So there’s reason to hope, as the campaign enters its final days, that Biden has changed his tune on spending and the size of government. If elected, he should follow that instinct — and go big.
The policy case is obvious: With millions still unemployed and thousands of businesses shuttered, the economy cries out for massive stimulus. But that was true after the last recession as well, when Biden was beginning his term as vice president. What’s really changed in the past decade is the politics. First, Democrats have realized that watering down measures to win Republican votes no longer works; the Obama administration gained nothing from a smaller stimulus post-Great Recession (or from taking the public option out of the Affordable Care Act). Since the GOP will call any Democratic measure “socialist,” a would-be Biden administration might as well pass whatever legislation it feels best, regardless of what conservatives might think. Second, we’ve already seen massive increases in state intervention and expenditures this year. Republicans are prepping the pivot to caring about the national debt again, but the fact is they back an administration that finished the fiscal year with a $3.1 trillion deficit, thanks to significant interventions in the economy that Republicans supported. That door’s now open.
Well, sort of open. As Grace Blakeley notes in her excellent new book, “The Corona Crash,” not all increases in the size of government are created equal. In the 2008 recession, states and central banks propped up “too big to fail” institutions and other debt-laden businesses until they were back on their feet, while individuals were a lesser priority. In 2020, the contrast is even starker: The first covid-19 relief bill became law just four days after the Dow Jones hit its lowest point of the year. But with the stock market back to pre-pandemic levels, it’s no wonder that second relief bill languishes even as Americans suffer.
“What has happened as a result of 2008 and 2020,” Blakeley writes, “is that both financial and now also nonfinancial institutions … have collapsed into the arms of the state and appear set to become wholly and permanently reliant upon it.” Among the biggest beneficiaries are financial institutions and large corporations, especially technology companies, which are best positioned to weather the covid-19 lockdown. (Full disclosure: There is perhaps no better example of the latter category than Amazon, whose founder and chief executive Jeff Bezos owns The Post.) Governments around the world — even those most fervently claiming fealty to the free market — are actively planning their economies, “except that the planning that is taking place is neither democratic nor rational,” according to Blakeley.
Remember, it’s not as if the recovery from the Great Recession was all that tremendous. U.S. job growth during that time trailed most other recoveries in the postwar period. Low pre-recession interest rates meant central banks were hamstrung in their monetary policy, and austerity measures implemented in many countries in the first few years of the 2010s undercut the recovery far too early.
Fast forward to 2020: “After a decade of slow growth, surging debt levels and rising inequality,” Blakeley writes, “we can rarely have been worse prepared for a new recession.” Rates are back to zero, so that arrow is already shot. Luckily for Biden, there’s an elegant solution that addresses all three of his priorities: a Green New Deal, not just in the United States but around the world. At home, that means a nationwide mobilization to deal with the virus and move the country to 100 percent renewable energy, using massive infrastructure programs and other investments. Abroad, that means all of the above, plus debt forgiveness to nations in the Global South to allow those countries to afford and prioritize environmental reforms, rather than the neoliberal policies demanded by creditors.
One suspects that such a program, unfortunately, is a bridge too far for Biden. But those around him should remind him he has nothing to lose. History may not repeat, but it does rhyme, and Biden knows as well as the rest of us that Democrats missed an opportunity to go big after the last recession. As Rep. Alexandria Ocasio-Cortez (D-N.Y.) put it on CNN on Sunday, “This is about making sure … to not just make up for lost time, but leap into the future and actually ensure that we are making the investments and policy decisions that will create an advanced American society.” Others might worry about the bill, but if Biden doesn’t go big, the country will pay the price.
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