Discover more from Letters from an American
June 3, 2022
In 1981, Reagan Republicans took power with the plan of cutting the government back to the form it took in the 1920s. But Americans like a basic social safety net and protection for consumers and workers, so to win votes for tax cuts and deregulation, Republican leaders warned that white Christian men who just wanted to work hard for their own success were under attack by a government in thrall to minorities, women, lazy organized workers, and secularists who were destroying traditional values and turning the country over to socialism.
As wealth concentrated upward and it became harder and harder for ordinary Americans to rise, Republican leaders demonized Democrats and, when voters kept electing them, delegitimized elections themselves. Increasingly, they talked of the need for violence to protect individualism from an overreaching government.
Finally, as of January 6, 2021, they have rejected the idea of democracy and have convinced their followers—and perhaps themselves—that the only way to save America is to destroy it.
Today, Maggie Haberman reported in the New York Times that on January 5, Marc Short, then–vice president Mike Pence’s chief of staff, told Pence’s lead Secret Service agent that Trump was about to turn against Pence publicly and that the vice president could be in danger. Clearly, members of the administration anticipated violence on January 6 and, astonishingly, expected it because of the actions of the U.S. president.
President Joe Biden took office with what appeared to be the idea that he could wean Republicans away from their growing fascination with authoritarianism by creating a government that rebuilt the economy to work for ordinary people.
His American Rescue Plan enabled the U.S. to come out of the pandemic with the strongest economy among any of the liberal democracies that make up the Group of Seven (G7)—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—and the nation’s economy is on track to grow faster this year than China’s for the first time since 1976.
Today’s jobs report shows that employers are still adding jobs: there were 329,000 new non-farm jobs in May. Unemployment held steady at 3.6%, with Black Americans showing the highest gains in labor force participation. With almost two job openings available for every unemployed person, wages continue to rise, up .4% since April. Wage growth for the year is over 5%. The stock market responded by dropping, likely a reflection of an expectation that the strong jobs report will mean the Fed will raise interest rates again soon.
Biden celebrated the numbers but said, “There’s no denying that high prices, particularly around gasoline and food, are a real problem for people. But there’s every reason for the American people to feel confident that we’ll meet these challenges.”
That inflation has been driven by a number of factors: increased demand, increased savings, supply chain snarls, and even the rising wages that are putting money into the pockets of those unaccustomed to economic gains. And since February, Russian president Vladimir Putin’s war on Ukraine has further disrupted oil markets, supply chains, and, increasingly, food.
Inflation has also been driven by the concentration of industry in the past several decades, which provided economies of scale but now sees us hamstrung as vital industries are controlled by a few operators. Notably, the pandemic shifted consumer preferences to online shopping, and the recovering economy kept that buying active. Shipping containers piled up on wharves with goods undelivered, and since just nine carriers control 80% of the global shipping market, they have been able to raise prices to triple their profits in 2021. The price for moving a container to the U.S. from China is now 12 times higher than it was before the pandemic.
Global oil production is also still out of whack with the rebounding global economy. Production dropped dramatically during the pandemic, with oil-producing nations cutting production by about 10% globally. Producers have been slow to increase production to keep up with the global recovery, not least because they are making record profits. Last month, Shell, which is Europe’s largest energy company, reported its largest quarterly profit ever, at $9.1 billion. It said it would use the windfall to buy back shares of the company, increasing the value of its stock.
The baby formula crisis has also been exacerbated by this concentration of industry. In the U.S, 90% of infant formula is produced by four firms, and they are protected from foreign competition by high tariffs. When one of the four, Abbott Nutrition, closed its Sturgis, Michigan, plant to deal with contamination, it sparked a true crisis.
Biden has tried to deal with these issues with the power he wields in the executive branch. He negotiated deals with U.S. carriers to clear out the pileup of containers in vital ports and asked Congress to pass legislation to increase competition in the carrying trade. (Both the House and the Senate have passed such bills, but they have not yet reconciled them to make one bill Biden can sign.) He released oil from the strategic reserve and asked Saudi Arabia to increase production, a request its leaders refused, but yesterday OPEC+ (the 13 members of the Organization of Petroleum Exporting Countries plus 10 oil-producing countries not in OPEC) agreed to begin ramping up their output back to where it was before the U.S. got them to reduce production in April 2020.
The administration has tried to increase the supply of infant formula by easing the way for more imports, worked with Abbott Nutrition to reopen their Sturgis plant safely, flown in two planeloads of formula from Europe, and arranged for a third planeload donated by United Airlines to arrive on June 9. On May 18, President Biden delegated authority to U.S. Health and Human Services secretary Xavier Becerra to address the shortage of infant formula. Becerra has invoked the Defense Production Act for the third time to increase infant formula supplies. It is not clear how bad the shortage remains. While store shelves are empty, buying is up 13% since April, suggesting that people may be stocking up.
Biden has emphasized that he wants to move more manufacturing back to the U.S. to stop the sorts of disruptions that have caused inflation. On Wednesday, he pointed out that the U.S. has added 545,000 manufacturing jobs since he took office and that the U.S. created more manufacturing jobs in 2021 than in almost any year in 30 years. “This didn’t happen by accident,” he said. “This is a direct result of my economic plan to grow the economy from the bottom up and middle out.” He called on Congress to pass the Bipartisan Innovation Act to support domestic manufacturing.
On Tuesday, Biden published an op-ed in the Wall Street Journal touting his economic successes and explaining how he plans to transition from the red hot economy of the past year to stable, steady growth. He promised to work with anyone “willing to have an open and honest discussion that delivers real solutions for the American people.”
Will any Republicans take him up on it? Something else Biden wrote makes me doubt it: “I ran for president because I was tired of the so-called trickle-down economy. We now have a chance to build on a historic recovery with an economy that works for working families.”
The big news today is that former Trump aide Peter Navarro was arrested on two counts of contempt of Congress. The House Select Committee to Investigate the January 6th Attack on the U.S. Capitol had subpoenaed Navarro to hear testimony and read documents about his participation in the attack on our government. Although he has talked openly about the plan to overturn the election, he refused to comply with the subpoena.
Navarro was livid at being arrested and handcuffed and put in a cell, saying that if they had just called him and said they needed him down at court, he’d have shown up. (He appeared to miss the point that the subpoena he ignored is basically a call that says, “Hey, we need you down at the court….”) He claims that authorities have violated the Constitution.
Reacting to the arrest, Representative Louie Gohmert (R-TX) told Newsmax, “If you’re a Republican, you can’t even lie to Congress or lie to an FBI agent or they’re coming after you.” He claimed that the grand jury acquitted lawyer Michael Sussman of lying to the FBI about his contact with Hillary Clinton’s 2016 campaign with the argument that “[o]f course you’re gonna lie. Everybody lies!” but that is, of course, not true. The jury said that the Department of Justice, which brought the suit against Sussman, did not prove its case. It is against the law to lie to Congress or to the FBI. Navarro has not been tried yet; he has simply been indicted.
And on Wednesday, as the horrific murders of schoolchildren and teachers in Uvalde, Texas, have been followed by several more mass killings, Fox News Channel personality Tucker Carlson claimed that Democratic efforts to promote gun safety are not about public health. Instead, he said, Democrats want to disarm the people because they’re afraid of a popular uprising against them because “they know they rule illegitimately.”