The New York Times: The Morning Newsletter

"Biden's Economic Record."

Views expressed in this geopolitical news update are those of the reporters and correspondents.  Accessed on 22 February 2023, 1941 UTC.  Content provided by email subscription to "The New York Times:  The Morning Newsletter."

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Russ Roberts (https://www.hawaiigeopoliticalnews.com).

February 22, 2023

Good morning. As Biden’s economic team turns over, we look at its successes and failures over the first two years.

Brian DeeseTom Brenner for The New York Times

An exit interview

President Biden’s economic team is turning over. Brian Deese, the top adviser in the West Wing, left his job this week, and Cecilia Rouse, the chair of the Council of Economic Advisers, will soon return to her faculty post at Princeton.

I want to use the transition to think about Biden’s biggest economic successes and failures so far, as well as some big uncertainties. As part of that exercise, I sat down with Deese to conduct an exit interview, and you’ll read quotes from it below.

In the interest of accountability, let’s start with what I see as the administration’s biggest disappointments.

Two failures

Inflation. After decades of low inflation, Biden and his team erred on the side of a large Covid stimulus plan in 2021. They were more worried about the economy being too weak, as it has been for much of the 21st century, than being so strong that prices spiked. They were at least partly wrong.

The chart below captures the administration’s mistake — but also its somewhat limited consequences. Inflation in the U.S. was initially higher than in similar countries, but only modestly so and not anymore. That pattern suggests that the Biden bill did aggravate inflation, but the stimulus wasn’t the biggest problem.

Source: St. Louis Fed | By The New York Times

The bigger problems were the supply chain disruptions caused by Covid and the energy price increases caused by Russia’s invasion of Ukraine.

When I gave Deese a chance either to defend the size of the stimulus plan or acknowledge that it was too big, he did neither and simply said, “It was the right thing to do.”

The “care economy.” Biden came into office calling for universal pre-K, paid family leave and an expansion of elder care. But he could not rally enough congressional support despite the policies’ popularity in polls. The failure seems to stem partly from the administration’s lack of focus on the so-called care economy: It was one item on a long list of Biden’s priorities.

Barack Obama was able to pass an expansion of health care partly because he made clear that the bill was his top priority. A future administration may need to do the same to make the care economy a reality. It’s also an area that would benefit from more policy design work by outside experts, Deese said.

One policy that Biden did pass was a large expansion of the child tax credit, and it led to a sharp decline in child poverty. Nevertheless, Congress let the expansion expire. A lesson: For a policy to become too popular to end, it probably needs to exist for several years.

Cecilia RouseKriston Jae Bethel for The New York Times

Three successes

The Covid recovery. Deese named “a strong and equitable economic recovery” as Biden’s top economic accomplishment. The unemployment rate is at the lowest level since 1969, and wage increases have been larger for lower-income workers than higher earners. Black unemployment often takes more than four years to recover from a recession, Deese said. This time, it took two years.

The stimulus plan deserves criticism for aggravating inflation, but it also some credit for the vigorous recovery.

Investment. Biden can’t claim any one victory as large as Obamacare, but the scope of his legislation is impressive. It includes bills to reduce medical costs; rebuild bridges, highways and other infrastructure; and expand broadband internet service, public transportation and the nation’s semiconductor sector.

“In terms of magnitude, you have to go back to the ’50s and early ’60s to find a similar approach,” Deese said, referring to infrastructure. He is particularly hopeful, he said, that those investments will spark investments by private companies. Already, Intel and Micron are planning semiconductor factories in response.

Climate. Close readers may have noticed that the above list of investments left off one category: clean energy. I think it is important enough to highlight. Given the extreme costs and dangers of climate change, Biden’s investments to accelerate the transition away from greenhouse gases may end up being the most important part of his economic legacy.

A few uncertainties

Antitrust. Along with a strong recovery and a surge of investment, Deese named Biden’s focus on competition and antitrust as one of his three biggest economic accomplishments. The competition policy includes a new skepticism toward mergers; a crackdown on “junk fees”; and the approval of over-the-counter hearing aids. “It’s been decades or more since you’ve had a president who was this forward leaning,” Deese said.

That’s true and significant. Even so, it remains unclear whether Biden’s policies will lead to a meaningful reduction in corporate concentration.

Collective bargaining. Biden vowed to be the most pro-union president in history. But like other recent Democratic presidents, he failed to pass a bill that would make it easier for workers to join unions. Still, Deese argues that Biden’s full-throated support for organized labor has contributed to a renewed understanding of the benefits of unions.

We’ll see: Public approval of unions is at a 50-year high, but the share of workers belonging to one declined again last year.

Red tape. Some supporters of Biden’s investment program worry that it will prove disappointing because major construction projects are so expensive and bureaucratically fraught in the U.S. (A recent Ezra Klein Show described the problem in detail.) Deese insists that the White House is working on solutions. “We can do things differently,” he said.

Related: You can read the transcript of my conversation with Deese. He has been replaced by Lael Brainard, a former Federal Reserve official, while Biden will nominate Jared Bernstein, one of Rouse’s deputies, to replace her.

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Thanks for spending part of your morning with The Times. See you tomorrow.

P.S. About 800 people gathered in the cold for the dedication of the Washington Monument, The Times reported 138 years ago.

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Matthew Cullen, Lauren Hard, Lauren Jackson, Claire Moses, Ian Prasad Philbrick, Tom Wright-Piersanti and Ashley Wu contributed to The Morning. You can reach the team at themorning@nytimes.com.

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