President-elect Joe Biden’s speech on Thursday night was his best in years ― a calm, clear-eyed assessment of the trials facing the United States in the year ahead, and a morally compelling call for an assertive government to fight the pandemic and provide economic relief to its people.
“A crisis of deep human suffering is in plain sight,” Biden said. “We have to act, and we have to act now.”
Biden not only spoke convincingly to the struggles families are facing in a time of “real pain overwhelming the real economy,” but he also provided a sophisticated economic rationale for his program. “A growing chorus of top economists” no longer believe apocalyptic warnings about the dangers of government spending and government debt, he said. The real danger, according to this new intellectual consensus, is not spending enough.
“We cannot afford inaction,” the president-elect continued, noting that a bold, multitrillion-dollar economic agenda “will prevent long-term economic damage” and provide near-term social rewards.
“The benefits will far surpass the costs,” he said.
The details of the plan Biden put forward fall a bit short of the emotional and intellectual grandeur of his speech, however. By relying on tax credits to deliver some key relief funds ― particularly his expanded child care tax credits ― important elements of the $1.9 trillion package will not be delivered until 2022, which is a long way from the imperative now in which Biden urged Congress to act. More immediate measures, such as the $400-a-week expansion of unemployment benefits, come with a hard deadline in September, setting up another round of high-stakes negotiations with Republicans. Republicans may very well choose to sit that out entirely, as they did when the initial batch of expanded unemployment benefits expired in July.
With the economy running about $3.5 trillion a year short of its February 2020 output, according to economists Mark Paul and Adam Hersh, Biden’s $1.9 trillion price tag will not be sufficient to close the gap between the economy we have today and what we called “prosperity” under President Donald Trump.
And the politics of the package are murky. Biden hopes to pass his plan with the support of at least 10 Republican senators, which is all but impossible to imagine regardless of how obstructionist soon-to-be Senate Minority Leader Mitch McConnell (R-Ky.) chooses to be. Republican-aligned business groups are cheering the Biden plan, but the party these days is more beholden to QAnon than the Koch family.
Biden’s package will likely have to be passed through the budget reconciliation process, allowing Democrats to bypass a Republican filibuster. If reconciliation is the route, Biden’s $15 minimum wage proposal will have to be discarded. And with a mere one-vote Democratic majority in the Senate, Biden will almost certainly have to make concessions to conservative Democrats who, for whatever reason, are eager to show voters at home that they just won’t stand for all the nice things Biden wants to give them. We will probably never see the full $1.9 trillion.
Despite these oddities and disappointments in Biden’s proposal, there is simply no denying that his program is more ambitious and progressive than the economic agenda of former President Barack Obama. Relative to the size of the economy, Biden’s stimulus is more than a third larger than Obama’s 2009 bill.
Where Obama offered corporate tax cuts, Biden would provide small-business rescue funding. The roughly $1 trillion in aid to families is concentrated among those who need it most ― the unemployed and those who are low-income ― but includes measures like an additional round of $1,400 that will reach most middle-class families.
The tax credits may not come until next year, but will be welcome when they arrive: Biden would expand the earned income tax credit for workers of modest means from $530 a year to $1,500 for 2021. He would bump the child tax credit from $2,000 to $3,000, and $3,600 for children under 6 years old. A separate child care tax credit would be increased from $3,000 to $4,000 per child, with a maximum family benefit of $8,000.
All told, these three changes alone would give a low-income family of four with two adult workers an $8,200 boost. Add in the checks, which go out to each individual in the household, and that same family would see a $13,800 increase in their income across the next two years.
This is real money that will help millions of households weather the storm. But it will not update the deteriorating foundations of the U.S. economy. Biden was being honest when he called it the first in a two-step economic program of “relief and recovery.”
His $160 billion vaccination program and $350 billion in federal aid to state and local governments are best understood as public health measures to fight the COVID-19 pandemic. You can’t get vaccines out the door if local governments are laying off everyone who would provide them.
There is simply no denying that Biden’s program is more ambitious and progressive than the economic agenda of former President Barack Obama.
Indeed, Biden’s most ambitious language on Thursday night was focused on his “recovery” step, to be revealed in detail next month.
“American manufacturing was the arsenal of democracy in World War II,” Biden said. “It will be so again.”
He promised “historic investments” in research and development on everything from batteries to artificial intelligence to clean energy, as well as a massive domestic infrastructure project to repair roads, bridges and public transportation.
This is where Biden has the opportunity to be a transformational president. For decades, public economic investment has lagged, as leaders in both parties have insisted that all important new developments are spawned by the genius of the private sector. But the type of innovations we have seen in this era are not particularly inspiring. The brightest minds in Silicon Valley are largely devoted to uncovering new ways of dodging regulations and slashing labor costs. Uber makes it easier to get a ride, but it doesn’t establish a new foundation for middle-class prosperity.
There’s a reason. One company, even a massive tech monopoly, can’t provide the sustained investment and coordination necessary to upgrade American industry. Any company that tries will be flushing money away. Only the government can provide this economic stability, and once it does, new productive private innovations taking advantage of that public investment will follow.
We don’t yet know what Biden will propose for his “rebuild” stage, and the politics of rebuilding are even more precarious than those of relief. Trump has thundered about domestic manufacturing and infrastructure for four years, and Republicans in Congress have delivered nothing of substance on either measure. How Biden will convince them to deliver for a Democrat is unclear.
But a domestic investment program will be popular, and Biden will have a strong case that it’s critical for public health. In Taiwan, for example, the government ramped up the domestic manufacturing of face masks to the point where every household was receiving a fresh supply of high-quality, government-regulated masks every week as early as April 2020. This was not just an economic program — it was part of an enormously successful public health program. To date, only seven people have died from COVID-19 in Taiwan.
We need the ability to manufacture ourselves out of not just this crisis, but the next.
Zachary D. Carter is the author of The New York Times bestseller “The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes,” named one of the best books of the year by The New York Times, The Economist, TechCrunch, Publishers Weekly and others.