Christophe Gateau/picture-alliance/dpa/AP Images
Jason Furman speaks at a meeting of the International Monetary Fund and the World Bank in October 2023.
Jason Furman is a protégé of Robert Rubin and Larry Summers. He held a variety of senior posts in the Obama administration and now teaches economics at Harvard. Furman was and is a true believer in neoliberalism—the idea that the job of government is to deregulate, privatize, globalize, and do some social welfare around the edges to moderate the casualties of liberated capitalism.
It was this ideology and constellation of policies that destroyed decent jobs in America’s factory economy. The extreme deregulation of finance led to the collapse of 2008 and the Great Recession that followed. And it was the Obama team’s inadequate response that led to a very slow recovery and paved the way for the disaffection that elected Donald Trump. Furman was at the center of all that.
Now Furman has written an extended piece in Foreign Affairs magazine, attacking Biden’s recovery program as an overreach that brought us Trump II, and excoriating Biden for having abandoned neoliberalism. The piece is titled “The Post-Neoliberal Delusion and the Tragedy of Bidenomics.”
The piece is surprisingly churlish, and a textbook case of intellectual dishonesty. Furman is a master of misrepresentation and the use of cherry-picked data.
Furman’s main complaint, to which he devotes more than half the piece, is that Biden’s several recovery programs overstimulated the economy, leading to inflation, which in turn soured voters on Biden’s re-election. He also disparages Biden’s industrial policy as having overpromised and underperformed.
The result, he writes, was dramatic price increases “on many Americans, which made it harder for them to pay for groceries, pay off credit cards, and buy homes. Not entirely unreasonably, they blamed that squarely on the Biden administration.” Explicitly blaming Trump on Biden, Furman adds that Biden’s “missteps reflected a broader unwillingness to contend with tradeoffs in economic policy and allowed Trump to ride a wave of discontent back into the White House.”
FOR STARTERS, FURMAN IS SPLENDIDLY OBLIVIOUS to all the other factors that led to Trump’s return. They included Biden’s age and the increasing evidence that he was plainly unfit for a second term; the fact that Biden was a feeble spokesman for his own policies; that he had to be pressured into abdicating just four months before the election, leaving Kamala Harris as a weak candidate to run a weak campaign with mixed messages; not to mention the drag of Israel-Palestine. Even so, had 150,000 voters voted differently in three key states, Harris would be president.
To the extent that economic outcomes—in particular inflation—were responsible for the Democratic defeat, it was the same inflation that every major country experienced around the world, regardless of their responses to COVID, and it led to the uniform thrashing of political incumbents in every major country around the world, regardless of their political philosophy.
For Furman, none of this matters. It was all Bidenomics. Furman wraps his specific misrepresentations in a general broadside against Biden for having abandoned neoliberalism. And this is the article’s biggest whopper.
In chiding Biden for not doing more, Furman is splendidly oblivious to politics.
Furman writes: “Since the 1990s, Democratic economic policy had largely been shaped by a technocratic approach, derided by its critics as “neoliberalism,” that included respect for markets, enthusiasm for trade liberalization and expanded social welfare protections, and an aversion to industrial policy.”
In fact, neoliberalism was far from technocratic. It was deeply political, often corrupt, and buried in Furman’s innocent-sounding “respect for markets” was a set of policies that demolished the safeguards dating back to FDR that protected workers and prevented a second great financial collapse until the crash of 2008.
The role of the several Biden stimulus programs in the economy’s rapid recovery from the COVID recession and the lingering inflation is complex and subject to fair debate. Jared Bernstein, who served as Biden’s chief economist, agrees that the program modestly contributed to inflation, but that other factors such as supply chain shocks contributed more; and that given the risks of deep recession, it was better to overstimulate than understimulate.
But Furman dismisses the impact of supply shocks on the COVID-induced inflation, and then whacks the Biden administration for paying insufficient attention to them. Furman writes: “Factors such as consumer tastes and supply chains determined where those price increases showed up in the economy, but they did not drive the overall average price increase.”
This is nonsense. As Bernstein has pointed out in rebuttal, “Unless a bunch of well-established economists, including Ben Bernanke and Olivier Blanchard, are all post-neoliberal delusionists, we’re in good company [in pointing to supply chain disruptions]. Their model also reflects the role of supply chain disruptions, as does work by Peter Orszag [OMB director under Obama], who wrote: ‘The central cause [of the inflationary spike] was the pandemic itself—and the nearly unprecedented supply-side shock it caused, which extended beyond the crisis itself.’”
Speaking at a panel at the American Economic Association, Furman even tried to sell the idea that supply disruptions were of little consequence to Ben Bernanke, the former Fed chair who is anything but a defender of over-stimulus. Bernanke was having none of it. Sectoral shortages drove most price increases, he pointed out.
One of the Biden administration’s first and most impressive reports, “Building Resilient Supply Chains,” which was commissioned during the 2020-2021 transition, was on reclaiming domestic sources of supply, precisely to prevent a recurrence of the sort of supply shock of the early days of the pandemic that led to both recession and shortage-driven inflation. So a prime goal of Biden’s industrial policy was not some sort of perverse economic nationalism in defiance of neoliberal verities; it was to ensure the security of supply chains.
Furman also writes, preposterously, that “Biden was the first Democratic president in a century who did not permanently expand the social safety net.” Among other accomplishments, the Biden administration managed to put in place the largest increase in food stamps ever, as well as major improvements to Affordable Care Act exchanges, and child care requirements and incentives attached to industrial-policy subsidies. His increase in the Child Tax Credit cut child poverty nearly in half, but was limited to just one year because of the opposition of Republicans and faithless Democrats in a closely divided Senate.
In chiding Biden for not doing more, Furman is splendidly oblivious to politics. The hoariest economist joke concerns the economics professor and his student who are walking down the street, deep in thought, and the student, not watching where he is going, falls into a manhole. “What should I do?” asks the student. “Assume a ladder,” replies the professor.
Furman, perfectly in character, assumes away Joe Manchin.
He writes toward the end of his piece that two of Biden’s priorities—expanding the Child Tax Credit and raising the minimum wage—were set back by inflation. Contradicting himself, he notes in passing that these goals were blocked by Republicans. That smells like a line added by an editor.
Turning to Biden’s climate objectives, Furman, with characteristic political myopia, argues that a carbon tax would be more cost-effective than industrial policies. Maybe so, but has Furman heard of the oil industry? There have never been anything close to the votes for a carbon tax, least of all in a closely divided Congress.
IN FAULTING BIDEN FOR OVERSTIMULATING the economy, Furman denies Biden credit for what he did well. At one point, he writes, “Inflation, unemployment, interest rates, and government debt were all higher in 2024 than they were in 2019. From 2019 to 2023, inflation-adjusted household income fell, and the poverty rate rose.”
As Noah Smith writes, taking Furman to task for playing cute with baseline years, “Comparing government debt in 2024 to 2019, and then blaming the rise on Biden, is more than a little unfair, because Donald Trump was President in 2020. More than 100% of the increase in debt actually happened under Trump. In fact, federal government debt actually fell as a percent of GDP between Biden’s inauguration and the third quarter of 2024.”
Smith, something of a careful neoliberal himself, also observes, “As for the unemployment rate being higher in 2024 than 2019, this involves a bit of cherry-picking—in 2022 and early 2023, unemployment rates were as low or lower than they ever were before the pandemic.” For a well-documented technical rebuttal of Furman, see Smith’s Substack, which has its own better-nuanced criticisms of Biden.
Contrary to another bogus claim of Furman, thanks partly to Biden’s success in reaching full employment, worker bargaining power increased and real wages for nonmanagerial workers rose to above their pre-pandemic level.
Furman also contends that Biden’s strategy of running the economy hot combined with targeted industrial policies did not create many jobs. He writes that “industrial policy has not led to better or cheaper microchips or any net job creation” and that “despite signing into law an infrastructure bill that committed over $500 billion to rebuilding everything from bridges to broadband, skyrocketing costs of construction have left the United States building less than it was before the law’s passage.”
In fact, according to official statistics of the Transportation Department, under Biden more than 1.7 million construction and manufacturing jobs and over 700,000 transportation sector jobs were created. Removing residential construction jobs from the total, that totals 1.3 million construction and manufacturing jobs. About 800,000 of these are manufacturing jobs. And the U.S. now has 400,000 more union workers than in 2021.
Moreover, even Furman acknowledges the historic boom in manufacturing construction since the passage of the Biden agenda. Eventually, that construction will be completed, the factories will open, and workers will assume their jobs.
At one point, Furman writes, as if sleepwalking through his own responsibility, that Biden’s stimulus program was “an overcorrection of the Obama administration’s insufficient stimulus package in the wake of the global financial crisis in 2008, which contributed to the United States’ painfully slow recovery.” He got the Obama failure right. Furman was at the center of those Obama policies!
NONE OF THIS CRITIQUE OF FURMAN is meant as a blanket defense of Joe Biden. He appointed some great people and revived antitrust. He defined a sensible form of economic nationalism and allied himself with a resurgence of trade unionism. However, he appointed some regulatory officials who were too close to industry, and his reappointment of Jay Powell to chair the Fed was one of his greatest blunders. Biden also stayed too long at the fair.
But his programs of economic stimulus and industrial policy, if imperfect, were directionally sound and a long-overdue break with the neoliberal past.
What, finally, is Furman up to? At 54, he may feel he still has another shot at a senior economic post in some future Democratic administration. If so, this is his own delusion.
While Democrats are at odds with each other on everything from DEI to whether to make some tactical alliances with Trump, I know of no Democratic faction that pines for the good old days of neoliberalism when Democrats joined with Republicans to cut managed capitalism loose from its moorings and wreck the life chances of working families.
