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By any measure, the massive $1.9 trillion pandemic aid package enacted at the start of Biden’s term stands as the most effective anti-recessionary policy in American history.
The coming Biden re-election campaign appears to be proceeding down two distinct thematic lanes. To get the Democratic base to the polls, Biden can campaign on his opposition to, and willingness to appoint justices who’ll overturn, the Supreme Court’s rulings against abortion rights, student loan cancellation, and affirmative action. To win more support in the general population, he’ll try to sell Bidenomics.
To do that, he’ll not only have to overcome Republican attacks on his economic policies, but also the rather piss-poor job that most of the media have done in reporting—or even understanding—his economic programs. Herewith, then, a guide to Bidenomics’s component parts, and where it all fits into the historic spectrum of the nation’s economic policies.
The first element of Bidenomics was the unprecedentedly massive $1.9 trillion pandemic aid package enacted along party lines at the outset of his presidency. By any measure, it stands as the most effective anti-recessionary policy in American history. Whereas previous recoveries from recessions took many years—that from the 2008 financial panic and the Great Depression dragged on for nearly a decade—the Biden stimulus brought down unemployment to near-record lows in under two years, and distributed its aid in such a way that for the first time since the late 1940s, Americans of modest incomes benefited most from the package. One telling sign is that Black unemployment is now lower than at any time since the government began measuring it.
The Biden recovery stands in particular contrast to the Obama recovery, which was short-circuited by efforts within both parties to focus instead on reducing the national debt, at a time when unemployment still hovered near double digits. That focus on the debt killed all efforts to boost the economy after the first round of stimulus, which had the effect of consigning millions of millennials to a prolonged stay in economic purgatory.
To be sure, the $1.9 trillion stimulus boosted the public’s purchasing power and thereby contributed to inflation, but it’s worth noting that the U.S. rate of inflation today is well under the levels in European nations that made no comparable efforts to stimulate their own economies. Supply chain breakdowns and the war in Ukraine have boosted costs quite independently of anything the administration has done; so have the outsized profit margins that many major businesses have seized for themselves, as none other than the IMF recently found. It might behoove Biden to make an issue of those profit margins.
Media coverage of this first element of Bidenomics has been notably poor: focusing on inflation while failing to report on or even recognize both the speed of the recovery and its progressivity, which provided a particular boost to low-wage workers—a group all too easy for mainstream media to miss.
The second element of Bidenomics can be found in the late, lamented Build Back Better bill, which Sens. Joe Manchin and Kyrsten Sinema almost completely derailed. Its contents—which included a Child Tax Credit, affordable child care, free community colleges, and paid sick leave—were expansions of social provision that nearly every other rich and middle-income nation enacted decades ago for their own citizenry. Had BBB passed, it would have provided Biden and the Democrats with highly effective talking points, as nearly every one of its particulars polls very well. Universal social programs that remedy universal social needs that the market doesn’t address (indeed, that the market has created) are very popular (see: Social Security, Medicare). Biden can and will avow to keep working for their passage, but had they become law, I suspect his standing in the polls would be considerably higher.
The turn to Biden’s “middle-out” economics, to boosting the fortunes of American workers, is Jeffersonian in its concern for ordinary Americans.
The third element of Bidenomics is industrial policy, which is also politically popular but also much harder for the public to discern. As the major U.S. corporations began offshoring their production or their suppliers in the 1980s and ’90s, only a relative handful of progressives—among them, Economic Policy Institute founder Jeff Faux, MIT economist Lester Thurow, and my Prospect colleague-to-be Bob Kuttner—argued that this would do long-term harm to the nation generally and its working class in particular. Their advocacy of industrial policy, of government support for keeping, or bringing back, strategic industries, was scorned by the mainstreams of both parties. In time, the validity of their arguments persuaded many Democrats to their viewpoint, but it took the supply chain breakdowns of the COVID pandemic to convince a number of the long-term skeptics.
Biden himself had supported a turn to industrial policy well before the pandemic arrived, and has successfully secured government investment and backing for more domestic investment in the Inflation Reduction Act (with massive tax credits for green industries) and the CHIPS Act (with direct public support for domestic semiconductor production), as well as boosting the nation’s long-neglected infrastructure with the first bill to address that in many years.
All of these initiatives are popular, at least in theory; they clearly boost the national interest and conform to whatever remains of the public’s common sense. (The support for our free-trade agreements of the past 30 years was largely confined to elites; with the public, they never polled well at all.) The political problem Biden faces is that it takes a good deal of time to build factories and infrastructure, and more time still for the economic benefits that they will yield to become apparent. Biden and his fellow Democrats are already doing a lot of ribbon-cutting as work on these projects commences; they’ll have to do a good deal more.
The fourth element of Bidenomics is to encase some of the unenacted particulars of Build Back Better in the criteria that employers must meet to fully access the benefits of the administration’s industrial policy largesse. The criteria can vary depending on which federal agency is doling out the tax credits or direct aid. To date, recipient businesses have been required, for instance, to provide child care or to cease using anti-union consultants as conditions for getting federal support. This is definitely a Plan B version—perhaps more like a Plan C—of Build Back Better, confining that bill’s benefits to a factory here and a construction crew there. Given the realities, however, it’s the most that the administration can do.
The fifth and final element of Bidenomics is the overriding theory that informs the four preceding elements. It was best expressed to me by one White House official referencing the now famous graph that the Economic Policy Institute first published in 1994, showing that the nation’s level of productivity and the level of its median hourly wage rose in tandem from 1947 through 1979, and then, as productivity continued to rise, the median wage barely rose at all thereafter. “What Joe Biden is about,” the official said, “is closing that gap” so that the nation’s prosperity could be broadly shared, as, however imperfectly, it was when rates of unionization were high and New Deal legislation that boosted workers and constrained finance were still in place.
So where does all this place Bidenomics in the continuum of American economic history? The turn to industrial policy, to government support for domestic production, has ample antecedent in Alexander Hamilton’s Report on Manufactures, in the “internal improvements” for roads and canals championed by the Whig Party in the early 19th century, in Abraham Lincoln’s backing of a privately owned transcontinental railroad, in the tariff policies of the late 19th and early 20th century under which the U.S. became the world’s economic powerhouse, in the massive public infrastructure investment undertaken by the New Deal, and in the military Keynesianism of the Cold War.
The turn to Biden’s “middle-out” economics, to boosting the fortunes of American workers, is Jeffersonian in its concern for ordinary Americans. Even before America ceased to be the nation of small farmers whom Jefferson envisioned as the nation’s backbone, however, governments were using Hamiltonian means to produce Jeffersonian ends. Thus, the Homestead Act, enacted under Lincoln, in which the West was divided into small-farm-sized plots that immigrants from abroad and restless urbanites from East Coast cities could claim as their own provided they worked their patch of land. Thus also the labor legislation enacted under FDR, which gave workers a stake not in the land but in the bounty that their employer produced.
Hamiltonian in promoting productive domestic enterprises, Jeffersonian in its belief that the wealth those enterprises produce won’t trickle down of its own accord but requires giving workers the power to claim a share of that wealth as their own—those are the schools of thought that Bidenomics can claim as its antecedents. None of this necessarily makes Bidenomics an easier sell to a disgruntled electorate, especially given Biden’s own limitations as a salesman. But he and his party have a compelling product to sell, if only they can figure out how to do it.
