Wars are a commonly used tool of national leaders throughout history when they face domestic challenges and are losing popular support. It therefore makes sense that Biden is positioning Ukraine as an existential battle for the survival of the free world. Voters might ignore the high cost of eggs if they can be convinced a monster is on the loose again on European soil and must be stopped at all costs.
Biden went on to indulge the very debatable proposition that Ukraine can in fact “stop Putin” if we just continue to supply them with weapons. He did not, however, define what stopping Putin actually looks like in practical terms.
Biden also did not address the key strategic problem here. Russia is a nuclear-armed super power that perceives an existential threat to its security if Ukraine were to transition fully into a client state of the U.S. and NATO. Russia has much more to lose than we have to gain in terms of the make-up of the Ukrainian government and its future political alliances, if the conflict were to ever end.
Analogies to World War II also raise the issue of Russian stubbornness in matters of warfare. There is some irony in the comparison of Russia to Nazi Germany, since most historians believe the Russians, above all other countries, deserve the most credit for stopping Hitler. More than 20 million Soviet soldiers and civilians died in WWII, versus approximately 400,000 Americans.
If history is a guide, the Russian population, facing what it perceives as a serious external threat on its doorstep in the form of US/NATO control over Ukraine, will not readily capitulate. Meanwhile, no matter how many billions of “loans” we make to Ukraine to purchase weapons from American defense companies, Ukraine seems to be running out of men.
These complexities remain disturbingly unaddressed. President Biden led with Ukraine and the need for America to maintain an open-ended commitment to funding the war but did not see the need to discuss any details. He spent a few more moments romanticizing himself as the second coming of FDR/Winston Churchill, before moving onto his other favorite topic, January 6th.
Taxes and class warfare
Towards the end of the speech, President Biden went after his oft-mentioned “predecessor” as a representative of “ancient ideas.” Yet the economic policies proposed in the speech (and later clarified in White House documents) were far from novel—unless you consider “tax the rich” a brilliant innovation in political science.
Biden maintained the shrinkflation/greedflation narrative, even spending a few moments in the speech on Snickers bars, which are apparently getting smaller. As we discussed in Issue 1, the goal here is to attach blame for the inflation wave that began with his Presidency to corporate executives, rather than his policies or decisions.
In similar fashion, Biden targeted the “wealthy,” who were mentioned exactly 10 times in the speech. No discussion this time of “white supremacy” or systemic racism, as his speechwriters presumably recognize the country is growing weary of divisive racial rhetoric. Instead, we seem to be back to class warfare. The wealthy, the “super-wealthy,” the billionaires and “the big corporations,” versus regular folks.
With Republican control of the House, the slew of tax hikes Biden is proposing have little chance of becoming reality, but they are certainly worth noting, as circumstances can change.
In addition to higher corporate tax rates, Biden wants to see a tax on unrealized capital gains, which is akin to a wealth tax of the kind that even European governments have abandoned. (Speaking of “old” ideas.)
On the topic of tax increases, there is one economic reality that is underdiscussed and worth raising here. While it is indirect and somewhat hard to appreciate, it’s actually quite significant. It is that inflation itself drives higher taxation due to “bracket creep” and other effects. This is widely agreed upon by economists and really just a logical consequence of progressive taxation methods.
