Much has already been written about Joe Biden’s presidency. His plans that will expand the size and scope of the federal government receive the most attention.
Biden quickly pushed a $1.9 trillion coronavirus relief package through Congress, despite unanimous Republican opposition. This was on top of $3 trillion of relief passed while Donald Trump was still in the White House. Biden proposed a further $2 trillion on what he generously characterizes as “infrastructure” and $1.8 trillion to “support families.” To give some idea of the cost of all this, Washington spent a total of $4.4 trillion in 2019. The legislative response to the financial crisis in 2008-9—principally the American Recovery Act and the bailout of troubled financial institutions and other companies—cost about $1.3 trillion. Added to regular expenditures, Biden’s proposals means spending is likely to be about 27% of GDP this year and well over 20% after that.
With this agenda, Biden has drawn comparisons to FDR. The New Deal transformed America’s government and economy. In 1930, federal civilian workers constituted about 1% of the country’s labor force and government spending was just over 1.5% of GDP. In 1940, before the U.S. entered World War II, the proportion of Americans working for the federal government outside the Department of Defense doubled and expenditures exceeded 6% of the total economy. The government grew dramatically in the decades after the New Deal. But FDR’s agenda of massive public works projects, Social Security, food stamps, meaningful unemployment insurance, and strict regulation of production, prices, and wages initiated the process.
FDR is among the presidents progressives most admire. They view his policies as redistributionist and trace the beginnings of the modern welfare state back to his administration. They suggest he radically altered American capitalism, finally killing off the Gilded Age of Gatsbys and industrial “Robber Barons,” while finally coming to grips with urban squalor. In many ways, however, the New Deal was more conventionally American. Deeply influenced by the economic theory of John Maynard Keynes, FDR borrowed and printed money, using debt to stimulate moribund demand and therefore generate growth. His counter-cyclical fiscal policy echoed Alexander Hamilton and Henry Clay who had called for huge federal financing with their efforts to strengthen the country by providing public goods and subsidizing certain industries. Infrastructure—generally called “internal improvements” back then—was all the rage in the 1790s and 1830s-1840s.
Biden’s agenda displays the tension between redistributive progressivism and American-style Keynesianism. It reflects the interests of the traditional 20th-century Democratic politician. Transportation is characteristically central, although, on top of money for mass transit and roads, Biden wants $175 billion for electric vehicles and their charging stations. Construction and public housing are prevalent, as they were especially in the latter stages of the New Deal and after the war. Whereas defense spending accelerated during the Cold War, today scientific research is decidedly “green.” Rural broadband has replaced the electrification of the Tennessee Valley Authority. And, of course, there is no concern for the effect of all this spending on the nation’s debt.
But the Democratic Party is not what it was in 1935 or even the era when Biden sat in the Senate. The Warren-Sanders wing sees redistribution as intrinsically valuable. This is reflected in parts of the infrastructure bill, but particularly the American Families Plan. The president has requested $400 billion for “caregiving,” mainly through expanded Medicaid and a mammoth subsidy to an industry that performed poorly during the pandemic. He estimates his plan for child-care, comprehensive family and medical leave, and universal preschool will cost $750 billion. Free community college and subsidized tuition for study at other institutions adds another $300 billion.
Whereas some will get a tax cut, levies on high earners will pay for most of it. Hamilton suggested a luxury goods tax and new tariffs should fund internal improvements. But Biden’s tax on capital gains and wealth is intended to punish as much as stimulate.
Biden is walking a tightrope. He believes deeply in much of his agenda because it validates his understanding of politics. He sees it as unifying and rewarding blue-collar Americans for their work and sacrifices—his support of the pro-union Protecting the Right to Organize (PRO) Act is evidence of this as well. His hero is the white ethnic hard hat, New Deal man. He thinks he has designed this agenda to make American capitalism fairer and stronger.
But he is also bowing to pressure from his left flank. It sees the BLM protestor and white coastal professional as the hero—there’s a reason the administration’s tax plan conceives of $400,000 as middle-class. The left wants structural changes to kneecap American capitalism. Over the longer term, let’s hope Biden can more forcefully resist.
Andy Taylor is a professor of political science at the School of International and Public Affairs at N.C. State University.