Biden Can Afford to Build Back Better Slowly
(Bloomberg Opinion) -- In his bid to make his presidency historic, Joe Biden has taken a first step: He met with historians. They encouraged him to quickly enact his “Build Back Better” plan even if it means eliminating the filibuster and forgoing any attempts at bipartisanship. At his press conference Thursday, he indicated that he was open to the idea.
In fact, the key to his success is a smaller, slower agenda.
Biden was right to go fast and big on stimulus. But there are important differences between the stimulus bill that he signed into law and the infrastructure bill that is being put together now.
First and foremost, the stimulus addressed the ongoing Covid crisis and replenished programs both for workers and small businesses. More generally, it set up the economy to bounce back in late 2021 and into 2022. That’s crucial, because even before the pandemic, the U.S. labor market had not fully shaken off the effects of the Great Recession — and anything less than a booming economy risks the permanent loss of marginal workers from the labor market.
Politically, a booming economy is essential for support of the rest of Biden’s agenda. Especially if the pandemic is abating, midterm voters will most likely judge Biden on how well the economy is performing.
The approach recommended by historians probably owes something to the experience of Biden’s old boss, President Barack Obama. In 2009 the Obama administration accepted the view that the U.S. economy was still going to be terrible when voters headed to the polls in 2010. Members of the administration worried that they had only two years to pass major legislation before the backlash began and Democrats would lose their majority in Congress. Whatever was going to be accomplished, had to be accomplished quickly.
But the circumstances are not analogous. The political and economic winds will be at Biden’s back in 2022. Even more important — and unlike Obama — Biden is meeting the American people where they are. The through line of his Build Back Better agenda is that the U.S. needs to invest in greater industrial capacity — with infrastructure as well as direct support for homegrown industries — even if that means turning away from the bipartisan economic consensus of the 1990s.
The echo here is not so much to Obama’s agenda as to the core idea of Donald Trump’s MAGA platform, which focused above all on trade and reindustrialization.
The second pillar of Biden’s plan is increasing investment in families and children. Social conservatives are more open to that agenda as well, with some of the more ambitious proposals coming from Republicans.
Of course, Democrats would prefer a program that achieved these goals with more direct action on climate, greater government involvement rather than direct payments to families, and a stronger emphasis on racial justice. But these issues and approaches are not likely to be popular across the political spectrum.
So if Biden jams through a package before the midterms, he could find himself fending off attacks against its more fringe elements. If instead, he uses the next two years to build support for his general agenda, the midterms could feature congressional candidates arguing over which version Build Back Better they prefer. That’s precisely the debate Biden wants to have if his goal is a lasting and fundamental shift in American politics.
Since the Great Recession, U.S. politics has become increasingly partisan at all levels. Both Democratic and Republican politicians attempted to use the financial crisis and its aftermath as opportunities to enact long-standing priorities over strenuous objections from the other side. Republicans were never going to get on board with a huge expansion of federal control over health care. Democrats were never going to sign on to an enormous corporate tax cut.
Build Back Better is different. Core constituencies in both parties already back its basic premise. If he takes time to make the case, Joe Biden can create a consensus in support of a profound shift — even, should he dare to use the term, a historic shift — in U.S. economic policy.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Karl W. Smith is a Bloomberg Opinion columnist. He was formerly vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina. He is also co-founder of the economics blog Modeled Behavior.
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