|Date||January 12, 2022|
|Speaker||Bruce STOKES (Non-Resident Fellow, German Marshall Fund of the United States)|
|Moderator||WATANABE Tetsuya (Vice President, RIETI)|
January 20 marks the end of the first year of the Biden Administration. How do the American people think he has done? As 2022 begins, what are Americans' greatest domestic and international concerns, their views on trade, China, Japan, and Russia? In November, the U.S. will have Congressional elections. What does history and polling data tell us about the possible outcome? Will Republicans reclaim Congress and, if so, what does this mean for Biden's presidency?
The American public's view on the economy
January 20th will be the first anniversary of President Joe Biden's inauguration, and a congressional election will also be held this year. These events create an opportunity to understand where the American public opinion stands on Biden's handling of issues, who could win the U.S. congressional elections, and its implications for the midterm elections in November.
In the U.S., consumer confidence is high and rising, which is a good sign for the economy and means people are willing to spend. Economic growth in 2020 is the fastest it has been since the Carter administration, which is a good sign of a strong economy. More jobs have been created this year than any year since 1939, which is a sign that there has been a rebound in the economy. On the other hand, more jobs were destroyed in 2020 than ever before due to COVID-19, but the rebound has been incredible. Unemployment is now at 3.9%, which is near its record low, and the stock market is robust. For example, the S&P 500 is at its second highest level in more than 60 years.
In addition to improvements in the economy, 200 million Americans have gotten vaccinated. It seems that the Biden administration has been successful; however, a recent Washington Post poll showed that 63% of Americans thought that the Biden administration has accomplished little or nothing. This could be due to the impact COVID-19 has had on the workforce. Americans could also believe in the administration's little to no accomplishments because inflation is at its highest level in 30 years, and inflation is something that the average consumer worries about. Consumers are easily and directly affected by inflation, especially in terms of gasoline in the U.S. 61% of the public blames the Biden administration for the rise in gasoline prices. However, the Biden administration has done nothing to raise the price of gasoline, but consumers notice the rise in prices and blame the party that is in power.
Even more concerning, 54% of Americans are not confident in the Biden administration's ability to keep inflation in check, and 47% have no faith in the Federal Reserve keeping inflation in check even though it is their responsibility. The Biden administration has very little it can do to keep inflation in check. This is very partisan, and Democrats believe that inflation is likely to settle down to about 3% in the coming year, whereas Republicans see it up around 7%.
Finally, 57% of Americans say the economy is on the wrong track even with the recent improvements. It is almost exclusively because people are worried about inflation and the ongoing effect of the COVID pandemic on employment and the ability of the economy to function.
What are Americans' views on major international challenges facing the country?
The important and immediate issues are between Ukraine and Russia, and Taiwan and China. However, when the American public is asked about important issues facing the country, international issues, climate change, foreign policy, and national security are of low concern. Issues of high concern are jobs and the economy, and health care. This could be because America is inward looking; it is a country protected by two oceans and global issues do not gain priority over domestic ones.
China is a concern to the American public. Now, 79% of Americans, both Republicans and Democrats, have an unfavorable view of China, which is the worst it has been since the mid to late 1970s. Only 38% of the American public believes America should continue to help Taiwan defend itself against possible attack, and 28% have no opinion, showing that much of the American public is not sure what should be done if China threatens Taiwan.
Similarly, there are threats by the Russians to invade Ukraine. When the public is asked about it, 44% say they do not know enough about the topic to have an opinion. A third of the public supports helping to protect Ukraine, but mostly, the American public is ambivalent or unknowledgeable about what to do about Ukraine.
Support, which has been present since 1995, for the relationship with Japan is strong at 84%. An issue that Japan is concerned about is entering a trade war with the U.S., which has occurred in the past. For approximately the last 30 years, the American public has supported trade. Now, Democrats support trade more than the Republicans, whose support for trade has decreased since Biden became president. This shows that partisanship in the U.S. even affects attitudes towards trade.
The overall political mood of the country
Over the last 20 years, the overall political mood of the U.S. has been declining. The public generally feels that the government will not make progress in some major domestic policy issues, such as immigration, the economy, and COVID. Biden's approval rating has been slipping ever since he was inaugurated, which is now at 43%, and is the lowest for any president in his first year since the Carter Administration, except for Donald Trump. The approval rating of Congress is even lower than that of Biden's.
The outlook for the 2022 congressional elections
The United States is an increasingly unstable democracy. Most believe that there will be a congressional change of power, which has been an increasing trend in congressional elections, in the 2022 congressional election. Also, a strong belief in Washington is that there will be a Republican wave resulting in a massive improvement in the standing of the Republican party after the election. This year, in the U.S. Senate, there are 20 states represented by Republicans and 14 states represented by Democrats that are up for election. Five senators in the Republican seats are retiring, and one senator in a Democratic seat is retiring. This is important because, usually, it is more difficult to defend a seat if the incumbent is retiring, so the Democrats have that advantage, but they will lose control of the Senate if they lose even 1 seat. On the other hand, in the House of Representatives, the Republicans have a significant advantage in terms of gaining control of the House, because on average, the President's party loses 29 seats in the first election after gaining power in the White House, and when the President's job-approval rating is below 50 percent, their party tends to lose an average of 43 seats, but the Republicans only need 5 seats to gain control of Congress.
The census, which occurs every 10 years, results in states gaining and losing seats in the House of Representatives. This is going to work against the Democrats due to the current population shift. Also, every 10 years, gerrymandering, or redrawing the boundaries for congressional seats, occurs, which has meant that there are fewer swing seats. Republicans have the advantage in the most recent gerrymandering. When politicians control the drawing of the district boundaries, they tend to protect the incumbent for reelection. This means that fewer seats could be considered competitive, which belies the sense of an American democracy in which power can change hands.
The future of American democracy
Two-thirds of American voters believe that democracy is now under threat partly due to the January 6th insurrection, Trump's presidency, and because some think that voting is being suppressed. Some people feel that democracy is under threat partly because 71% of Republicans believe that Biden is not the legitimate president, whereas 91% of Democrats say he is the legitimate president. Since one of the principles of democracy is to accept the outcome of an election, having 71% of Republicans not accepting the result is a potential threat to U.S. democracy.
The American public's opinion suggests that trust in elections is directly related to which party wins, which is not a sign of a healthy democracy. Another sign of an unhealthy U.S. democracy is that four in ten Republicans and Independents say that violent action against the government is sometimes justified, and 23% of Democrats agree. Distrust in elections and a belief that violence against the government is sometimes justified, is dangerous to democracy. Finally, in a recent poll regarding the next election, 61% of people believe that they expect violence by the losing side over losing the election. They do not support it, but they assume it is likely.
Comments and Q&A
Are America's inward-looking trend and the decline in the interest in global leadership long-term trends in American society?
There is a long-term trend in believing that the country is on the wrong track, even though, in some years, the economy was doing very well. Americans seem to have an interesting psychology wherein they do not feel positive about democracy even when things are going well. The economy seems to have rebounded strongly; however, 63% of Americans say that the Biden administration has done nothing in its first year in office.
As Biden has stated, the best defense against autocracy is democracy delivering and solving problems for its people. The Biden administration solved many problems last year, and people do not seem to care. This supports another concern in American politics that America is a tribal society. We self-segregate ourselves around people who think like us. Both Republicans and Democrats think the other side is a threat to the country.
To address your question about global leadership, America has most often been an inward-looking, isolationist, and protectionist country. After WWII, America changed that and acted as a hegemon, but that has dramatically deteriorated. There are burdens that the U.S. cannot bear anymore. I think we have to accept that America is in decline relative to China. We are still the world's strongest economy and military power. However, we are not the superpower we once were, which is hard to accept for some Americans. In situations like this, some Americans tend to turn their backs on the rest of the world. Others are of a different mind.
American domestic politics needs to adjust to the relative decline of being a superpower. Also, it seems that other countries' attitudes are not aligned.
I agree. Europeans want America to continue to be as fully engaged in the defense of Europe as it has been in the past, and Biden has slightly increased the number of troops in Europe. America is now in the middle of negotiations with the Russians over Ukraine. However, the attention of America is increasingly on Asia, specifically China.
I would argue the pivot to Asia is inevitable for the U.S. as Asia is where the direct security threat comes from and where the future economy of the world is. This pivot is troubling to the Europeans, and to the older generations of Americans who are of the a Europeanist mindset. Americans have to adjust to how they think about the world and what they expect of other countries.
How is the U.S. commitment to trade and economics in the Asia Pacific?
America failed to finish the Trans-Pacific Partnership (TPP) negotiations and get it passed by Congress. Trump pulled out of the TPP, and the Biden administration has not re-engaged on trade. Meanwhile, China is trying to join the successor to the TPP, and I do not foresee the Biden administration trying to join the TPP or its successor.
The TPP was supposed to be the joint response to the China economic challenge. We were going to set the rules and China would have to follow them or not. If America were part of the TPP, China could never have tried to join its successor. China likely thinks that if they join, they can change the organization's rules over time to benefit them.
How is the Biden administration's proposal on new trade framework in the Indo-Pacific?
The problem is that it is an idea without much substance. The administration is trying to have an agreement that deals with future issues and avoid difficult issues from the past. Given the domestic political situation in the U.S., where the Biden administration needs the support of the union movement and industrial America, it cannot politically afford to appear to do a trade agreement that might lead to more competition in America. I think the administration is trying to find some issues where there might not be domestic political opposition. The problems with this are that a) this type of trade framework currently does not exist, so it would be a very difficult process, and b) getting support from the average American will be a big challenge, since even the academic experts do not fully understand the content and implications.
Focus on new issues like digital and overseas infrastructure development and partnering of the supply chain are new, but I think it could be done.
We, along with the Japanese and Europeans, have an interest in the development of emerging technologies; however, it is challenging and extremely costly, so a large market to support such developments is frankly critical. I hope the Biden administration proposes to Japan to conduct pre-competitive research and development together, and that both countries invest money and talent in this area in order to compete with China, which is already doing such work.
Does this new kind of framework relate to the U.S. midterm election?
No. Most American voters do not know enough about the framework and its implications. Those who do have knowledge about it would not want to cooperate with Japan because there is a sense that America does not need help from other countries.
Cooperation in semiconductor research and development would be beneficial. The U.S. will eventually put multiple billions of dollars into semiconductors. Those who care about the U.S.-Japan relationship should support that, and there have been some discussions between the Japanese and the U.S. governments about it, but there doesn't seem to have been any concrete action as of yet. I think it is exactly the kind of thing we should be doing.
Tension is heightening between America and China, but American industries and Wall Street are heavily engaged in activities in China. What is the whole situation of politics and economics relating to China?
It is an important point that American companies and Wall Street are deeply invested in China. Many of these investments are good investments. However, those investments are also hostage to the Chinese as they can squeeze those investments any time they want. We have ourselves in a very difficult position where, for example, the U.S. is trying to get Europe to work together on human rights abuses in China and to sanction China. However, China replied by threatening to create difficulties for European companies.
Hopefully, the efforts to rebalance the supply chains will result in less dependency on Chinese production. Going forward, we need to realize that manufacturing something in the cheapest country may not be the most secure method, and that paying a little bit more for products to have them produced securely may be worth it.
In terms of supply chain distribution, what will be the next big manufacturing region in your opinion?
America has always had an interest in India in this regard. Because of its raw attributes, it should become a huge production site for us and the rest of the world. However, it has enormous infrastructure needs. Its poverty is still very debilitating for the society and economy. The disparities in the income, social status, and the lingering parts of the caste system make it difficult to deal with, in addition to the recent emergence of Hindu nationalism, which may be problematic.
In South-East Asia, Vietnam has become a major supplier to and investment place for the U.S., which was unimaginable 50 years ago. The major mid and long-term issue is whether Africa can ever become the next major production site. Even though Africa has many issues related to poverty, infrastructure, and civil wars, it is extremely similar to China in the middle of the last century, and so it has the future potential for production.
No African country has organized itself the way China has in the last 20 years. However, Ethiopia, before its current civil war, was the fastest growing country on the continent, largely due to production moving there. Africa is the continent with the fastest growing population, and it will have low wage rates for many years. Therefore, China's current push to create infrastructure may be because it wants to manufacture in Africa in 20 years.
SABURI Masataka (Director, PR Strategy, RIETI):
The future of the world depends on the U.S. and China. Therefore, the world is paying attention to U.S. political trends, and current political trends in the U.S. are very much influenced by the public opinion.
How can the divide in American democracy be repaired?
It is a very good question that I do not have an answer to. One might have expected before COVID that a major health crisis like it would bring the country together, and yet we have about 30% of the population that has not been vaccinated and refuses to get vaccinated. It has become a political issue.
The pace of change in America is accelerating and the stress of this change has not been dealt with. Demographics are changing drastically. For example, the percentage of foreign-born people and non-white people have both tripled in the last 50 years, the percentage of people employed in manufacturing has gone down by two-thirds, incomes had stagnated for almost 50 years until recently, there has been more LGBTQ support, and women have gone into the workforce, all of which are positive developments (except stagnation of wages, obviously), but their simultaneous rise has made coping with these societal changes difficult. I think that all of this together has put incredible stress on a minority of the population, who voted for Trump because he promised to take the country back to its cultural status in the 1950s.
Going forward, challenges will be helping people adapt to this new world, including increasing wages, and improving income distribution. Some of these challenges can be overcome by economics, but others have to do with human psychology, which will pose a challenge for American politics.
*This summary was compiled by RIETI Editorial staff.