Biden won the US Presidential election in November 2020, by the barest of margins. Had a mere 21,500 specific votes (0.000135% of the 158.4 million votes cast) in the three states of Arizona, Georgia and Wisconsin gone to Trump rather than Biden voted for Trump rather than Biden, Donald Trump would have won re-election. In the same election, the Democratic Party in 2020 barely won control of Congress, with a surprising victory in the two Georgia Senate election permitting them to have the slimmest of margins with the 50-50 Senate decided by Vice-President Kamala Harris’ deciding vote. The Democrats also succeeded in winning a tiny 9-person majority in the House of Representatives.
In spite of this slim margin in both Chambers and operating in an environment of extreme partisanship, Biden has launched a major multidimensional agenda and, to the surprise of many, has succeeded beyond expectations. Among his most significant accomplishments has been getting Congress to approve four major spending bills totally a staggering $3.7 trillion: i) the $1.9 trillion American Rescue Plan Act (March 2019), ii) the $1.2 trillion Infrastructure Investment and Jobs Act (November 2019), iii) the $280 billion Chips and Science Act (August 2022) and iv) the $385 billion Inflation Reduction Act (August 2022). He has also undertaken many less visible actions in pursuit of his overall agenda.
The sum of these multiple actions legitimizes the claim that Biden’s Presidency is truly transformative, leading America into a radically different direction than that followed during the last decades, Biden is taking the US into a “post neo-liberal” age. He is also seeking to transform the political landscape of the US, and of the Democratic Party. This article will begin a series, seeking to understand the new direction the Biden Administration has taken, in an effort to evaluate its likely outcome and impact, both for the United States and for the rest of the world.
Let us start with recent history, beginning with the Presidency of Ronald Reagan, who in his inaugural address in January 1981 made his now-famous statement “Government is not a solution to our problem, government is the problem”. This marked the beginning of close to 40 years of conservative neo-liberal orthodoxy, where both Republican and Democratic Administrations espoused a governing philosophy minimizing the role of government in favor of promoting free markets. Democratic President Bill Clinton in 1996 exemplified this view with his declaration that “the era of big government is over”.
Well, with this Biden Administration, “Big Government” is back, signaling a new, post neo-liberal era. And the principal architect of this major change in economic philosophy of the US Government is the unlikely 80-year old, middle-of-the-road ex-Senator, Joe Biden.
Of course, like all major changes, they do not happen overnight, there are always earlier factors that prepare the terrain, so when the change comes, it seems almost natural. We can point to four important ones in this case: a) the Great Recession of 2008-2009, b) the rise of China, c) COVID-19 and, perhaps most significant, d) the presidency of Donald Trump.
a. The worse economic downturn in the US since the Depression in the 1930’s, the Great Recession of 2008-2009 not only showed glaringly the failure of the previous economic model, it also required massive government intervention to save the US auto and financial sectors and to pump money to revive a faltering economy, involving the government in private sector activity on a scale unheard of in the last 70 years.
b. One of the few areas where Democrats and Republicans agree is in the threat posed by the rise of China. It is interesting to note that the US reaction to this threat is in part to copy the Chinese model, pursuing aggressive, government-led nationalistic management of the economy.
c. COVID-19 led to direct government involvement in the economy in much of the world, the US was no exception, the magnitude of the threat posed by the pandemic led to governments’ putting economies into “induced comas” to reduce the spread of the disease, at enormous cost, and then pumping massive amounts of money to awaken the patient, to put the economy back into normal activity, again accepting that the requirement that to deal with such an enormous crisis, the solution required “big government”.
d. It is tempting to describe the change in government philosophy as the “TrumpBiden Transformation”. It was Trump more than anyone who changed the US attitude towards China, insisting that China was a serious threat, and Trump flaunted Republican economic orthodoxy by turning against free trade and also by creating huge increases in government debt. In addition, Trump’s surprising victory in the presidential election of 2016 showed the Democratic Party had lost touch with much of the US Middle Class, a lesson Biden has no doubt learned.
But even if Trump’s presidency was a precursor to this change in governing philosophy, the Trump Administration did not carry out the change, this has been left to his successor, Joe Biden.