Election Obstacle to ‘Historic Agreement’: Biden’s Path Unclear after Initial Progress

“Last week, we had good news on job growth: 943,000 jobs created in July — the seventh-largest month of job creation in U.S. history — making the administration the first ever to add 4 million jobs in the first six months in office ... So, here’s where we stand: Jobs are up, and monthly price increases have come down. Economic growth is up to the fastest in 40 years, and unemployment is coming down,” President Joe Biden said on Thursday, highlighting economic performance after the July jobs report showed that the number of non-farm workers rose by 940,000, more than the market had expected.

The strong swing back from the Donald Trump era of broken alliances changed the tide for the world order and the U.S. economy all at once. The Group of Twenty finance ministers and central bank governors reached a historic agreement on a minimum corporate tax rate of over 15%, reversing the previous war of attrition. The U.S. has also launched a climate change summit to show emerging nations its willingness to decarbonize from developed nations.

Five months ago, I pointed out in this column that the last opportunity to revive multilateralism had arrived. The momentum is stronger than I imagined. "Most people didn't expect the G-20 to agree on corporate taxation so quickly,"* said Matthew Goodman, senior vice president of the Center for Strategic and International Studies, who has been watching the trend of international cooperation for many years.

However, these fair winds will not last. The restoration of the U.S. to the world order will be a painful, uphill battle. Elections, the fate of all democracies, stand in the way.

Disapproval of Biden's Economic Management Surpasses Approval

U.S. public opinion is gradually hardening. Biden's approval rating has dropped from 55% to nearly 50%, and his disapproval rating gap has narrowed to one-third.

While the U.S. economy continues to grow in the range of 6%, a survey by Quinnipiac University showed that 43% of respondents approved and 48% disapproved of the Biden administration's economic management. The government's $1.9 trillion bailout plan, which includes cash transfers to households, has been well-received, but the initial speed of the administration has faltered and the means to recover are becoming scarce.

Biden's plan to invest in infrastructure took a long time to reconcile with the Republican Party, which resists tax increases. Although the Senate passed a bipartisan bill narrowing the scale of the plan to $1 trillion on Aug. 10, the Democrats will have to deal with policies such as child care assistance and tax increases on the wealthy themselves.

"The devil is in the details,"* said Goodman, when it comes to climate change countermeasures and corporate tax systems aiming for international cooperation. If the necessary amendments to treaties and laws end badly, even the best of agreements will become mere pieces of paper. The Republicans are unlikely to offer any help under such circumstances.

If the November 2022 midterm elections were held now, the Democratic Party would lose its majority in the House of Representatives. Politico reported that Democratic leaders in charge of elections have expressed a sense of crisis over the fact the party has allowing Republican candidates to take the lead in nearly 50 fierce battlefield states.

There is chaos over surging immigration at the Mexican border. There is a trend toward higher prices, a byproduct of the high-pressure economy created by massive fiscal spending. Republicans are exploiting the weaknesses of the Biden administration. Charlie Cook, an election analyst, said, "this tendency backs the theory that voters of a party that loses the presidency are more motivated to vote in the midterm election that follows than those on the side that won. They are angry and want revenge for the loss ... Almost anything going wrong could doom Democrats, but nothing more than if there is a disparity in energy levels that works to their disadvantage." Republicans are trying to retake power in the House, where they lost the majority they won in the 2018 midterms, and in the Senate, where they lost control in the 2020 presidential election, now holding the same number of seats as the Democratic Party.

Japan, Germany and France Hold Elections Amid Headwinds

Other major countries also face an election season amid headwinds for their governments.

As Germany prepares to hold elections for the Bundestag (the lower house of parliament) on Sept. 26, the leadership vacuum created by the retirement of Chancellor Angela Merkel after 16 years in office is a concern. Armin Laschet, the center-right candidate expected to succeed Merkel as chancellor, lost credibility when he smiled insensitively during a visit to a flood-damaged area. Polls show that his support has slumped to 13%, the same as that of his Green Party co-chair Annalena Baerbock. There is no strong leader to succeed Merkel.

France continues to struggle with President Emmanuel Macron, who faces uncertainty over his reelection in the presidential race next April due to the big defeat of ruling party La République En Marche in the local elections last June and public opposition to measures against COVID-19.

In Japan, the surge in COVID-19 infections that began just before the Tokyo Olympics, and dissatisfaction with the government's ever-changing response, have pushed Prime Minister Yoshihide Suga's approval rating below the danger level of 30% in some polls, casting a heavy cloud over the upcoming lower house election to be held by November.

International Politics Will Reach a Critical Point in October

The time to complete an international summit will come in October. The G-20 summit scheduled in Italy starting on Oct. 30 will finalize the agreement on corporate taxation rules; the Conference of the Parties to the United Nations Framework Convention on Climate Change to be held in Glasgow, U.K., starting on Oct. 31 will be the critical moment for multilateral negotiations on measures to reduce greenhouse gas emissions to avoid a rise in global temperatures.

However, the uncertainty about who the political leaders will be ahead of elections, will be a major obstacle to implementing any kind of historic agreement.

The world is in a maelstrom of division and discontent, amplified by the COVID-19 calamity. The Group of Seven summit in the United Kingdom agreed to provide 1 billion doses of vaccine to developing countries, but a third round of vaccination, sought by developed countries because of the threat of the delta variant, could lead to a new battle over vaccines. The global economy is trending toward recovery, but the gap between developing and developed countries is widening.

As elections continue to test the democratic system, Chinese President Xi Jinping is seeking a third term at the Communist Party Congress in the fall of 2022.

Dominique Moisi, special adviser at the Montaigne Institute in France, said, "While China is deeply united under Xi, the United States, with its enormous internal and external challenges, is deeply divided like two countries. It's a serious situation," he lamented. Biden's United States and its close allies face an unavoidably difficult road in the battle of democracy versus despotism.

*Editor's Note: This quotation, accurately translated, could not be verified.