In announcing this strategic shift, Mr. Biden has three advantages. The first two are political: He is in tune with public opinion, at least in the sense that 52 percent of Americans — roughly the percentage of votes he won in 2020 — now say they prefer a bigger government providing more services, vs. 45 percent who want a smaller government providing fewer services, according to Pew Research Center. Meanwhile, his Republican opponents, despite their predictable opposition to his proposed tax increases, have themselves shifted in favor of more active government during the Trump era. Infrastructure was a priority for President Donald Trump, too, albeit unfulfilled during his term, as were tariffs, border controls and a bigger defense budget. The political constituency for laissez-faire economics has all but collapsed in the United States.
Third, and most important, Mr. Biden’s plan addresses real needs, both on the spending and the revenue sides. There are many details we do not know, and the bill will inevitably change as Congress works on it prior to passage — if indeed it ultimately passes. However, to the extent it addresses long-standing backlogs in transportation maintenance and water-supply safety, and in preventing climate change (and increasing the United States’s resilience in the face of unavoidable climate impacts), the priorities are sound. And insofar as it pays for itself, at least in part, by correcting unduly light business taxation, the plan strikes blows for both equality and fiscal responsibility.
The caveat — and it’s a significant one — is that there is a reason Mr. Biden’s predecessor Bill Clinton once felt constrained to declare “the era of big government is over.” And that is that the public grew disenchanted with Democratic policies of the 1960s and 1970s, sometimes justifiably. The enduring lesson from that experience is that government should do more — of what it does best. Government has a comparative advantage in providing public goods — education, training, roads, ports, basic research — which indeed figure largely in Mr. Biden’s plan. When it comes to allocating investment capital, however — picking winners among alternative industries, companies, technologies and locations — the private sector ordinarily performs better.
At its heart, Mr. Biden’s plan shifts hundreds of billions of dollars from the private sector to the public sector on the theory that the latter can put them to better use than the former. It’s a bold and potentially historic move whose results could shape the country’s future, political and economic, for generations.