of an energy crisis. “We pay for these investments in our future by finally making the wealthiest and the biggest corporations begin to pay their fair share. I’m a capitalist. But just pay your fair share.”These are words in a speech, not yet nailed-down achievements in the life of the nation. The Republicans will use Congress to stop much of it in its tracks. As words, as a strategy and as a story so far, however, Biden’s message is a world away from anything that Britain’s leaders have attempted or embraced.Liz Truss, of course, would oppose everything that Biden stands for. She stands for a top-down not a bottom-up or middle-out economic approach, and for tax cuts for the wealthiest people and the richest corporations. The contrast helps explain why Britain is still in economic distress and the US is starting to recover. But it isn’t just Truss. No British Conservative leader of the past decade and a half would have said the things Biden said this week.More importantly, perhaps, would any Labour leader now say them either? Keir Starmer has hinted, in his energy policy commitments, that he is open to responding big in the Biden manner. Like Biden, he is a consensus-builder by nature. But Starmer is at a different place in the political cycle, operates in a very different political and economic environment, and most of his strategic thinking has not been revealed or tested.The Washington Post columnist EJ Dionne suggested this week that Joe Biden is a quiet revolutionary, slowly turning the US away from the neoliberal economic assumptions that took hold in the 1980s. Biden’s State of the Union speech, with its commitment to growing the economy for everyone, seems to bear that out. It is not guaranteed to succeed. But it is hugely in the Labour party’s interests that it should, and that Labour is able to learn from it.
      Martin Kettle is a Guardian columnist
      TopicsState of the Union addressOpinionJoe BidenUS economyUS politicscommentReuse this content More

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      Biden to outline optimistic vision for US’s future in State of Union address

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      Biden to outline optimistic vision for US’s future in State of Union addressPresident hopes to combat widespread sense of pessimism and to tout his accomplishments from first two years in office Joe Biden will outline an optimistic vision for the future of America in his second State of the Union address on Tuesday, White House officials said, hoping to combat the widespread sense of pessimism that surveys and polls have captured across the country.As he marks the halfway point of his first term, Biden is expected to tout his legislative accomplishments from his first two years in office – including the passage of the Inflation Reduction Act, the Bipartisan Infrastructure Law and the Chips Act.“This president is focused on delivering results for the American people, and we’ve seen him do that over and over and over again,” Kate Bedingfield, White House communications director, said. “We look forward to continuing to talk to the American people about the work that we are doing and the results that we’re delivering.”But polls show most Americans have not yet felt the impact of Biden’s policies in their everyday lives, particularly when it comes to their personal finances. Although inflation has started to cool after peaking at an alarming rate of 9.1% last summer, only 21% of Americans rate current economic conditions as positive, according to a recent Pew Research Center survey.Even the jobs market, which has been a bright spot for the US economy in recent months, does not inspire much confidence among the American public. The country’s unemployment rate hit a 53-year low of 3.4% last month, but just 34% of Americans say Biden has made progress on creating more good jobs for their communities, a new ABC News/Washington Post poll found.Brian Deese, the outgoing director of the National Economic Council, said Biden would acknowledge these challenges in his State of the Union speech.“The core message is: we have to make more progress, but people should feel optimism that because of what we have seen and because of the progress that we’ve made, that we know how to keep making progress,” Deese said Monday.Progress will now be even more difficult for Biden to achieve, however. With Republicans in control of the House of Representatives, Biden faces significant hurdles in advancing his legislative agenda. Previewing the president’s Tuesday speech, White House officials said he would work with the new House Republican majority to find areas of common ground.“We are going to work with Congress on a bipartisan basis to make progress on the issues that we’re talking about today,” Bedingfield said.But the relationship between Biden and the new House Republican speaker, Kevin McCarthy, has gotten off to a rocky start. McCarthy has demanded government spending cuts in exchange for raising the debt ceiling, but Biden has insisted on a “clean” bill to raise the nation’s borrowing limit with no strings attached. The treasury has warned that the US could be at risk of default unless the debt ceiling is raised by June.In an address Monday, McCarthy defended the Republican strategy of using the debt limit as a bargaining chip to extract spending cuts.“The debt limit is one of the most important opportunities Congress has to change course,” McCarthy argued.But the Republican’s speech was scant on details about exactly which programs his party would target. McCarthy said cuts to Medicare and social security – the largest federal spending programs – were “off the table” and told reporters Republicans would not raise taxes, leaving it unclear how his party plans to shrink the federal budget.Deese said Biden would explicitly make the case in his Tuesday speech that raising the federal borrowing limit was “Congress’s constitutional obligation” and the responsibility of all elected officials to ensure the United States does not default on its debt.Biden is prepared to hold separate talks with Republicans about fiscal discipline, Deese noted, but he has made clear he will not allow them to leverage the full faith and credit of the United States to force spending cuts.“You will hear an openness and, in fact, an eagerness to have a real serious conversation about the fiscal and economic priorities of the country and where we can find common ground,” Deese said. “That’s the kind of conversation you have in a normal budget process, and that’s the appropriate way to approach these things.”Biden will likely reiterate that message as he delivers his State of the Union speech, which he and his team have been crafting for weeks. Biden spent the weekend huddled at Camp David with advisers and his chief speechwriter, Vinay Reddy, fine-tuning the address. True to form, the president was “heavily engaged” in the drafting process, said White House press secretary Karine Jean-Pierre.“When you hear the speech there’ll be no question that this is a Joe Biden State of the Union speech.” she said.TopicsState of the Union addressJoe BidenBiden administrationDemocratsUS politicsUS economynewsReuse this content More

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      Biden has revived democratic capitalism – and changed the economic paradigm

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      Biden has revived democratic capitalism – and changed the economic paradigmRobert ReichThe president’s domestic successes offer a rebuke to disciples of Reagan: the ‘free market’ has never existed How can inflation be dropping at the same time job creation is soaring?Schools and universities are ground zero for America’s culture war | Moira DoneganRead moreIt has taken one of the oldest presidents in American history, who has been in politics for over half a century, to return the nation to an economic paradigm that dominated public life between 1933 and 1980, and is far superior to the one that has dominated it since.Call it democratic capitalism.The Great Crash of 1929 followed by the Great Depression taught the nation a crucial lesson that we forgot after Ronald Reagan’s presidency: the so-called “free market” does not exist. Markets are always and inevitably human creations. They reflect decisions by judges, legislators and government agencies as to how the market should be organized and enforced – and for whom.The economy that collapsed in 1929 was the consequence of decisions that organized the market for a monied elite, allowing nearly unlimited borrowing, encouraging people to gamble on Wall Street, suppressing labor unions, holding down wages, and permitting the Street to take huge risks with other people’s money.Franklin D Roosevelt and his administration reversed this. They reorganized the market to serve public purposes – stopping excessive borrowing and Wall Street gambling, encouraging labor unions, establishing social security and creating unemployment insurance, disability insurance and a 40-hour workweek. They used government spending to create more jobs. During the second world war, they controlled prices and put almost every American to work.Democratic and Republican administrations enlarged and extended democratic capitalism. Wall Street was regulated, as were television networks, airlines, railroads, and other common carriers. CEO pay was modest. Taxes on the highest earners financed public investments in infrastructure (such as the national highway system) and higher education.America’s postwar industrial policy spurred innovation. The Department of Defense developed satellite communications, container ships and the Internet. The National Institutes of Health did trailblazing basic research in biochemistry, DNA and infectious diseases.Public spending rose during economic downturns to encourage hiring. Even Richard Nixon admitted “we’re all Keynesians”. Antitrust enforcers broke up AT&T and other monopolies. Small businesses were protected from giant chain stores. By the 1960s, a third of all private-sector workers were unionized.Large corporations sought to be responsive to all their stakeholders – not just shareholders but employees, consumers, the communities where they produced goods and services, and the nation as a whole.Then came a giant U-turn. The Opec oil embargo of the 1970s brought double-digit inflation followed by the Fed chair Paul Volcker’s effort to “break the back” of inflation by raising interest rates so high the economy fell into deep recession.All of which prepared the ground for Reagan’s war on democratic capitalism.From 1981, a new bipartisan orthodoxy emerged that the so-called “free market” functioned well only if the government got out of the way (conveniently forgetting that the market required government). The goal of economic policy thereby shifted from public welfare to economic growth. And the means shifted from public oversight of the market to deregulation, free trade, privatization, “trickle-down” tax cuts, and deficit-reduction – all of which helped the monied interests make more money.What happened next? For 40 years, the economy grew but median wages stagnated. Inequalities of income and wealth ballooned. Wall Street reverted to the betting parlor it had been in the 1920s. Finance once again ruled the economy. Spurred by hostile takeovers, corporations began focusing solely on maximizing shareholder returns – which led them to fight unions, suppress wages, abandon their communities and outsource abroad.Corporations and the super-rich used their increasing wealth to corrupt politics with campaign donations – buying tax cuts, tax loopholes, government subsidies, bailouts, loan guarantees, non-bid government contracts and government forbearance from antitrust enforcement, allowing them to monopolize markets.Democratic capitalism, organized to serve public purposes, all but disappeared. It was replaced by corporate capitalism, organized to serve the monied interests.Joe Biden is reviving democratic capitalism.From the Obama administration’s mistake of spending too little to pull the economy out of the Great Recession, he learned that the pandemic required substantially greater spending, which would also give working families a cushion against adversity. So he pushed for the giant $1.9tn American Rescue Plan.This was followed by a $550bn initiative to rebuild bridges, roads, public transit, broadband, water and energy systems. And in 2022, the biggest investment in clean energy in American history – expanding wind and solar power, electric vehicles, carbon capture and sequestration, and hydrogen and small nuclear reactors. This was followed by the largest public investment ever in semiconductors, the building blocks of the next economy.Notably, these initiatives are targeted to companies that employ American workers.Biden has also embarked on altering the balance of power between capital and labor, as did FDR. Biden has put trustbusters at the head of the Federal Trade Commission and the Antitrust Division of the justice department. And he has remade the National Labor Relations Board into a strong advocate of labor unions.Unlike his Democratic predecessors, Biden has not sought to reduce trade barriers. In fact, he has retained several from the Trump administration. But unlike Trump, he has not given a huge tax cut to corporations and the wealthy. It’s also worth noting that in contrast with every president since Reagan, Biden has not filled his White House with former Wall Street executives. Not one of his economic advisers – not even his treasury secretary – is from the Street.I don’t want to overstate Biden’s accomplishments. His ambitions for childcare, eldercare, paid family and medical leave were thwarted by senators Joe Manchin and Kyrsten Sinema. And now he has to contend with a Republican House.Biden’s larger achievement has been to change the economic paradigm that has reigned since Reagan. He is teaching America a lesson we once knew but have forgotten: that the “free market” does not exist. It is designed. It either advances public purposes or it serves the monied interests.Biden’s democratic capitalism is neither socialism nor “big government”. It is, rather, a return to an era when government organized the market for the greater good.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
      TopicsState of the Union addressOpinionJoe BidenBiden administrationUS politicsDemocratsUS domestic policyUS economycommentReuse this content More