Changing directions in the land of Uncle Sam

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By RAFAEL IORIS*

The United States may turn out to be the tomb of neoliberalism

After decades of pontificating around the world on the need for a minimal state, the United States may turn out to be the tomb of neoliberalism. Indeed, if President Joe Biden manages to approve his new investment package in the areas of infrastructure and health, which together could reach an impressive total of around US$ 4 trillion, the country could experience the biggest redefinition of the notion of the role of the State in the economy since at least the 1960s, or even since the so-called New Deal in the 1930 years.

After approving a recovery package for the covid-19 crisis of almost US$ 2 trillion, Biden last week announced his new plan to invest, over the next ten years, about 2 trillion new in different sectors that could be defined as of infrastructure, including, in addition to roads and ports, the renovation of schools, Internet cabling in homes and farms, as well as the promotion of electric vehicles and greater access to solar energy in homes. As the main way of funding such measures, the proposal intends to return the percentage of corporate taxation, reduced in the Trump administration, from 21% to 28%, and to prevent tax evasion by companies offshore.

It is still uncertain whether (and even how) the Biden administration will be able to pass such ambitious ideas. Given that such changes would clearly impact the tax structure that, over the last 40 years, had been progressively favoring the business world, resistance has already begun to be enunciated both by the leaders of the Republican opposition, as well as by moderate senators from the Democratic party, such as Joe Manchin from the state from West Virginia. In any case, Biden's proposal, as well as the intention of the US Treasury Secretary, Janet Yellen, to seek a single basic taxation among developed countries, as a way to avoid the income-concentrating tax evasion process of recent decades, clearly signal a change of direction in the neoliberal logic that defines public policy around the world since, at least, the 1980s.

It is true that, even when the US government as well as multilateral institutions such as the International Monetary Fund promoted the agenda of the so-called Washington Consensus throughout the last decades of the twentieth century, it was largely for foreign consumption. . After all, the opening of the market and the reduction of public spending, required by the debt renegotiation agreements of Latin American countries, for example, were clearly not measures that the White House sought to implement in the domestic environment, at least not with the same vigor required of developing countries.

Even so, although incoherent in its proposal to reduce the role of the State, which in the military sector was, in fact, consistently expanded, since the Reagan years, in the early 1980s, the neoliberal agenda — especially with regard to the search for fundamentalist approach to reducing corporate taxes and capital gains, as well as reducing public investment, especially in items related to reducing inequality — has become a dogma of public administration in the US, whether during Republican governments such as Reagan and Bush , as well as in Democratic governments, especially in the golden years of Bill Clinton's neoliberal globalization.

As a result of this process, the US has today, and since at least the last ten years, its worst levels of income concentration in the last 100 years, with associated levels of political polarization and disbelief in government institutions comparable to the years of the Civil War of 1860s. Such dynamics, especially with regard to their political elements, are certainly more acute among supporters of the Republican Party, especially sectors linked to former President Donald Trump. The latter, in fact and largely, was elected based on the growing frustration of economic sectors negatively impacted by the manufacturing deindustrialization caused by the free market policies promoted over the last 30 years.

Both Tump and Barack Obama sought, or at least promised, a reversal of course in relation to the social responsibility of government structures - with the creation of health legislation known as Obamacare, in the case of the latter; as well as with regard to the protection of domestic economic sectors, with the new protectionist measures implemented by the former. But it is with Biden that there is, in fact, the possibility of an effective elimination of the neoliberal mantra from the North American governmental logic.

The current president was elected, to a large extent, based on the promise that he would seek to renegotiate the notion of the State's social responsibility. And now, in his first 100 days in office, Biden gives strong indications that he is seeking to implement such a shift in direction. Depending on what will happen to your proposals in the country's Congress, as well as your ability to maintain the narrative of the value of such a change, we would be witnessing the most important and radical change in the course of the conception of the State in the last 50 years in the USA, certainly with repercussions around the world. This would be especially the case, it is predicted, in countries like Brazil, where again the extreme neoliberal agenda of the last five years has proved not only ineffective in promoting economic growth, but also destructive in its social impact.

*Rafael R. Ioris is a professor at the University of Denver (USA).

Originally published on the website of Institute of United States Studies (INCT-INEU).

 

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