In spite of having won the US president’s election in November 2020 by an ultra-slim margin, President Biden has launched a major multidimensional agenda leading America into a “post neo-liberal” age, representing a radically different direction from the last decades. Since Reagan became President in 1981, the governing political and economic philosophy of the both Republican and Democratic Administrations has been neo-liberal, the view that the less the government was involved in the economy, the better, free markets know best, the government’s role should be to stay out of economic guidance to let markets operate freely. This approach also favored international trade, globalization and limiting the growth of US federal debt.
Biden has radically changed this governing philosophy, for example in his second major legislative success, the $1.2 trillion Infrastructure Investment and Jobs Act (“IIJA”) passed in November 2021 with bipartisan support. Both Parties have for years recognized America’s need to repair its crumbling infrastructure, but conservative resistance to such a project, consistent with the “anti-big government” attitude of past Administrations meant that it was only in 2021 that sufficient support could be mobilized by President Biden to get an infrastructure bill through Congress. The IIJA provided for a huge $1.2 trillion expenditures over eight years[1], for multiple investments in transport (highway, roads and bridges, rail, public transport systems), broadband access, clean water, sewage systems, the national electrical grid, airports, protecting against cyber attacks and weather disasters, clean energy production and transmission, treatment of abandoned mines and oil wells, electrical charging stations, the list goes on. The monumental scale of investments represents the largest federal expenditure in history in most categories and will, consistent with Biden’s new policy, increase dramatically the involvement of the federal government at a local level in nearly every one of the 3,143 counties in the country.
The project gives credence to the idea that Biden’s economic agenda is also deeply political, operating at multiple levels: it aims to create middle class jobs, to improve the plight of low-income Americans including Blacks and Latinos that typically vote Democratic but also to show all Americans that a Democratic Party led government can truly improve their lives.
Many political commentators agree with the assessment that since 1980, both the Democratic and Republican Parties have ignored the plight of the US Middle Class, who have seen their income stagnate for decades, with virtually all the benefits of growth going to the lowest income classes and even more predominantly to the rich. Many of these persons have become disaffected, disappointed and disillusioned with both traditional Parties, and have been easily attracted to an outsider, anti-establishment figure like Trump. Biden understands this, his economic agenda is also a promotion of the benefits of a democratically elected government responsive to the needs of the majority of the people, be they Democrats or Republicans.
Various estimates have suggested that the IIJA will generate from 650,000 to 1 million new jobs: Moody’s Analytics believes that the jobs created will average about $70,000 per year and will boost the rural economy. IIJA also addresses economic inequity, unionization and climate initiatives. Biden will put forth the political message that it is only the Democratic Party that was able to get an infrastructure bill passed, to the benefit of all, including voters in the Republican base.
One additional major change in government policy evident with the IIJA is the clear protectionist flavor, a commitment that investments be spent on American products made by American workers. The US has for years strongly defended free trade and the benefits of globalization. Not any more. The IIJA clearly marks a turning point in the leadership that the US has provided over the past half century in promoting free trade. Biden Administration tax dollars are going to be spent in the US, buying US products with significant consequences for the rest of the world, who will find themselves increasingly cut off from selling to the US Government from non-US sources. Already, a number of close allies of the US have complained that they are being excluded from the US market, in violation of WHO rules. In vivid contrast to his predecessor, Biden will listen politely and without acrimony to their criticism, but the fundamental message will be the same, it will be “Protectionism with a Smile”, but protectionism nevertheless, and it is virtually certain to lead the world to a period of increased nationalism in the management of international commerce in the coming decade, and increased tension between the US and its close allies. The losers in this game will be developing countries, but also Europe, the largest trading bloc in the world
[1] Eight years represents two Presidential Administrations. Biden and the Democrats need to win the election of November 2024 to fully implement without Republican obstructionism the IIJA.
