Evan Vucci/AP Photo
President Joe Biden arrives to speak at Tioga Marine Terminal, October 13, 2023, in Philadelphia.
With Kamala Harris now the Democratic nominee for president, and her polling looking rather favorable, attention turns to what she might do in office. The consensus view in the Democratic Party probably is that Harris should largely follow the trail blazed by Joe Biden. In party circles, he’s thought to have had an unusually successful presidency, especially given his razor-thin margins in Congress, besides which he stayed on decent terms with all party factions (until the nonideological dispute over whether he should drop out). Many of his proposals died in the Senate, but that means they’re ready to be picked back up.
New York’s Jonathan Chait disagrees. He argues that Biden was a failure, and instead Harris should turn to the right and embrace the legacy of Chait’s hero, Barack Obama.
My colleague Harold Meyerson has already taken Chait to task on the politics of Biden’s shift to the left. But I would like to drill down on the economic specifics of the argument. Chait argues simultaneously that the Biden administration was lousy with left-wing ideologues, yet also failed to accomplish nearly as much as Obama did. To make the case, Chait has to seriously bend the facts, omit multiple major stories entirely, and on occasion resort to flagrant falsehoods. His advice, in short, is bad.
Let me start with the macroeconomy. Chait lavishes praise on Obama’s $787 billion stimulus plan, “one of the largest enacted in American history, almost equal in size to the stimulus in the New Deal.” That is true simply adjusting for inflation, but it is not at all true when compared to the size of the economy—which is what actually matters when talking about a policy intended to restore full employment and production across the whole country. By this measure, the New Deal was more than seven times larger.
Chait also doesn’t mention, as former Obama bundler Reed Hundt explains in his book A Crisis Wasted, that several experts proposed strategies to the incoming administration to boost the power of the stimulus without increasing its sticker price, and got nowhere. They could have set up a green infrastructure bank (Hundt’s personal favorite), which could lend out ten dollars for every dollar appropriated. Or they could have refinanced state debt at the federal government’s then-rock-bottom interest rate, thus preventing state-level austerity. Or they could have gamed the ten-year budget window by spending big at first, then compensating with a bunch of tax hikes that wouldn’t take effect until years later. Obama advisers Larry Summers, Tim Geithner, and Peter Orszag, however, rejected all these ideas out of hand.
Naturally, when Chait discusses Biden’s stimulus, the American Rescue Plan, he does not mention its size—about twice as big as the Recovery Act.
Details aside, ultimately the proof is in the pudding. Obama’s stimulus led to a pitifully weak recovery where unemployment did not reach its pre-recession level for more than eight years, and the lowest quintile of earners saw the lowest wage growth until mid-2014. Biden’s stimulus led to the fastest recovery from a recession in at least four decades, and the longest period of sub-4 percent unemployment since the 1960s. It created a labor market so hot that not only did the bottom quintile see the fastest wage growth, it was so fast that roughly a third of the post-1980 increase in wage inequality was reversed in just a couple of years.
President Biden’s stimulus led to the fastest recovery from a recession in at least four decades.
Chait displays a similarly evasive pattern on climate and industrial policy. He praises the climate bits of the Obama stimulus to the rafters, calling it “the largest green-energy-subsidy program in American history ($90 billion of the stimulus), bolstering a fledgling domestic wind sector and creating a solar industry virtually from scratch.”
Yet when Chait turns to Biden’s climate bill, the Inflation Reduction Act, he again does not mention its size—which is (depending on the analysis) something like three to ten times larger. As my colleague David Dayen explains in detail, it is simply a colossal bill—so big, for instance, that the $20 billion green bank that Hundt actually did get this time, which would account for about a fifth of Obama’s climate package, has barely even been noticed among the various multi-hundred-billion-dollar programs. Thanks to this and other laws, the green-energy transition is going gangbusters. More solar has been installed under Biden than all previous presidents combined. Grid-connected battery capacity doubled in 2023 and is projected to double again in 2024. The EV share of car sales doubled between 2021 and 2023, to 10 percent.
But perhaps I’m missing something? Chait references a Politico analysis finding that as of last April, only about 17 percent of the $1.1 trillion in direct spending authorized by the various Biden bills had been spent.
It is true that the administration is struggling to get its various pots of money out the door, and they should hop to it. But one reason for that is the sheer size of the pots. It has only been two years, after all, and waste should be avoided where possible. Moreover, the money is also flowing reasonably steadily. I consulted the IRA tracker maintained by the Columbia Law School and Environmental Defense Fund, and by my count there has been another nearly $25 billion in various IRA projects announced since the Politico piece ran (not all of them direct spending, but still an indicative figure).
Another reason for delay, as usual not mentioned by Chait, is that about $300 billion of that spending is not legally available until the next two fiscal years. He also doesn’t mention an additional $551 billion of spending (not part of the $1.1 trillion) that is allocated in the form of tax credits that are estimated to be claimed by individuals and businesses in coming years.
In other words, the delays are partly intentional, because one of the core goals of the IRA and kindred legislation was to give the nascent renewable-energy and green-manufacturing sectors ten years of policy runway. Previous renewable credits had been repeatedly passed or adjusted in varying amounts for only a few years at a time, leading to serious instability in the industry. A full decade of policy certainty (at least if these laws aren’t repealed) gives business the confidence to invest for the long term.
Obama’s various green investments were indeed pretty good for the time. But they simply pale in comparison to the IRA and its cousins. Unlike the Recovery Act, these actually are intended to catalyze a major national economic restructuring. Despite a bumpy start, it is working. Indeed, preserving Biden’s climate-industrial framework—his legacy, if you will—is probably the best reason on balance to vote Harris in November.
THE 2008 TARP BAILOUT DESERVES special attention. Chait complains that Obama gets blamed for it despite President Bush being the one who signed it, but he does not mention that Obama actually was core to its passage as the Democratic presidential nominee. As Obama himself explains in his memoir, by late 2008 President Bush’s popularity was imploding and Treasury Secretary Hank Paulson was relying on Democrats, who controlled both houses of Congress and were de facto led by Obama as the Dems’ presidential nominee, to supply the bulk of bailout votes. That leverage was further increased when the first bailout attempt failed, leading to panic in the markets.
Obama writes that he did not exploit that leverage, because he thought it would be irresponsible. “With the stakes this high, I would do whatever was necessary, regardless of the politics, to help the [Bush] administration stabilize the situation.” Obama’s economic adviser Austan Goolsbee told Hundt they could have extracted more concessions out of Bush and Paulson but refused to do it. “We could have forced more mortgage relief. We could have imposed tighter conditions on dividends and executive compensation,” he said.
Even if Obama did not sign the bailout, he was still responsible for much of its implementation and oversight. It’s not Bush’s fault that Obama’s Department of Justice negotiated wrist-slap fines for literally hundreds of alleged crimes committed by Wall Street banks.
Speaking of crimes, the foreclosure crisis poses an even worse problem for an Obama economic apologist. The major concession congressional Democrats successfully stuck in the bailout was sweeping language allowing the president to help homeowners. They figured that since Obama was likely to win, he could be trusted to do some good on this front, so it wouldn’t just be Wall Street that was getting rescued.
Pablo Martinez Monsivais/AP Photo
Vice President Joe Biden speaks to President Barack Obama during a June 8, 2009, Cabinet meeting at the White House to discuss the implementation of the economic Recovery Act.
They were wrong. As Carolyn Sissoko explains in detail, Obama and his staff instead used the homeowner authority to give Wall Street another sneaky bailout by shifting losses from toxic mortgage assets from the banks to the government and homeowners. The point, as Geithner told Elizabeth Warren in a meeting, was to “foam the runway” for the banks. The result, besides the banks’ foamed runway, was about ten million foreclosures, and untold millions more paying on underwater mortgages for years.
The story gets even worse. During the housing bubble, when the banks were slicing and dicing mortgages into zillions of other assets, they rarely kept proper track of the paperwork, in which case they could not legally foreclose. As Dayen explains in his book Chain of Title, the banks solved this problem by forging the documents en masse. They set up a factory system of document fraud where their poorly paid workers would falsely attest to personal knowledge of immense mortgage files hundreds of times per day—the “robo-signing” scandal.
That stupendous crime spree again provided the Obama administration with enormous leverage. But once again, Obama refused to use it to force the banks to agree to stop the foreclosure machine. All they got were some more weenie fines and a few prosecutions of powerless underlings.
The foreclosure crisis was an economic and political disaster. It severely damaged the net worth of the population (particularly Black Americans), blighted neighborhoods across the country, and led to a marked shift to the right in counties with high concentrations of foreclosures.
So how does Chait explain this? Simple: He ignores it entirely!
Now, Biden’s record on regulating finance doesn’t measure up to his other achievements. The Silicon Valley Bank bailout was rather slimy, and trouble is brewing in the commercial real estate market. However, that is partly because the Dodd-Frank financial reform bill Obama signed is largely toothless.
But fundamentally, nothing Biden has done remotely compares to throwing tens of millions of homeowners to the mortgage servicer wolves. So if a President Harris were to find Wall Street prostrate and broken, rather than protecting bankers against populist “pitchforks” as Obama did, she should seize the moment to slash their vast share of corporate profits and hence their power.
WHILE CHAIT OMITS OBAMA’S WORST FAILURES, he also omits or distorts many of Biden’s successes. Chait has nothing to say about the revival of antitrust, which was almost totally moribund under Obama, nor the revival of the administrative state. The Biden administration, for instance, recently won an antitrust case against Google, and is pondering a breakup of the company entirely, while under Obama, Google was practically its own branch of government. Student loan forgiveness slipped Chait’s mind as well.
Chait does mention Biden’s pro-union and industrial policy, only to flippantly dismiss them in a sentence. There “is no evidence of success in either effort,” he sniffs. This is just wildly incorrect.
Chait is right that the rate of union membership declined slightly from 2021 to 2023, but this must be judged against the ultra-fast recovery in jobs. Bureau of Labor Statistics data shows total union membership was up by 411,000 over that period. More importantly, private-sector union membership—long a focus of the labor movement, where it has consistently struggled to organize—was up by 382,000. The private-sector membership rate kept up with job growth between 2022 and 2023 and the contract coverage rate actually increased slightly (though those figures fell in the public sector).
Biden’s various industrial policies have catalyzed an explosion in manufacturing investment.
What’s more, as this Economic Policy Institute analysis outlines, union election petitions were up by 53 percent in 2022, and a further 3 percent in 2023. The first half of 2023 also saw an election win rate of 80 percent, as compared to 66 percent in 2020 or less than 60 percent in the 2000s.
Finally, labor has won several high-profile fights in recent years. Hollywood unions won a bitter strike with the studios last year, as did the United Auto Workers against the big automakers. The Teamsters successfully extracted major concessions out of UPS. Numerous smaller-scale strikes were also successful. These victories were partly thanks to pro-labor actions and rulings from Biden’s appointees to the National Labor Relations Board (not to mention personal support from Biden himself), as well as the red-hot Biden labor market enabling workers to take more risks. In polls, unions are more popular than they’ve been in decades.
It is true that unions have struggled mightily to organize under America’s weak and anachronistic system of labor law. But this is very, very far from “no evidence.” Perhaps Chait missed these elementary facts because of his personal distaste for the labor movement. When a union drive occurred at his own workplace in 2018, he refused to sign a union card, and instead took to Twitter to praise his boss.
On manufacturing, Chait is even more egregiously mistaken. As a factual matter, he is simply wrong to claim that manufacturing “employment is no higher than it was before the pandemic.” On the contrary, it is measurably up, by roughly 150,000 jobs—a modest amount, but still the first time since the 1970s that a recovery from a recession has ended up with more manufacturing jobs than before. This almost certainly would not have happened absent the American Rescue Plan—some 765,000 manufacturing jobs have been created since Biden took office.
More importantly, Biden’s various industrial policies have catalyzed an explosion in manufacturing investment, nearly doubling from an inflation-adjusted $82 billion in the last quarter of 2022 to $155 billion in the second quarter of this year. Obviously, factories take some time to build, and so most of the workers who will be running those factories have not been hired yet.
What’s more, all this investment in green energy and industry has happened in face of high interest rates that burden renewables hard, especially wind. If the Fed cuts rates soon, as it is widely expected to do, the pace of investment is likely to accelerate.
THIS ISN’T THE FIRST TIME CHAIT has had to twist himself into knots to defend the savior Obama, blessed be his name. Chait had to hurriedly change the subtitle of his hagiography Audacity from How Barack Obama Defied His Critics and Transformed America to How Barack Obama Defied His Critics and Created a Legacy That Will Prevail when the assumed victory of Hillary Clinton did not happen. It would be hard to imagine a better demonstration of the feebleness of a president’s “legacy” when his handpicked successor—recall Obama talked Joe Biden out of running in 2016—whiffed a layup election against a game-show clown who has been found liable for committing sexual abuse.
But I think even better proof can be found in Obama himself, who evinces barely any interest in defending his legacy or even participating in politics at all. Aside from the occasional speech during election years, he’s out there surfing with billionaires, producing Netflix shows, and posting online about his reading and listening habits.
Biden, by contrast, just took the nearly unprecedented step of abandoning his presidential re-election race when victory seemed impossible, and helped organize a quick coalescence around his vice president as a replacement. He’ll be speaking at the Democratic convention tonight, and will surely receive a hero’s welcome. For all his flaws, he put the party and the preservation of his accomplishments ahead of his own ambition—and if the polls are any indication, it was a wise decision. That’s an example worth emulating.
