Even a much smaller bill — say, one that amounts to “only” $2 trillion — would still be a massive expansion of government programs. President Barack Obama’s large 2009 stimulus was for temporary spending measures, much like President Biden’s $1.9 trillion covid-19 relief package passed this year. Whatever is included in the reconciliation bill would be for ongoing expenditures, no matter what the formal expiration date for each is. While other large, new programs — such as Obamacare and President George W. Bush’s Medicare Part D drug program — have been approved in recent decades, the Democratic reconciliation bill would surely be the largest multi-program expansion of federal spending since the Great Society in 1965.
This makes the political stakes extremely high for both major parties. Reagan’s success meant that large-scale domestic program expansion was off the table for decades. Smaller incremental expansions could pass, but the public shot down anything that smacked of permanent “big government” hard and fast. The 1994 and 2010 GOP midterm waves reinforced the initial Reagan-era verdict that the era of ever-expanding government was over.
Democratic success would overturn that verdict. That would require the economy to roar back without significant inflation even after the new programs are implemented. If unemployment is down to 4 or 5 percent and inflation has retreated to something near 3 percent in 2024, Democrats will claim that their new spending approach has worked. “Bidenomics” will be the watchword, and Republicans will likely find themselves in the position that Democrats faced in 1984, when they had to confront the accomplishments of Reaganomics. Republicans will wail and gnash their teeth, but to no avail; the public will likely embrace bigger government.
This will then set the foundation for future expansion. Much as Reagan’s victory set the stage for the 1996 welfare reform, the 1997 balanced budget agreement and tax cuts in 2001, 2003 and 2017, a Biden victory would set the stage for adding the elements not included in this year’s package. More spending on climate change, a public option for health insurance and a host of other items on the progressive wish-list would all become possible.
This, in turn, will force Republicans to adapt. They, like Clinton-era Democrats, will have to present themselves as interpreters of the new paradigm rather than its opponents. The anti-government right won’t like this any more than the progressive left liked Bill Clinton’s turn, but it will have to live with it. Once the public has set the contours and direction of public discourse, one can only bend the tide, not reverse it.
Democratic failure, on the other hand, would reinvigorate a faltering Reagan-era consensus. If inflation takes off and reaches heights not seen since the 1970s, Republicans will be well-positioned. They will say “I told you so” and reap the political benefits as America’s upper middle class overlooks cultural disagreements with the party’s right and votes their pocketbooks. Inflation is the scourge of wage earners. People with modest savings will watch as their salaries can’t keep up and their nest eggs melt away. Even inflation in the range of 7 percent, if sustained, would be higher than most Americans have experienced and would affect every aspect of daily life. Democrats’ political agenda will not survive if that happens.
That outcome could give the right something that even Reagan couldn’t bequeath: the political capital to cut entitlement spending. Reagan mainly critiqued welfare, government regulations and high tax levels, not the core redistribution to working America that entitlements represent. If Biden’s expansion of entitlement spending is seen to fuel inflation, then cutting that spending might be seen as inflation’s cure. A GOP-controlled Washington in 2025 could then prune and repeal Biden-era domestic programs. It could even cautiously limit spending on the big entitlement programs, Social Security and Medicare — the Holy Grail for a generation of fiscally conservative activists.
Biden is America’s oldest president and campaigned as having the cautious temperament often associated with the elderly. Instead, he has boldly thrown the dice to try for an audacious paradigm shift. Win or lose, that gamble will change American politics.