There is a famous story by French writer Jean Giono about a man who plants trees in a barren valley. “For three years he had been planting trees in this wilderness. He had planted one hundred thousand. Of the hundred thousand, twenty thousand had sprouted. Of the twenty thousand he still expected to lose about half, to rodents or to the unpredictable designs of Providence. There remained ten thousand oak trees to grow where nothing had grown before.”
President Joe Biden has planted a lot of trees during his first three years in office, pushing through Congress bills that direct the investment of billions of dollars into infrastructure, research and subsidies for domestic manufacturing.
As he begins to ask voters for a second term, Biden can make a strong case for his stewardship of the American economy. His determination to treat the economic effects of the Covid-19 pandemic with large infusions of federal aid eased the pain of the crisis and propelled a rapid recovery, notwithstanding a painful spike in inflation that has left a sour taste in the mouths of voters. His administration also has made creative use of its regulatory authorities to shift power to workers and consumers from corporations.
But it is Biden’s reinvigoration of the government‘s role as the nation’s most important investor that may endure as a turning point in the nation’s political and economic history.
Investments, like saplings, do not yield immediate fruit, and Biden has struggled to generate public enthusiasm for these long-term strategies.
He deserves more credit. Government investment plays a critical role in the nation’s economy. It provides the means to develop ideas that aren’t yet ready for the market, the power to turn ideas into products, the roads to deliver goods to consumers. America’s prosperity in the late 20th century was the harvest of its investments after World War II. The economic malaise of the last few decades is equally a product of the failure to continue making new investments.
Federal spending on research and development, measured as a share of the nation’s economic output, declined to the lowest level in half a century in 2017.
During the Biden administration, it has begun to rise again.
The emphasis on investment also restores a healthy competition of ideas between our major political parties. It arms Democrats, for the first time in recent decades, with a message that can plausibly compete with “tax cuts,” the two words that define Republican economic policy.
Biden is articulating a simple, strong contrast: Republicans believe that collecting less money in taxes will catalyze economic growth; Bidenomics “is rooted in what’s always worked best for the country: investing in America and investing in Americans,” as the president put it in a November speech in Northfield, Minnesota.
It is an overdue end to an era in which the difference between the parties could be summarized as a debate about how large tax cuts should be.
The Democratic Leadership Council emerged as a force in the 1980s by arguing that Democrats needed to accept the broad outlines of President Ronald Reagan’s economic agenda to win national elections. In a 1990 manifesto, the group declared that its North Star in matters of economic policy was to “expand opportunity, not government.”
Bill Clinton rode that platform to victory in the 1992 presidential election, and the people who charted the course of economic policy during the Clinton years remained at the wheel during the next Democratic administration, under President Barack Obama.
But the minimization of government worked better as politics than as economics. It was based on a false dichotomy. As Biden recognizes, expanding government’s role in the economy is necessary to expand opportunity. During the 1990s, America’s workforce was the best educated in the developed world, and companies built empires on the foundation of federal investments in technology. Since then, other nations have surpassed the United States in education and in developing new technologies.
Biden’s response to the pandemic similarly reflects the revival of a more robust conception of government’s role in the economy. In the opening months of his presidency, he pumped money into the economy on a scale unmatched during any other economic crisis of the postwar era, despite the warnings of some prominent economists that it was too much and would do more harm than good.
It appears clear in retrospect that the benefits were larger than the costs. Federal aid shielded millions of American families from destitution, hunger and the loss of their homes, and it spurred a recovery that has far outstripped the postpandemic rebounds in other developed democracies. In the third quarter of 2023, real wages in the United States were 2.8% higher than in the third quarter of 2019. Among the other six members of the Group of 7 developed democracies, the next best performer was Canada, where real wages were 0.2% higher in the third quarter of 2023 than before the crisis. In the other five countries, real wages still had not rebounded completely.
The thick layer of federal aid also has helped to deliver a recovery that is more even across the United States than after past downturns. During most periods of economic growth, some parts of the country lag further. In 2000, for example, even as the national unemployment rate fell below 4%, unemployment in Alaska, the state with the weakest labor market, remained above 6%. Brendan Duke, an economist at the Center for American Progress, points out that the current expansion, by contrast, is unusually even. The highest unemployment rate in any state in November was 5.4%, in Nevada. That is the lowest highest rate in the past half-century.
The Biden administration also has used its regulatory powers to distribute prosperity more evenly. Biden has championed a revival of antitrust enforcement aimed at curbing the market power of large corporations. He has supported labor unions more vocally than any of his predecessors, becoming the first president to walk a picket line, when he joined striking workers outside a Michigan auto plant.
The Biden administration has engineered a historic increase in the value of food stamps; proposed a ban on noncompete agreements, which hold down wages; and forgiven billions of dollars in student loans, among other measures aimed at reducing economic inequalities.
The large hole in these efforts is the failure of the domestic portion of Biden’s domestic agenda — his ambitious and important proposals to provide more direct assistance to American families, especially to working parents, including through a permanent expansion of the federal child tax credit, guaranteed access to affordable child care and universal paid sick and family leave.
This failure, which is mostly — but not entirely — the responsibility of obstruction by congressional Republicans, remains important even if Biden’s investments succeed. Growth is not like the tide, which raises all boats. Just as government has an important role to play in the creation of prosperity, it has a role to play in its distribution.
There also remains one respect in which Democrats should take a page from Reagan. In 1984 his campaign aired a famous ad declaring that it was “Morning again in America.” Biden has grounds for making the same claim. His economic policies, if they are carried forward, hold the promise of opening a new era of prosperity.
The end of Reagan’s ad is worth repeating, too.
“Why would we ever want to return to where we were less than four short years ago?”
President Joe Biden has planted a lot of trees during his first three years in office, pushing through Congress bills that direct the investment of billions of dollars into infrastructure, research and subsidies for domestic manufacturing.
As he begins to ask voters for a second term, Biden can make a strong case for his stewardship of the American economy. His determination to treat the economic effects of the Covid-19 pandemic with large infusions of federal aid eased the pain of the crisis and propelled a rapid recovery, notwithstanding a painful spike in inflation that has left a sour taste in the mouths of voters. His administration also has made creative use of its regulatory authorities to shift power to workers and consumers from corporations.
But it is Biden’s reinvigoration of the government‘s role as the nation’s most important investor that may endure as a turning point in the nation’s political and economic history.
Investments, like saplings, do not yield immediate fruit, and Biden has struggled to generate public enthusiasm for these long-term strategies.
He deserves more credit. Government investment plays a critical role in the nation’s economy. It provides the means to develop ideas that aren’t yet ready for the market, the power to turn ideas into products, the roads to deliver goods to consumers. America’s prosperity in the late 20th century was the harvest of its investments after World War II. The economic malaise of the last few decades is equally a product of the failure to continue making new investments.
Federal spending on research and development, measured as a share of the nation’s economic output, declined to the lowest level in half a century in 2017.
During the Biden administration, it has begun to rise again.
The emphasis on investment also restores a healthy competition of ideas between our major political parties. It arms Democrats, for the first time in recent decades, with a message that can plausibly compete with “tax cuts,” the two words that define Republican economic policy.
Biden is articulating a simple, strong contrast: Republicans believe that collecting less money in taxes will catalyze economic growth; Bidenomics “is rooted in what’s always worked best for the country: investing in America and investing in Americans,” as the president put it in a November speech in Northfield, Minnesota.
It is an overdue end to an era in which the difference between the parties could be summarized as a debate about how large tax cuts should be.
The Democratic Leadership Council emerged as a force in the 1980s by arguing that Democrats needed to accept the broad outlines of President Ronald Reagan’s economic agenda to win national elections. In a 1990 manifesto, the group declared that its North Star in matters of economic policy was to “expand opportunity, not government.”
Bill Clinton rode that platform to victory in the 1992 presidential election, and the people who charted the course of economic policy during the Clinton years remained at the wheel during the next Democratic administration, under President Barack Obama.
But the minimization of government worked better as politics than as economics. It was based on a false dichotomy. As Biden recognizes, expanding government’s role in the economy is necessary to expand opportunity. During the 1990s, America’s workforce was the best educated in the developed world, and companies built empires on the foundation of federal investments in technology. Since then, other nations have surpassed the United States in education and in developing new technologies.
Biden’s response to the pandemic similarly reflects the revival of a more robust conception of government’s role in the economy. In the opening months of his presidency, he pumped money into the economy on a scale unmatched during any other economic crisis of the postwar era, despite the warnings of some prominent economists that it was too much and would do more harm than good.
It appears clear in retrospect that the benefits were larger than the costs. Federal aid shielded millions of American families from destitution, hunger and the loss of their homes, and it spurred a recovery that has far outstripped the postpandemic rebounds in other developed democracies. In the third quarter of 2023, real wages in the United States were 2.8% higher than in the third quarter of 2019. Among the other six members of the Group of 7 developed democracies, the next best performer was Canada, where real wages were 0.2% higher in the third quarter of 2023 than before the crisis. In the other five countries, real wages still had not rebounded completely.
The thick layer of federal aid also has helped to deliver a recovery that is more even across the United States than after past downturns. During most periods of economic growth, some parts of the country lag further. In 2000, for example, even as the national unemployment rate fell below 4%, unemployment in Alaska, the state with the weakest labor market, remained above 6%. Brendan Duke, an economist at the Center for American Progress, points out that the current expansion, by contrast, is unusually even. The highest unemployment rate in any state in November was 5.4%, in Nevada. That is the lowest highest rate in the past half-century.
The Biden administration also has used its regulatory powers to distribute prosperity more evenly. Biden has championed a revival of antitrust enforcement aimed at curbing the market power of large corporations. He has supported labor unions more vocally than any of his predecessors, becoming the first president to walk a picket line, when he joined striking workers outside a Michigan auto plant.
The Biden administration has engineered a historic increase in the value of food stamps; proposed a ban on noncompete agreements, which hold down wages; and forgiven billions of dollars in student loans, among other measures aimed at reducing economic inequalities.
The large hole in these efforts is the failure of the domestic portion of Biden’s domestic agenda — his ambitious and important proposals to provide more direct assistance to American families, especially to working parents, including through a permanent expansion of the federal child tax credit, guaranteed access to affordable child care and universal paid sick and family leave.
This failure, which is mostly — but not entirely — the responsibility of obstruction by congressional Republicans, remains important even if Biden’s investments succeed. Growth is not like the tide, which raises all boats. Just as government has an important role to play in the creation of prosperity, it has a role to play in its distribution.
There also remains one respect in which Democrats should take a page from Reagan. In 1984 his campaign aired a famous ad declaring that it was “Morning again in America.” Biden has grounds for making the same claim. His economic policies, if they are carried forward, hold the promise of opening a new era of prosperity.
The end of Reagan’s ad is worth repeating, too.
“Why would we ever want to return to where we were less than four short years ago?”