Robb: Biden keeps making it tougher for swing voters

President Joe Biden’s State of the Union address represented a strategic choice and, in my view, a strategic mistake.

There is a cohort of center and center-right swing voters who reject Donald Trump and Trumpism. There is a strong likelihood that these voters will determine the outcomes of the 2024 election, particularly here in Arizona.

In the State of the Union address, Biden made it clear that a vote for him was more than just a vote to reject Trump and Trumpism. It was a vote for a full-fledged effort to transform the United States into a European-style social democracy – with higher taxes, a substantially expanded welfare state, and markedly greater government interference in markets. 

The domestic policy portion of the speech was an attempt to rekindle enthusiasm among Democratic base voters for his candidacy. Prioritizing that was the strategic choice. The calculation seems to be that, at the end of the day, the anti-Trump swing voters in the center and center-right will swallow a domestic policy agenda they strongly oppose rather than vote for a guy they think attempted a coup. 

This is a crass and cynical calculation that undermines the sincerity of Biden’s assertion that democracy is at stake in the election. If Biden truly believes that, he should be proposing more of a consensus agenda that would make it an easier decision for this cohort of swing voters. Instead, he is making it as difficult as possible.

In 2020, Biden was able to bifurcate his audiences. He struck a unity platform with Bernie Sanders that laid out the European-style social democracy blueprint for progressives. On the campaign trail, however, Biden depicted himself an old-style moderate Democrat, a safe option for returning to the political status quo ante after the Trump chaos. 

As president, Biden tried to implement the Sanders unity platform blueprint. In his State of the Union speech, he vowed more of the same if re-elected. For this cohort of swing voters, there is no safe option reassurances being offered in this election cycle. 

That’s a big risk for Biden, and for the country. Biden is likely to see leakage on his left, irrespective of how aggressive of a progressive agenda he advocates. He will need a big segment of the center and center right swing voters who are adverse to a second Trump term, but also don’t want to see such a fundamental change in the nature of the country’s political economy.  

The most consequential element of Biden’s sweeping agenda was his prescription drug proposals which, taken together, would turn pharmaceutical companies essentially into regulated utilities.

Biden wants to expand the number of drugs for which Medicare can “negotiate” prices. But these aren’t really negotiations, freely entered into by both parties. If a company doesn’t accept what Medicare decides to pay for a drug, there are confiscatory penalties assessed, including on sales of the drug outside of Medicare. This is really government price setting. 

For Medicare patients, out-of-pocket expenditures for prescription drugs are scheduled to be capped at $2,000 a year. Biden proposes to extend that to the entire population. 

Now for some people, the cost of prescription drugs can be a financial burden. But for many people it is not. Yet the new entitlement would be universal, irrespective of need. 

If the federal government caps out-of-pocket costs of prescription drugs at $2,000 for everyone, as surely as night follows day, government price controls will follow, covering all drugs and the entire industry. This will be a stark example of Bastiat’s dictum about what is seen and what is unseen. Seen will be temporarily lower costs for existing drugs. Unseen will be the drugs that aren’t developed and brought to market because government severely depleted the ability of the industry to attract investment capital. 

Biden’s discussion of taxes was mendacious. In reality, the United States has a sharply progressive income tax. The relatively affluent pay the overwhelming majority of federal income taxes, more than would be proportionate to their share of income earned. 

Biden, however, wants to generate resentment against rich individuals and big corporations supposedly not paying their fair share. To the extent there are rich individuals and big corporations paying little in income tax, it is not because they are cheating. It’s because they are adhering to the tax code as passed by Congress. Any resentment should be directed at the politicians who concocted the tax code, not toward taxpayers simply following it.

Biden was misleading in saying that the very rich were only paying an effective tax rate of about 8% in an attempt to distort the true incidence of income taxation in the country. The 8% is a comparison of what is paid in income taxes relative to third-party, unverified estimations of increases in net worth. Most of that is unrealized capital gains, for which income taxes aren’t owed. 

Biden wants to put a wealth tax on top of the sharply progressive income tax, but makes a dishonest case for it by comparing what rich people pay as a percentage of their net worth to what middle-class people pay on income as defined by the tax code. 

In the speech, Biden ranted about credit card late charges, junk fees, and shrinkflation. Biden claims to be a capitalist. But all this reflects a profound lack of trust in markets and lack of any limits on when and how government should interfere in them, or how minutely government should regulate them.

Shrinkflation offers the most vivid example. Contrary to Elizabeth Warren, inflation wasn’t caused by businesses suddenly, like synchronized swimmers, deciding to raise prices in unison. Inflation was caused by excessive fiscal and monetary stimulus.

Facing higher production costs, consumer goods companies had pricing decisions to make. Some decided to reduce what was offered at a unit price rather than fully increasing the unit price to reflect their own higher costs.

Now, the snack and candy industries are highly competitive. If reducing what is offered at a unit price isn’t an option consumers like, they will gravitate toward bags with more chips in them or bigger candy bars. The market can figure out the right range of options for potato chip bags and sizes of candy bars.

Yet there was the president of the United States railing about it, in the State of the Union address of all places. I would submit that a government whose leader frets about the number of potato chips in a bag or the size of candy bars is, ipso facto, already too damn big and intrusive.  

The cohort of center and center-right swing voters won’t catch all these nuances and deceptions. But they will know that Biden wants higher taxes, a larger welfare state, and more government control of the economy. And that’s profoundly not the direction this cohort favors for the country. 

So, there are some difficult political calculations Biden has forced on these voters. If Republicans have control of at least one chamber of Congress, Biden’s agenda of transforming the political economy into a European-style social democracy will run aground. If Democrats control the presidency and both chambers but the Senate filibuster is retained, the agenda will have to be squeezed through the reconciliation process, limiting it at least somewhat. 

Republicans are thought to have the inside track on regaining control of the U.S. Senate, even if they lose control of the House. But if there is a clean Democratic sweep, the two leading Democratic supporters of the filibuster, Kyrsten Sinema and Joe Manchin, are retiring. A clean Democratic sweep could mean swift progress on transforming the country’s political economy into a European-style social democracy that would be tough to unwind. 

So for center and center-right swing voters, which is the bigger risk? The damage to the constitutional order a second Trump term could bring? Or the tough-to-reverse movement toward transforming the political economy into a European-style social democracy a Democratic clean sweep could bring?

That’s the difficult choice Biden has presented the swing voters who will probably decide the outcome. He could have made it far easier.  

Reach Robb at robtrobb@gmail.com.