Susan Walsh/AP Photo
President Biden waves outside Air Force One, at Andrews Air Force Base, Maryland, March 16, 2021, as he prepares to depart for a trip to Pennsylvania.
We can all celebrate President Biden’s first hundred days. His appointments have been mostly better than feared. He is dreaming big on everything from COVID relief and recovery to a large-scale infrastructure program. His $1.9 trillion rescue program achieves goals that have long eluded progressives, most notably a much enlarged temporary child tax credit, which will be difficult to terminate next year once experienced by so many Americans. Activist government is back, and it’s broadly popular. And the deficit hawks have been banished from the temple.
He, and we, also benefit from the kind of splits in the Republican Party of which Democrats only dream. Biden’s program is far more popular with Republican voters than with Republican politicians. Mitch McConnell and Donald Trump are at each other’s throats.
The Republican schisms bode well for 2022. Normally, Democrats would lose seats in a new president’s first midterm. Another 10 to 15 Democratic House seats are at risk from redistricting. However, this loss could be offset by Republican fratricide. If center-right Republicans in swing districts are ousted in primaries by far-right Trumpers, Democrats could pick up those seats.
The amazing on-the-ground efforts of 2017–2018 helped the Democrats pick up 41 House seats in 2018. That upsurge of organizing was short-circuited by the pandemic in 2020, while Trump went right on with live, infectious campaigning. But Trump will not be on the ballot in 2022.
With the GOP fractured, Democratic turnout could easily exceed Republican. The Senate also looks good, with more vulnerable Republican seats than Democratic ones. As I reported in a feature piece in our last issue, the Democrats now have a party chair in Jaime Harrison who believes in local party-building and long-term organizing, Howard Dean style.
Economic tailwinds, and the massive relief of the pandemic being over, will also help the Democrats hold their own, maybe even make gains. Analysts expect the economy to grow as much as 7 percent this year.
All that said, the challenges go much deeper than Democratic prospects for the midterms. The big risk is that Biden will not be able to transform the American political economy, Roosevelt fashion, in a fashion that transforms life chances for working people. And if that is the case, despite Biden’s popularity the grievances that helped propel the Tea Party and Trump will remain to reinfect the polity.
THE NEW DEAL did three big, extraordinary things. First, it imposed a salutary straitjacket on capital. Second, it empowered labor. And third, it used government in visible and dramatic ways to help regular people.
Due to the historical accident of World War II, the 1940s did even more of this than the 1930s. By the time war broke out, Roosevelt had pretty well purged abuses from the big banks and brokerage houses. The war buildup required a great deal of public capital, as well as income surtaxes as high as 93 percent on the wealthy. The need for wartime debt financing put speculative capital markets on hold, and pegged interest rates on government bonds. This further tilted the balance against concentrated private wealth.
The war buildup also produced overfull employment. Wages were controlled, but companies bid for scarce workers with good health and pension benefits. The wartime no-strike pledge required government to redouble its alliance with organized labor. Defense contractors—every large corporation that mattered—were required to recognize unions. The big wage gains, built on these structural changes, came in the postwar period.
By the time the war ended, the relationship between capital, labor, and government had been transformed. Ordinary people could live a middle-class lifestyle on one income. The power of unions meant that rising productivity translated into regularly rising earnings, well beyond the minimum wage (which was far higher in real terms then than now).
Most jobs were regular payroll jobs. Temp work was rare, and gig work hadn’t been invented. The tax system remained steeply progressive through the late 1970s. In the three prosperous postwar decades, the distribution of income and wealth became more equal.
Some of the economic security of the working middle class was a one-time happy convergence. Cheap farmland could be converted to affordable housing within commuting distance of large cities. It was possible for people to attend public university for free, without too much toll on the public treasury, because far fewer went to college. Trade was simply not an issue, because there wasn’t much.
Much of the postwar social contract was the result of deliberate policies, which in turn transformed power relations.
Yet attributing the good package of jobs, housing, and education to a one-time lucky convergence of events lets politics off the hook too easily. Much of the postwar social contract was the result of deliberate policies, which in turn transformed power relations. Government intervened on the side of labor, against capital. Speculative transnational movements of money were prohibited. Public universities were tuition-free as a matter of state policy. The GI Bill even paid living stipends as well as covering college tuition, public or private. Those interventions were not happy accidents. They reflected a profound power shift.
This basic social compact continued through the 1970s, when the combination of stagflation, globalization, and the resurgence of corporate power set in motion its reversal. The erosion became more explicit with the advent of Reaganism, and then with the Democratic me-too embrace of a lot of the neoliberal formula.
A shift back to the power relations of the era that spanned FDR through Johnson will require a transformation as revolutionary as that of the New Deal, in far less auspicious circumstances. Prospect co-editor Paul Starr has given us the concept of entrenchment—the tendency of politics and policies to be self-reinforcing. The New Deal revolution stayed entrenched for more than a generation. It changed norms as well as laws, reinforcing the entrenchment. But now the Reagan Revolution has been entrenched for longer than FDR’s, with aid and comfort from Wall Street Democrats. And it will be a bear to reverse.
BIDEN, MERCIFULLY, has broken with many of the neoliberal shibboleths that characterized the Clinton and Obama presidencies. He supports massive public investment, and rethinking orthodox trade and fiscal policy. That’s a promising start.
But what would Biden’s administration have to do in order to restore anything like the Roosevelt-Johnson era’s distribution of income, wealth, power, and life chances? The grotesque inequality and insecurity of today’s economy operates at both the bottom and the top. Let’s start with the liberation of capital.
The wreckage of the New Deal regulatory model has allowed the hyperconcentration of finance, with proliferation of business models such as hedge funds and private equity that do little to help the real economy but allow astronomical incomes at the top as well as intensified turbulence for ordinary companies and workers. The financial collapse provided both a reason and an occasion for the Obama administration to perform Roosevelt-style surgery on Wall Street. But Obama’s team settled for tinkering around the edges. High incomes are more highly concentrated than ever.
Another source of grotesque income concentration is the evisceration of antitrust. Many of the world’s wealthiest people are tech monopolists.
Getting serious about competition policy is necessary to moderate these supernormal profits. The abuse of patent, trademark, and copyright laws also promotes income extremes at the top, most dramatically in pharma and tech but elsewhere as well.
To seriously undertake these reforms, Biden would need to declare war on the excesses of concentrated capital, much as FDR did. But despite the COVID economic crisis, Biden doesn’t have Roosevelt’s sort of national emergency or Roosevelt’s large working majority in Congress. And he is chummier with Wall Street donors than Roosevelt was. He doesn’t welcome their hatred.
Biden is spending money to combat the crisis, but is not shaking the dominance of capital. These opportunities to drastically constrain the excesses of capitalism come once or twice in a century. FDR met his rendezvous with destiny. Obama missed his.
The good news is that the pandemic’s emergency measures took some steps toward a universal basic income, and opened the door to bolder experimentation.
There is a similar story at the middle and bottom of the income scale. To restore anything like the living standards and life prospects for ordinary people of the postwar boom, government would need to radically intervene on the side of labor, starting with the labor movement. John L. Lewis could say, with only slight poetic license, “President Roosevelt wants you to join the union.” Biden finally got around to saying that, indirectly, he supports the organizing drive at an Amazon warehouse in Alabama. He needs to go further.
A $15 minimum wage, still a long shot, is a bare beginning. Given the cost of living, it should be at least $20. Beyond that, government policy should make it illegal or at least uneconomic for corporations to convert payroll jobs to gigs. And government would need to supplement all that with massive job creation at good wages, such as making every human-service job a middle-class profession, as well as income supports. The good news is that the pandemic’s emergency measures took some steps toward a universal basic income, and opened the door to bolder experimentation, one of Roosevelt’s favorite concepts.
Lasting gains on the worker income and security front will require a massive revival of the labor movement. Strong unions are a direct source of worker power. They are a constituency for a progressive, worker-focused Democratic Party; and a source of worker education about how capitalism really works, and thus a partial inoculation against the false allure of Trumpism. Even with a supportive Biden administration, building back labor will be trench warfare.
HERE IS THE practical litmus: How much would have to change about the workaday economy and government’s role in it for Trump voters to give progressive populism a second look? One would have to be a giddy optimist to expect a Rooseveltian transformation by 2022 or 2024. But perhaps some plausible steps in that direction can give voters confidence that more are on the way?
On top of all this is the challenge of race. The New Deal social contract, disgracefully, could get the necessary legislative support of Dixiecrats who controlled key congressional committees only by doubling down on Jim Crow. The New Deal not only denied nearly all Blacks the protections of Social Security and the Wagner Act, by excluding such occupations as farmworker and domestic worker. It deliberately introduced racial segregation to places that had been integrated in the North, via racially separate public housing and racially restricted covenants mandated by the Federal Housing Administration.
Today, the long-deferred demand for racial justice is due and payable. So Biden will not only need to take radical steps to rebalance labor, capital, and government. He will need to succeed in a project whose success eluded Abraham Lincoln and Lyndon Johnson—creating a durable transracial political coalition. Heather McGhee’s superb new book, The Sum of Us, reviewed in these pages, points to a hopeful if paradoxical strategy of anti-racism as coalition: to remind whites of all the ways that racism hurts them too, by denying them policies of common class uplift.
If that strategy could ever succeed, Trumpism is finished. But for it to prevail, the other economic transformations must prevail as well. In short, to succeed as a liberal, Biden must govern as a radical.
The campaigns of Bernie Sanders and Elizabeth Warren gave us a taste of what progressive populism looks like. In 2016, Sanders did succeed in peeling off some voters who eventually defected to Trump.
Biden is not Sanders. Neither, of course, is Biden FDR. However, even FDR, who began as an advocate of budget balance, got radicalized in office. To some extent, events make the president. One has to hope that pressure from the party left, combined with the political logic of the situation and Biden’s own growing boldness, will keep pushing his administration deeper in the direction of progressive populism.
Even so, just about everything will have to break right—in a fateful race between a radically transformed economy and the next incarnation of Donald Trump.
