A transatlantic tiff is in the works. During a recent visit to an ice cream shop in Oregon, President Joe Biden lit into British prime minister Liz Truss and her recent (and recently withdrawn) tax proposals. Because this is how we do foreign policy in this country now: spouting off at random while the Chunky Monkey melts all over our hands.
“I wasn’t the only one that thought it was a mistake,” said Biden of Truss’s tax cuts, brandishing a vanilla cone all the while. “I think that the idea of cutting taxes on the super-wealthy at a time when…I disagree with the policy, but it’s up to Britain to make that judgment, not me.” And lest the Brits think they were being singled out, Biden also had tough words for the globe’s other 193 countries. “I’m not concerned about the strength of the dollar,” he said. “I’m concerned about the rest of the world.” (All of it?)
There are several ironies at work here. The first is that Biden piled on Truss while campaigning for Oregon gubernatorial candidate Tina Kotek, who is one of the most radioactive figures in American politics. A vicious and bullying radical who warred with law enforcement and helped enable the destruction of one of America’s most wonderfully zany cities, Portland, Kotek makes Truss look like Queen Victoria crossed with Joan of Arc. It does seem like Biden’s Democrats have some serious problems of their own; maybe they should focus on them rather than sniping at a political party an ocean away?
Another irony is that Truss’s most polarizing tax cut, the one Biden was denouncing, would have lowered Britain’s top marginal tax rate from 45 percent to 40 percent. Whereas in America, the top rate is 37 percent. The second highest rate, which also overlaps with Britain’s highest, is 35 percent. That, by the way, is not a QED in and of itself. The US and the UK are different countries, and we on this side of the Atlantic have a much vaster market and tax base to draw upon. Yet it does seem odd that Biden, an avowed critic of “trickle-down economics,” is assailing Truss for positioning Britain’s tax rates higher than those he has authority over.
The president’s defenders would respond that it isn’t the policy that’s the problem so much as the climate. You don’t slash taxes, and refuse to pay for them, when inflation is spiraling through the treetops (this is the same argument that Truss’s Conservative opponent, Rishi Sunak, made against her during their party’s leadership contest). And fair enough. Whatever logic there might be to Trussonomics — letting people keep more money to juice the economy amid stagflation and the coming bad winter — governance is all about timing. And the markets have clearly rendered their judgment as to whether this is the right time to cut taxes on upper earners.
Yet if unfunded tax cuts can overheat an economy amid inflation, then so can unfunded spending. And it’s here that Biden starts to get brain freeze from the vanilla swirl. Because the important thing to understand about the Biden economic policy is that there is no Biden economic policy beyond massive deficit spending. So far, this has included a $1.9 Covid relief bill, a $1 trillion infrastructure bill, a $1.5 trillion general spending bill, and a $750 billion climate bill that was renamed by way of George Orwell the Inflation Reduction Act. Inflation being too many dollars chasing too few goods, you can see the problem. The San Francisco Federal Reserve found last year that Biden’s spending is very much driving inflation.
Thanks to all this profligacy, America’s debt to GDP ratio is an astonishing 137 percent, higher than Spain’s and Portugal’s and creeping up on Italy’s. Contrast that with the Truss’s United Kingdom, which weighs in at 96 percent, and then ask yourself: which country is being fiscally reckless here? The US has gotten away with this binge because the dollar is the world’s reserve currency and investors have shown a bottomless appetite for our Treasury securities. But that doesn’t mean the free money will last forever. And Congress has proven itself absolutely resistant to any kind of budgetary belt-tightening.
Back in the realm of rainbow-sprinkles diplomacy, it is possible that Liz Truss brought some of this on herself. Outside of conservative think tanks, she wasn’t especially beloved in Washington when she was the UK’s foreign minister. The impression was of a Margaret Thatcher LARPer trying to handbag the Biden administration into doing more in Ukraine, while the Americans arched their eyebrows and thought, “Who’s paying for all this again?” That lukewarmth may well have risen to the top, which, along with Biden’s noted penchant for the Irish, would explain his willingness to write off Truss.
Yet whatever might exist here of presidential hypocrisy or botched statecraft, politics is always read in the most crowbar-to-the-head obvious sense. And the crashing takeaway from Biden’s denouncing of Truss is: she’s finished. The White House doesn’t respect her enough even to honor the most basic protocols. They’re probably already looking past her, trying to game out her successor. The optics is of a water-treading Britain trapped between an indifferent United States and a disdainful European Union. That will remain the case even after Biden wakes up from his post-sugar-high nap.