H I G H L I G H T S
• Blockbuster Budget
• Legislative Slowdown
• Migration Pains
• Defence Priorities
• Technology Push
• China and Covid
United States President Joe Biden released a $6 trillion budget request in May-end that combined his ambitious spending plans into one massive proposal, including mammoth investments in highways, child care and climate change.
The long-delayed document assumes a federal budget gap of more than $1 trillion for the next decade. Among its priorities is lifting the middle class, expanding the social safety net and boosting US global competitivenes. The budget combines Biden’s $2.3 trillion infrastructure plan, his $1.8 trillion families proposal, and $1.5 trillion in discretionary spending to fund federal agencies for the upcoming fiscal year.
Biden's request also signals to Democrats that they should use the special budget reconciliation process to get this all passed rather than waiting for Republican cross-over votes. The Democrats have exactly 51 votes in the Senate, the barest of majorities. By invoking the budget reconciliation process, similar to the concept of a finance bill in the Indian parliamentary system, they can pass the $1.9 trillion pandemic aid plan in March avoiding the 60-vote supermajority required under the Senate’s filibuster rule.
Negotiations are still on between the White House and the Senate Democrats to see if some Republicans can be won over, but the Biden team has indicated if these talks fail, it will take the budget process path. The administration claims that its huge outlays can be paid within 15 years through tax increases and would not increase the budget deficit in the long term, a claim met with some scepticism.
After a number of quick legislative victories, President Joe Biden has begun to face increasing push back from Republican senators against some of his proposals. One of them, the creation of a bipartisan commission to investigate the mob attack on the Capitol Building by Trump supporters on January 6, failed to reach the 60 votes needed to overcome the filibuster.
The second piece of legislation was the $ 2.3 trillion infrastructure fund, one of the cornerstones of the Biden administrations plans for economic recovery and job creation. Republicans have opposed the legislation on fiscal grounds and that parts of it, like a national broadband system, are paid for by higher corporate taxes. Biden has since come out with a $1.7 trillion version and the opposition a $ 900 billion plan. Biden has since moved to incorporate the fund into his budget, indicating he may be giving up on winning any Republican support.
Other legislation hanging fire include a national policing standards bill that would, among other things, expand the grounds on which citizens can sue police officers. Presently, police enjoy a degree of legal protection against being sued. The House of Representatives has passed a version of the bill, but Republicans have invoked the filibuster to block its passage. President Biden had hoped, and failed, to get the bill passed by May 25th, the anniversary of the murder of George Floyd by a police team, a killing that triggered nationwide race riots.
The increasing signs of legislative gridlock have also revived talk of doing away with the filibuster rule and its 60-vote supermajority. This in turn would require unity among all the Democratic senators but two of the most conservative blue senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, have insisted this can only be done if it receives the support of some Republicans.
The Biden administration has more domestic legislation planned, but these will be even more difficult to pass. These include measures to counter rightwing attempts at the state level to make it more difficult for minorities to vote, place curbs on arms buying to reduce the US’s perennial problem of gun violence, and major immigration reforms that would make it easier for H-1B visa holders to become citizens. Biden’s American Families Plan which would put billions of dollars in pre-schools, child tax credits and “human infrastructure” has become part of his budget proposal.
The administration continues to seek a bipartisan agreement on some of these, but finds this increasingly difficult given the degree to which the Republican Party remains under the thumb of former president Donald Trump. One sign of this was Trump’s ability to force out the third ranking Republican party official and long-standing critic, Liz Cheney. Polls show nearly half of Republicans believe the Capitol Building attack was done by leftists or has been exaggerated while 60% believe the 2020 elections were rigged. Going it alone would require some legislative gymnastics given the slender one vote majority the Democrats have in the Senate.
These circumstances have helped make Manchin the most important swing vote in the upper house. A Democrat in a state that voted strongly for Trump, he is one of only six senators able to buck the voting trend of their state in the last presidential elections. This means he is not beholden to his party leadership, cannot be challenged from the left, and is more careful to cater to the conservative instincts of his constituency and himself.
In a major boost for the Indian software industry, the Biden administration lifted a regulation of the Trump administration that sought to narrow the definition of “speciality occupation” under the H1B visa programme. The Indian IT sector is the primary beneficiary of such visas. The Trump rules also changed the way wage rates were calculated, reduced the validity period of such visas if employed at third party jobs sites, and increased compliance requirements among employers. The administration’s decision was backed by a federal court ruling against the Trump regulation on the grounds it had been enacted in violation of the Administrative Procedures Act.
However, Biden’s polling numbers are the worst when it comes to immigration, a policy area where he is under severe attack from both right and left. The progressive wing of the Democrats are demanding the president move faster to dismantle the anti-immigrant legacy of Donald Trump, especially the resurrection of a 1944 rule allowing US authorities to reject refugees on public health grounds. Conservatives say Biden’s unstructured embrace of immigration is resulting in a flood of illegal migrants along the border with Mexico.
A Quinnipiac University poll found only 35% of adults approved of Biden’s handling of immigration issues, nearly half the figure he gets for handling Covid-19 and well below his job approval rating. While disapproval of his immigration policies is unsurprisingly high among Republicans – over 90%, less than 50% of independents give him a thumbs up.
But the immigration policy path may become easier once the Biden team has laid out clearer policies and is able to show it has greater control of the situation. Either because Trump was seen to be taking tough action against illegal migrants or despite it, support among Republicans for immigration actually increased during his term. Polling shows that during the Trump term, Republicans became more likely to support a path to citizenship for undocumented immigrants (from 37 to 50%) and support for deporting immigrants dropped (from 45 to 34%). But conservative voters still characterise immigration as a critical threat, holding steady at about 60%.
The Biden administration sent its first defence budget to the Congress for approval. The $715 billion budget, after inflation, is a modest three per cent increase on last year’s request. More telling is how funds are being redirected within the budget. Washington plans to reduce investments in traditional weapons systems like fighters and warships, spending more money on high-tech weapons aimed at countering China.
The proposal reduces planned increases for F-35s, cuts funds for ground weapons like tanks, reduces ships like coast guard cutters and littoral combat ships, and keeps troops numbers flat. It also calls for cancelling the F/A-18 Super Hornet – a plane India has been considering for its carriers and air force. The money saved is to be spent on hypersonic missiles, newer generation warships, space-related projects and modernizing the US nuclear arsenal. “To defend the nation, the department in this budget takes a clear-eyed approach to Beijing and provides the investments to prioritize China as our pacing challenge,” said Deputy Defence Secretary Kathleen Hicks. China, she said, “has become increasingly competitive in the Indo-Pacific region and around the world.” She said the new budget will lay the foundation for new capabilities in “hypersonic missiles, artificial intelligence and 5G.” The administration has touted the budget’s research and development budget, the largest in US history.
The Pentagon is also asking for $ 5.1 billion for the Pacific Deterrence Initiative which is a special fund designed to help pay for the continuing US “pivot to Asia.” The budget remains vague about future expenditure plans for the Indo-Pacific Command, presumably as this is still being determined. The budget underlines the US’s declining interest in West Asia with a 40% reduction in funds to support anti-Islamic State forces in Syria and Iraq and plans to abolish the Overseas Contingency Operations account used for US military operations in Iraq and Afghanistan.
The budget will face much opposition in Congress. Many of the reductions will affect congressional districts who depend on these contracts for jobs. Republicans have criticized the relatively small increase in the budget, though it is largely in line with increases during the Trump administration. Progressive Democrats have been particularly harsh about the $ 2.6 billion upgrade of the nuclear arsenal and the failure to slash defence expenditure overall.
The Biden administration clearly hopes to persuade other partner countries to share the US defence burden. Cutting US funds for its military posture against Russia by $800 million is a message to Europe to pony up. During the summit between President Biden and South Korean President Moon Jae-in, the US announced the termination of the Revised Missile Guidelines which were put in place to limit the capabilities of Korean missiles. With this, Seoul is free to develop and deploy any number of conventional ballistic and cruise missiles with payloads and ranges of its choice.
One major piece of legislation working its way through Congress with a very good chance of passage is the $ 250 billion US Innovation and Competition Act, often described as a response to China’s increasing technology influence in the world. The act pours money into research and development across a number of cutting edge technology fields like artificial intelligence, green energy and robotics. In an attempt to expand the US’s technology base away from Silicon Valley and Seattle, $10 billion will be used to transform a number of other US cities into “technology hubs” on the basis of national competition to be overseen by the Department of Commerce. The Senate voted recently to end debate on the legislation, ending attempts to attach unrelated amendments to the bill, and its passage seems more than likely. Another bill, the CHIPS for America Act, is at an earlier stage of legislative development but would seek to provide $ 50 billion in subsidies to expand the US’s semiconductor manufacturing capabilities and attract semiconductor investments to the country.
China and Covid
The Biden administration’s foreign policy messaging and actions continue to show a strong and steady commitment to the Indo-Pacific and to countering the challenge of China. On May 26 President Biden opened up a new front against China by publicly taking up the cause of investigating the origins of the Covid-19 virus after new information has come up supporting the idea that the virus was the result of artificial manipulation of its genetic material. The new information, provided by the intelligence service of a third country, claimed workers at the Wuhan virology lab had been hospitalised with Covid symptoms as early as November – a strong indicator that a lab leak had taken place. Biden called for US intelligence agencies to provide a report on the matter in 90 days.
Earlier on Biden, during his first press conference as president, had spoken of Chinese leader Xi Jinping as “a smart, smart guy” but a firm believer that “autocracy is the wave of the future and democracy can’t function” in the complexity of the modern world. “This is a battle between the utility of democracies in the 21st century and autocracies,” he said. “We’ve got to prove democracy works.” This is a crucial reason behind for the Biden administration’s enthusiasm for the Quad and the idea of the Quad working groups tackling issues like vaccines, strategic technology and climate. The US president has said he proposed to British prime minister, Boris Johnson, that the democracies band together to form an infrastructure fund and provide an alternative to China’s Belt and Road Initiative.
There is a strong commitment to do things differently in the administration and try to adhere to these changes. “If the past 70 years of the post-World War II world order have been like classical Greek architecture—the straight lines and neat columns of the Parthenon—then the future will look more like Frank Gehry: unexpected angles, a mix of materials, and experimentation,” explained National Security Advisor Jake Sullivan in a recent article.
Despite the recent flare-up between Israel and Hamas, the Biden administration deliberately allowed Egypt to take the lead in brokering a ceasefire and the president has steadfastly refused to appoint a special envoy or talk of launching a peace process for the region. So far, the White House has held to his stated intention to reduce the US’s involvement in West Asia and allow itself to put more eggs in the Asian and European baskets. While Biden gave full support to Israel, in keeping with his long-standing support for the country, the strong criticism both he and Israel received from the progressive Democrats is evidence of a diluting US foreign policy consensus on Israel.
A similar sense of refocusing US foreign and security policy resources drives the Biden administration’s determination to pull out of Afghanistan. While a complete withdrawal by the announced September deadline still remains unlikely, the US will certainly slash the funds and troops it commits to Afghanistan. But Biden has more leeway there than is commonly believed, argues Richard Fontaine of the Centre for a New American Security. While polls show a majority of Americans want the troops to come home, there are no demonstrations or mass protests making this demand. Congressional majorities in both houses continue to believe the US should remain – even voting to restore cuts in defence spending for Afghanistan after the then president, Donald Trump, tried to reduce US troop presence.
(The views expressed are personal)