The Post-

Neoliberal
Delusion
And the Tragedy of
Bidenomics

U.S. President Joe Biden at a manufacturing plant in West

Columbia, South Carolina, July 2023 Jonathan Ernst /
Reuters
Although there are many explanations
for Donald Trump’s victory in the 2024
U.S. presidential election, voters’ views
of the U.S. economy may have been
decisive. In polling shortly before the
election, more than 60 percent of voters
in swing states agreed with the idea
that the economy was on the wrong
track, and even higher numbers
registered concern about the cost of
living. In exit polls, 75 percent of voters
agreed that inflation was a “hardship.”

These views may seem surprising

given various economic indicators at
the time of the election. After all,
unemployment was low, inflation had
come down, GDP growth was strong,
and wages were rising faster than
prices. But these figures largely missed
the lasting effects that dramatic price
increases had 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.

Biden arrived in office in 2021 with

what he understood as an economic
mandate to “Build Back Better.” The
United States had not yet fully
reopened after nearly a year of
restrictions necessitated by the COVID-
19 pandemic, which had suppressed
activity in the service sector. Biden set
out to restructure the country’s post-
pandemic economy based on a
muscular new approach to governing.
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. By
contrast, the Biden team expressed
much more ambition: to spend more, to
do more to reshape particular
industries, and to rely less on market
mechanisms to deal with problems
such as climate change. Thus, the
administration set out to bring back
vigorous government involvement
across the economy, including in such
areas as public investment, antitrust
enforcement, and worker protections;
revive large-scale industrial policy; and
support enormous injections of direct
economic stimulus, even if it entailed
unprecedented deficits. The
administration eventually came to dub
this approach “Bidenomics.”

Biden’s advisers and some prominent

economists proclaimed that the Build
Back Better agenda would herald the
beginning of a post-neoliberal era in
which massive public investment in
infrastructure and the domestic
economy would better position the
country for inclusive growth and the
clean energy future. In their view, they
were turning the page on the economic
policies pursued by Presidents Bill
Clinton and Barack Obama, which the
Biden team implicitly argued were too
focused on free trade, too timid on
deficit spending, and too reliant on the
welfare state to fix the gaps left as a
result. Instead, in order to gain an edge
in the competition with China, the
United States needed a transformative
agenda to revive domestic
manufacturing and power the
transition to green energy.

But the Biden administration’s post-

neoliberal turn, the predicted economic
transformations of which prompted
comparisons to Franklin Roosevelt’s
presidency, fell considerably short of its
lofty goals. In some respects, the
macroeconomic outcomes have been
impressive. The U.S. economy has
bounced back much faster than it did
after previous recessions, and its post-
pandemic performance has also
outpaced that of many peer countries
in terms of economic growth. But the
recovery has been uneven, frustrated
by inflation at least partly induced by
the administration’s own policies.
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.

Even before inflation doomed Biden’s

chances for reelection, it undermined
the administration’s goals. Despite
efforts to raise the child tax credit and
the minimum wage, both were
considerably lower in inflation-
adjusted terms when Biden left office
than when he entered. For all the
emphasis he placed on American
workers, Biden was the first
Democratic president in a century who
did not permanently expand the social
safety net. And 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.

There have been important successes,

especially considering the slim
congressional majority with which
Biden was forced to operate. Massive
legislation that he pushed to address
climate change is already reducing
emissions and likely will continue to
do so even in the face of hostility from
the Trump administration. Domestic
semiconductor production is being
revived. But a hoped-for
manufacturing renaissance has not
materialized, at least not yet. The
proportion of people working in
manufacturing has been declining for
decades and has not ticked back up,
and overall domestic industrial
production remains stagnant—in part
because the fiscal expansion Biden
oversaw led to higher costs, a stronger
dollar, and higher interest rates, all of
which have created headwinds for the
manufacturing sectors that received no
special subsidies from the legislation he
championed.

The Biden administration failed to

seriously reckon with budget
constraints and to contend with the
effects of “crowding out,” when a
surge in public-sector spending causes
the private sector to invest less. Both
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 Democrats, it would be a mistake
to think their loss was due solely to a
global backlash against incumbents—
or worse, to conclude that American
voters had simply been insufficiently
appreciative of everything Biden did
for them.

Truly building back better will require

harnessing the Biden administration’s
ambitions for economic transformation
without discarding conventional
economic considerations of budget
constraints, tradeoffs, and cost-benefit
analysis—in other words, not giving in
to the post-neoliberal delusion.

BIG SPENDERS

Biden entered the Oval Office at an

especially uncertain time during the
COVID-19 pandemic. Vaccines highly
effective at preventing serious illness
and death had become available in
December 2020 and were being rolled
out much more quickly than expected.
But for the first few months of 2021,
wait times for a jab remained long, and
the virus was still wreaking havoc.
Cases and deaths surged nationwide;
January 2021 was the worst month for
mortality of the entire pandemic.
Nevertheless, the economy was
holding up reasonably well. The
unemployment rate was at around six
percent and falling, well below its peak
of roughly 15 percent earlier in the
pandemic and much better than the
dire forecasts of economists who had
expected double-digit unemployment
rates going into 2021. GDP growth
remained strong even in the face of
social-distancing measures that
prevented in-person commerce.

The economy was also awash in pent-

up demand from consumers, who had
been unable to spend during the
pandemic. In 2020, toward the end of
the first Trump administration,
Congress passed $3.4 trillion in fiscal
support; in December, $900 billion was
authorized to fund $600 stimulus
checks for most American adults.
Despite the ravages of the pandemic on
public health, many households had
never been in better financial shape,
with overall debt service payments
representing the lowest share of
disposable income in decades,
delinquencies and defaults remaining
low, and record amounts of money
sitting in checking accounts across the
income spectrum. Economists hoped
that as the rollout of vaccines
proceeded, so would the economic
recovery. In fact, when Biden came to
office, the $1.5 trillion of excess savings
that Americans had accumulated from
the federal largess of 2020 and their
suppressed spending was waiting to be
unleashed by the reopening—perhaps
obviating the macroeconomic need for
yet another large stimulus bill. The
economist and New York Times
columnist Paul Krugman summed up
this view in late 2020. “Once we’ve
achieved widespread vaccination, the
economy will bounce back,” he wrote.
“On average Americans have been
saving like crazy, and will emerge from
the pandemic with stronger balance
sheets than they had before.”

Against these hopeful prognostications

by many mainstream economists,
however, the incoming Biden
administration moved aggressively,
proposing a $1.9 trillion American
Rescue Plan even before coming into
office. With U.S. GDP three percent
below pre-pandemic forecasts as of the
fourth quarter of 2020, an additional
$650 billion in stimulus—about a third
as much—would have been sufficient
to fill the hole in the economy.

Money was needed for vaccination,

testing, and other containment efforts.
But the bulk of the spending was
earmarked for items that clearly were
not needed. Around $900 billion, the
single largest provision in the bill, was
intended to support households
through direct payments and other
transfers. But by December 2020,
monthly real compensation per capita
was only about two percent below its
pre-pandemic trend, and the gap was
closing rapidly. (It returned to its pre-
pandemic trend in April 2021.) Closing
this gap would have cost less than $100
billion—far less than the hundreds of
billions in stimulus spending that
Congress passed. Despite state and
local revenue having fully recovered to
pre-COVID levels by the end of 2020,
state and local governments
nevertheless received around $500
billion more in the stimulus package.

There were several reasons for this

supersized legislation. Uncertainty
about the consequences of the January
2021 COVID surge was partly to blame.
The bill was also 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. In 2021,
Biden administration officials failed to
update their policies as the economic
data turned out to be less dire than
expected.

But economic ideas also played an

important role. Policymakers decided
to run the economy “hot”: that is, to
support high demand to jump-start the
economy even if it meant risking
higher inflation. The Biden
administration believed that the surfeit
of demand this would produce would
benefit a broad group of workers by
increasing their bargaining power and,
by extension, raising their inflation-
adjusted wages. The administration
dismissed dissenting voices who
expressed skepticism about this
approach, such as the economist Larry
Summers, who warned that it would
lead to high inflation.

The U.S. economy did continue to

grow rapidly after the passage of the
stimulus. The recovery was much
faster than the long and difficult return
from the 2008 financial crisis—a
difference mostly attributable to the
fact that financial crises tend to have
persistent negative effects on output,
whereas the pandemic produced only a
temporary shutdown of the economy
with fewer lasting effects. But the
recovery began in mid-2020, and real
GDP growth was a strong 5.6 percent
in the first quarter of 2021, before
much, if any, of the American Rescue
Plan funds had worked their way
through the economy. Most countries
experienced quick recoveries after the
initial shock of COVID, regardless of
whether they passed large stimulus
packages. Although Biden’s boosters
argued that the economy’s growth was
proof of the success of the stimulus
(and thus, of the validity of the
administration’s ideas), much of that
growth can be explained by structural
factors that predated the pandemic and
the stimulus, including faster
productivity growth and favorable
demographic changes. Compared with
other developed countries that are part
of the Organization for Economic
Cooperation and Development, the
United States saw a post-pandemic
recovery that was about average in
terms of real GDP growth versus pre-
pandemic forecasts.

PUMPED UP

Ultimately, the administration’s plans

to transform the United States would
be waylaid by a punishing bout of
inflation. Beginning in 2021, the
country experienced the most
sustained inflation since the early
1980s. The rate of inflation soared from
around two percent to a high of nine
percent, with the price level—the
average price of all goods and services
—rising by about 20 percent over four
years.

Biden’s defenders argued that the

causes were external and not the result
of the administration’s policies. The
fact that rising inflation in the United
States was mirrored in economies
around the world was proof, they
maintained, that Bidenomics was not to
blame. They were partly right. Russia’s
unprovoked invasion of Ukraine in
2022 dramatically raised energy and
food prices, as did supply chain issues
rooted in the pandemic. Indeed, the
2022 supply shocks were much worse
outside the United States: the price of
natural gas peaked at $10 per million
BTU in the United States but $100 per
million BTU in Europe because of
European countries’ greater
dependence on Russian energy
supplies and the limited global trade in
natural gas.

But the fact that inflation was a

worldwide phenomenon does not let
U.S. macroeconomic policy off the
hook any more than the global nature
of the Great Depression or the Great
Recession exonerated U.S.
policymakers then for their mistakes in
managing the economy. The war in
Ukraine and supply chain disruptions
alone cannot explain what happened in
the United States, where core inflation,
which excludes food and energy,
reached a peak of nearly seven percent
in mid-2022. This was not simply the
result of increases in energy and food
prices being passed on to other goods,
such as airline tickets. Energy prices do
not necessarily lead to large increases
in core inflation; when energy prices
surged in 2005, core inflation stayed
below two percent. Higher prices also
proved more durable. By late 2022, oil
prices had fallen back to where they
were before Russia’s invasion of
Ukraine earlier that year, but overall
price increases had not reversed, and,
in fact, inflation remained elevated.

At a supermarket in Los Angeles, June 2022 Lucy

Nicholson / Reuters
Supply chains, meanwhile, were less a
source of strain than an
underappreciated success. Real
consumer spending on durable goods
in the United States rose nearly 30
percent above pre-COVID levels in
2021, with no equivalent bump in
countries that did not provide
continued stimulus checks. Global
supply chains were mostly able to
accommodate the U.S. increase in
spending, in part through large
increases in imports. U.S. ports
processed 19 percent more cargo by
volume in 2021 than they did before
COVID, an unusually large uptick that
was responsible for the lineup of ships
at U.S. ports that many apologists
incorrectly attributed to supply chain
slowdowns. Ports simply could not
keep up with American consumers’
increased appetites for spending. These
were not supply dislocations but a
huge demand shock stemming in part
from the Biden administration’s
decision to provide another round of
stimulus checks.

The increase in support for the

economy resulted in a huge increase in
nominal GDP, as spending is bound to
go up when households have more
money. Real GDP could not have gone
up much more than it did given the
constraints on the productive capacity
of the economy. The excess took the
form of higher prices. 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. Had it not been for the large
infusion of cash and the Federal
Reserve’s delayed response to the
emergence of inflation (it did not raise
interest rates until March 2022), higher
goods prices would have led to
cutbacks in services and lower price
growth without much of an increase in
overall inflation. Economists and
pundits who claimed that inflation
would prove transitory correctly
predicted that the price of goods would
stop increasing but wrongly expected
that would mean an end to inflation.
Instead, inflation migrated from goods
to services, where it remains elevated
to this day.
The Biden administration was not
alone in missing the risk of inflation.
Some Republican economists also
dismissed the idea that the fiscal
stimulus would be inflationary, and
financial markets suggested that
investors believed that inflation would
be transitory. Nevertheless, the same
technocratic macroeconomic models
that recommended, to no avail, a larger
fiscal stimulus during the Great
Recession of 2009–10 now
recommended a much smaller one in
the wake of the pandemic. But the
administration’s desire to avoid
repeating the mistakes of 2008 and its
infatuation with the hot economy
hypothesis cost the economy dearly.

HARD HAT IN HAND

Biden hoped that a hot economy would
benefit workers, especially those with
low incomes, through higher
employment and faster wage growth.
This position found support beyond
the left-wing advocacy groups that had
long pushed for worker-friendly
economic policies: officials at the
Federal Reserve and even some right-
of-center economists endorsed it,
believing that experiences such as the
wage boom of the late 1990s were
evidence of its efficacy.

Unfortunately, the theory proved

unsuccessful in practice. The
overheating of the economy coincided
with a second round of budget deficit
increases—resulting from front-loaded
spending tied to the infrastructure act,
the CHIPS and Science Act, and climate
bills, plus executive actions by Biden,
such as student loan relief—that forced
the Federal Reserve to dramatically
increase interest rates. Although
inflation was mostly brought under
control by mid-2024, the effects were
lasting. As of December 2024, the
unemployment rate was roughly four
percent, above the three and a half
percent before COVID, and inflation
remained slightly above target. More
important, inflation-adjusted wages
have barely increased above pre-
pandemic levels, and the entire
increase in real wages took place in
2020; on net, real wages have fallen
since January 2021.
Meanwhile, from 2020 to 2024, average
real wage growth for workers in every
income group was slower than it was
from 2014 to 2019. Rapid real wage
growth, especially for low-income
workers, began in 2014, when the
unemployment rate was around six
percent, but diminished dramatically
when the unemployment rate fell
below four percent in 2022. That makes
it hard to argue that Biden’s policies
contributed much to real wage growth.
And although by keeping
unemployment down, heating the
economy did give workers more
leverage to demand higher nominal
wages, it also gave businesses more
leverage to raise prices, undercutting
the gains of many ordinary Americans.

Adding to the trouble, the

administration’s laser-like focus on the
demand side came at the expense of
addressing impediments to supply,
such as excessive obstacles to
permitting processes related to
building infrastructure. As a result,
infrastructure suffered an even worse
fate than real wages. More than half the
funds in the Bipartisan Infrastructure
Law dispersed to states through early
2024 went to highway and bridge
projects, prompting a spike in highway
spending, which rose 36 percent from
mid-2019 to mid-2024. But the costs
associated with construction, including
asphalt, concrete, and labor, increased
even more, leaving real infrastructure
spending down 17 percent over the
same period. In fact, the amount of
federal investment in highways during
every year of the Biden administration
was lower than in any year from 2003
through 2020. Biden’s putative
building boom was in reality a building
bust.

The Bipartisan Infrastructure Law did

little to address the root causes of the
United States’ long-standing
infrastructure unaffordability problem
—excessive environmental reviews,
labyrinthine permitting processes, and
laws requiring that workers are paid
prevailing wages—and, in some
respects, worsened the crisis by adding
new requirements. The permitting
reform that was supposed to pass in
parallel with the climate bill never
became law because of Republican
recalcitrance and Democratic fears of
incurring the wrath of
environmentalists. Spending such a
huge amount all at once without any
steps to increase construction capacity
led to even higher cost increases for
building materials than was reflected in
the overall inflation rate.

INDUSTRIAL DEVOLUTION

In January 2021, Biden declared that

one of his administration’s main goals
was “rebuilding the backbone of
America: manufacturing, unions, and
the middle class.” This focus drew on
the work of critics of the old economic
orthodoxy, who charged that the
neoliberal emphasis on free trade
without any supports for workers had
hollowed out once thriving
manufacturing communities and led to
discontent with the deindustrialization
that fueled Trump’s rise. Biden aimed
to revive manufacturing, especially in
sectors he viewed as critical for
national security and climate progress.
He built on Trump’s policies by
retaining, reformulating, or expanding
restrictions on trade to promote
domestic production. He strengthened
and more rigorously enforced “Buy
America” rules for government
procurement, offered subsidies for
companies sourcing clean energy
domestically, and expanded U.S.
production of electric vehicle batteries.
The process used by the Committee on
Foreign Investment in the United
States, which reviews bids for foreign
investment in U.S. companies, was
beefed up, culminating in the
administration blocking the acquisition
of U.S. Steel by Japan’s Nippon Steel.
The government provided tens of
billions of dollars of direct support for
manufacturing in an effort to boost
private investment.

So far, however, this attempted revival

of American manufacturing has
achieved little success. Unionization
rates fell below ten percent in 2024 for
the first time on record. The share of
workers in manufacturing has
continued to fall at the same rate as it
did during the Obama and first Trump
presidencies. Manufacturing output
has remained flat, as it has since 2014.
It is possible that Biden’s policies will
start to work after a lag; one hopeful
sign is an increase in factory
construction, which has more than
doubled in the last five years. But other
indicators, such as investment in
industrial equipment, have not risen,
suggesting that manufacturing may
continue to stagnate.

The manufacturing revival has run up

against the problem of crowding out.
By increasing subsidies for
semiconductor fabrication and green
technology innovation, for example,
the government has encouraged their
production. But these same policies,
coupled with other fiscally
expansionary policies, have driven up
the prices of materials and equipment,
wages for construction and factory
workers, interest rates for
entrepreneurs hoping to borrow, and
the value of the dollar, all of which
have made it harder for nonsubsidized
manufacturing to prosper.

Industrial policy has its merits, but it

did not live up to Biden’s hyperbolic
claims that it would usher in a
manufacturing renaissance along with
millions of well-paying jobs. The
CHIPS Act appears to be succeeding in
its primary objective of shifting
advanced chip production to the
United States. And given that the
national security benefits of domestic
semiconductor production are not
priced into markets, crowding out
other industries with government
subsidies for chip production is
worthwhile. But industrial policy has
not led to better or cheaper microchips
or any net job creation. It has done little
to revive manufacturing or create
middle-class jobs. In fact, favoring
some sectors while crowding out
others likely increased the pace at
which some companies have added
jobs while others have shed them,
leading to the very economic winners
and losers that post-neoliberal critics
complain result from expanded trade.

The administration also kept in place

and even expanded tariffs, effectively
pursuing foreign policy at the expense
of the middle class by keeping the costs
of imported goods high. Sometimes it
is worth paying a cost for another goal;
for example, sanctions on Russia ask
Americans to pay a small cost for a
worthwhile foreign policy objective.
But policymakers should not fool
themselves into thinking these policies
are win-win, which the Biden
administration seemed to do. Biden
never did the hard work of explaining
to the public, for example, that
enforcing further limits on trade with
China imposed real costs on Americans
but that the national security gain was
worth the economic pain.

IT AIN’T EASY BEING

GREEN

Biden made climate policy central to

his agenda, pushing a program
grounded in industrial policy,
regulation, and subsidies that
proponents reasonably argued was
more likely to pass through Congress
than the carbon pricing preferred by
many economists. But the rationale for
this approach went beyond political
feasibility; the administration and its
defenders argued that a carbon tax
could not curb emissions at the scale
needed to blunt the effects of climate
change and that their suite of policies
could both address the climate crisis
and create good-paying jobs by shifting
the production of green technology to
the United States.
Against all odds, the Inflation
Reduction Act passed into law in
August 2022, with extensive subsidies
for renewable energy, electric vehicles,
and the domestic production of green
technologies. Government estimates
have projected that U.S. emissions will
be roughly 17 percent lower by 2050
than was forecast before the IRA was
passed. Given the political constraints,
Biden’s administration could have
done little more to fight climate
change.

Supporters claimed that the industrial

policy approach was the more
progressive option, but it delivered
large subsidies to corporations,
whereas a carbon tax could provide
rebates to households. Gross job gains
are limited, and to an even greater
degree than the CHIPS program, the
IRA is likely to benefit certain
industries at the expense of others.
Shifting the focus of production from
internal combustion engines to electric
vehicles, for example, lends credence to
the possibility that the U.S. economy
will experience a “green shock” akin to
the “China shock” that hit
manufacturing sectors two decades
ago.
Workers assembling electric vehicles in Normal, Illinois,
June 2024 Joel Angel Juarez / Reuters

More important, the IRA will not be

any more effective at lowering
emissions than the carbon taxes that
post-neoliberals have criticized.
Estimates vary, but one of the most
sophisticated studies of the law, co-
authored by two former Biden
administration officials, concluded that
a carbon tax of $12 a ton would result
in about the same emission reductions
as the entire IRA.

The IRA’s reliance on corporate

subsidies should make it politically
resilient. Lobbyists for the oil industry
and the Chamber of Commerce have
pressured the Trump administration to
retain the law’s key provisions even
though Trump called for its repeal on
the campaign trail. But that reliance on
subsidies makes the law harder to scale
up—subsidies cannot simply be made
20 times larger to address the full social
costs of carbon, most recently
estimated by the Biden administration
at about $200 per ton. In 2005, the
European Union instituted a carbon
pricing system starting at around $10
per ton, but it has since risen to a little
over $80 as the EU tightened rules to
rein in emissions. Biden’s programs are
promising, but it’s doubtful they will
be able to scale up as the need to
restrict emissions becomes more
urgent.

Claiming that turning away from

traditional economic approaches is the
only way to address climate change, as
some proponents of the Biden strategy
have, will hinder the United States’
ability to transition its economy.
Policymakers need every tool in the
toolkit to fight climate change—
including “neoliberal” ones.

NET BENEFITS

Climate policy was not the only

bedrock liberal issue on which the
Biden administration valorized its
unorthodox approach. Post-neoliberal
enthusiasm for industrial policy, as
well as stricter antitrust enforcement
and labor market regulation—so-called
predistribution policies—have blinded
progressives to the fact that Biden did
little to permanently redistribute
income by building a stronger social
safety net. The Build Back Better
agenda did include the American Jobs
Plan for infrastructure and energy and
the American Families Plan, which
would have provided paid leave for
new parents and support for children.
The former passed, but the latter did
not. Some supporters of Biden, such as
his top antitrust official Tim Wu,
embraced the view that the policies
that passed would transform the
economy such that more traditional
Democratic social policies would
become unnecessary.

All the Democratic presidents since

Franklin Roosevelt put their stamp on
the social safety net in ways that
endure to this day: establishing and
expanding Social Security, expanding
access to health insurance, providing
subsidies for food, and providing
housing assistance. Biden expanded
premium tax credits for health
insurance under the Affordable Care
Act through 2025. But two of his
priorities—expanding the child tax
credit and raising the minimum wage
—were set back by inflation. The child
tax credit was temporarily expanded in
2021, contributing to a significant
reduction in child poverty that year.
But Republicans blocked renewal of the
expansion; after a year, it returned to its
previous value of $2,000 per child,
which was never indexed to inflation.
As a result, its real value has fallen by
20 percent over the last four years,
which amounts to one of the largest
real cuts to family support or the social
safety net that the country has ever
seen—dwarfing much of the legislation
passed by previous presidents hostile
to these programs. At the same time,
Republicans opposed a minimum wage
increase, preventing it from winning a
filibuster-proof majority in the Senate.
So the minimum wage, too, has fallen
by 20 percent in real terms and is now
effectively meaningless, barely binding
in a world in which competition forces
almost all employers to pay more than
$7.25 an hour.

BACK TO BASICS

Trump’s 2024 presidential election

victory was in no small part a harsh
rebuke to the Biden administration’s
economic policy. Proponents of the
Build Back Better agenda, in
convincing themselves that the hot
economy was transformative for
workers, appeared oblivious to the
genuine concerns of the electorate.
Biden’s supporters and policymakers,
especially those who have denied the
effects of inflation, insisted that voters
grossly misunderstood the economy or
attributed Vice President Kamala
Harris’s loss in the 2024 presidential
election solely to a global rejection of
incumbents. It is possible that just the
portion of inflation caused by global
shocks would have been enough to
doom any incumbent party’s reelection
chances. But adding to that inflation
with unnecessary spending,
minimizing the suffering it caused, and
touting an imaginary boom in
infrastructure and manufacturing
surely did not help Democrats.

The new economic philosophy that

dominated during the Biden years
emphasized demand over supply. It
considered concerns over budget
constraints overstated and placed its
faith in predistribution as a way to
change the trajectory of the
macroeconomy. It promised policies
that could simultaneously transform
industries, prioritize marginalized
groups in procurement and hiring
practices, and serve broad social goals.
Ultimately, this post-neoliberal
ideology and its adherents did not take
tradeoffs seriously enough, laboring
under an illusion that previous
policymakers were too beholden to
economic orthodoxy to make real
progress for people.

Rather than merely resorting to

conventional approaches, however,
what the country needs now is a
renewal of economic policy thinking.
The post-neoliberals were not wrong
about the problems they inherited.
Largely free labor markets have failed
to deliver high levels of employment
for prime-age workers in the United
States for decades. National security
concerns now shadow every question
regarding trade and technology. And
the transition to green energy will
require dramatic action. New ideas
about these old problems will never
yield successful policies, however, if
they dismiss budget constraints, cost-
benefit analysis, and tradeoffs. It’s fine
to question economic orthodoxy. But
policymakers should never again
ignore the basics in pursuit of fanciful
heterodox solutions.