Ladies and gentlemen, we can sum up President Joe Biden’s the State of the Union (SOTU) in five words: More spending, regulation, and dependency. That same agenda of escalating controls over the nation’s economy and life was shared by Barack Obama. But Obama’s pen-and-phone approach is vastly overshadowed by Biden’s “Whole-of-Government” regulatory pursuits, including those addressing the “Climate Crisis,” “Equity,” “Competition Policy,” “Digital Currency,” and more.
The year 2023 promises more of the same, and Biden’s efforts have benefited from Republicans assisting with the costly bipartisan infrastructure law and the CHIPS and Science Act. Both of these Acts expand federal authority and displace the private sector, when the exact opposite—privatization and deregulation—should have been done in each case.
Meanwhile, without Republicans, Biden succeeded in enacting his $1.9 trillion American Rescue Plan two years ago, and the Inflation Reduction Act last year. So Biden will be energized, knowing Republicans can be counted on to yield on the debt limit increase. After all, the GOP raised the debt ceiling many times without cutting spending, and enabled the recent 2023 Omnibus.
Biden can no longer enact everything he wants to “Build a Better America,” but given the spending spigots now fully opened, he enjoys renewed flexibility to act “without Congress.” Progressives may urge more solo acts across the board on issues like climate, family leave, and gun control regardless of legality, as with the eviction moratorium and student loan deferral.
Biden’s interventionism consists of the waging of domestic “forever wars” advancing the progressives’ entitlement agenda, ranging from child care to free education to income support, all of which are likely SOTU speech material.
Most significantly, though, is Biden’s signature “whole of government” campaign to advance “equity,” which is the pedal tone for all the others like climate crisis and “environmental justice” and further medical controls. To do these things “without Congress,” Biden can exploit the federal leviathan’s sheer size and gargantuan influence in the marketplace via employment and contracting, and its bullying heft in procurement as the ”world’s largest purchaser” (to the tune of over $500 billion in annual contracts).
Much of the new hyper-spending in which Washington engages is also hyper-regulatory, and will advance a number of federal social engineering experiments at the agency level. A day-one Biden action was to convert the Office of Management and Budget’s regulatory watchdog role to one of advancing regulatory initiatives in a move called “Modernizing Regulatory Review.” Already, no one has any idea how much regulation costs, and that obscurity will worsen, particularly if Biden opts for more executive orders and guidance documents rather than bother with notice-and-comment regulation.
On the economic front, Biden has on numerous occasions called himself a “capitalist,” but his compulsion is that of crowding out the private sector while expanding government’s role in economic pursuits from tap water to meat packing to high tech.
Relatedly, Biden is likely to warn again in the SOTU of escalating antitrust regulation, and to tout the creative use of moldy old statutes to crack down on new “anti-competitive” behavior. The GOP, unfortunately, shares the antitrust compulsion and a misplaced affinity for “public-private partnerships” and government infrastructure. So the Republicans may applaud some antitrust quip or shout-outs to some big construction project back in somebody’s district.
Much of the economy is extensively directed by Washington regulators rather than market forces, and Biden is heightening our vulnerability to the next economic shock. Regulators who talk of firms “too big to fail” ignore a federal government too big to succeed.
Our economic woes are less attributable to market failure than, as our founder Fred L. Smith Jr. points out, the “failure to have markets.” Misaligned incentives range from unchecked spending to the Administrative Procedure Act’s one-way ratcheting upward of regulation” to exploitation of economic shocks.
More spending, regulation and dependency are not the path to a strong state of the Union, but constitute some of the most egregious “mistakes of the union.”