If Democrats Want to Win Elections, They Should Bring Back the Covid Welfare State
By many measures, Bidenomics is working great—but most Americans are still down on the economy. That’s in large part because the U.S. government let its temporarily generous social safety net unravel.
Nick French
By many major indicators, the economy under President Joe Biden is doing great.
Real GDP has grown 5% since 2019. Unemployment has fallen to a low of 3.7% after a peak of around 15% in the early days of the Covid-19 pandemic. And inflation, although still higher than pre-pandemic levels, appears to be receding. Real wages are up by 3.5% since Biden took office, with low-wage workers seeing the biggest of those gains between July 2022 and July 2023.
Yet many Americans still seem decidedly unhappy with economic conditions today. Several recent polls have found that people in the United States hold negative views of the economy and of how President Biden has been handling it, despite the rosy macroeconomic indicators. For instance, the Michigan Consumer Sentiment Index, which has been measuring consumer confidence levels nationwide since 1978, found that consumers’ feelings about the economy and their personal finances — although up from an all-time low last summer — were still quite negative in August 2023. And a July New York Times poll found that only 20% of Americans would rate economic conditions today as “excellent” or “good.” (By contrast, 49% rated the economy “poor.”)
This disconnect has led many pundits to wonder what’s going on, with some chalking up Americans’ low opinion of “Bidenomics” to partisanship or ignorance. Look beyond topline metrics like GDP growth or unemployment, though, and you’ll find a more complicated story. Many Americans report struggling financially, in part because of the discontinuation of many early pandemic welfare policies. So even as the U.S. economy has reaped continued benefits from those programs and is seeing a jobs boom driven in part by the federal government’s historic investments in clean energy and domestic manufacturing, many people are understandably resentful at feeling like the ladder’s been kicked out from under them.
The situation shows that high-level metrics like GDP growth and unemployment are not good proxies for Americans’ quality of life — or for economic justice. It also demonstrates the need for a progressive economic program of combining ambitious “demand-side” welfare policies with “supply-side” investment programs like the Inflation Reduction Act (IRA). That combination is likely to be more conducive to actually helping people — while also being politically popular.
Bidenomics: success and failure
We can’t dismiss the high points of today’s economy, or the role Biden and national Democrats have played in rebuilding it. Real GDP and job growth have not just rebounded from the early Covid recession—they have outpaced the recovery of many other advanced capitalist countries. The United States has also been outperforming most of these nations in lowering both inflation and unemployment. The resulting tight labor market has even helped lower income inequality for the first time since the 1980s.
Biden and Democrats in Congress can take some credit for all this. The relatively generous welfare policies they passed at the beginning of the pandemic helped stimulate demand, making the recession shorter and the recovery from it stronger than would have been the case otherwise. More recent policies, like the Bipartisan Infrastructure Bill, the IRA, and the CHIPS Act, have made major investments in domestic manufacturing, further buoying the economy.
So why aren’t Americans celebrating Bidenomics? In a perceptive article at the New Republic, Kate Aronoff points out that many people simply aren’t aware of — and probably don’t viscerally care about — the administrations’ efforts to address climate change and create jobs, including the IRA. The problem is that many of these policies are “pretty boring,” Aronoff says: “Few people get up in the morning excited about the U.S. share of manufacturing employment, or tax credits to install heat pumps.” She goes on to argue that such projects should be married to more visible public investments in things like parks, swimming pools and national forests, and government support for the arts and culture — making sure that “people are having a nice time,” and that they know the government is responsible for it.
Fair enough. Creating communal spaces for leisure has long been an important element of progressive and left-wing political projects. But disapproval of Biden’s economic record isn’t just about ignorance or indifference to his policy achievements. Lots of Americans today really are dealing with economic hardship. Consider a few results from the Federal Reserve Board of Governors’ 2022 Survey of Household Economics and Decisionmaking (SHED):
73% of adults said they were doing ok financially — down 5% from the year prior.
The share of adults in 2022 who said they were financially worse off than a year ago stood at 35%, the highest level recorded since the SHED started asking the question in 2014.
23% of adults said that their spending had increased in the past year but that their income had not.
The Census Bureau’s Household Pulse Survey contains similar revelations: food insecurity, for instance, is at its highest level since Biden was inaugurated.
Giving with one hand, taking with the other
It is not too hard to find an explanation for all this, as writers Stephen Semler and Branko Marcetic have argued. The Biden administration allowed the temporarily expansive welfare policies and economic protections enacted during the pandemic to expire. Those included emergency Medicaid and food stamp expansions, eviction moratoria, increased child tax credits and many other anti-poverty measures.
With these policies’ expiration, it’s no wonder that many people are struggling. Homelessness is up by nearly 40% in big cities including New York and Chicago, eviction filings are on the rise; more adults have been skipping medical treatment due to cost; and only 63% of adults said they could cover a hypothetical $400 emergency expense with cash, down from 68% in 2021. The imminent end of the pause on federal student loan repayments threatens to make things much worse.
Biden and the Democratic Party did succeed in breaking with prior policy orthodoxy in two ways. The first was by passing the American Rescue Plan in early 2021, a relatively generous enlargement of the welfare state in response to the Covid-19 crisis, which focused largely on providing direct support to households. The second break came with the Bipartisan Infrastructure Bill, the IRA, and the CHIPS Act — investments focused on boosting supply-side production, including green industry. These policies aim to boost domestic manufacturing and job growth and to help speed the country’s decarbonization.
But by letting the Covid welfare state collapse, the economic and political benefits of this new industrial policy are being muted. Instead of combining necessary investments in green manufacturing and infrastructure with social safety net provisions to protect the vulnerable, the federal government seems to be giving with one hand and taking with the other.
From a policy perspective, this doesn’t make much sense. The “demand-side” and “supply-side” policies serve different goals, and both sorts of programs are necessary for creating an economy that serves everyone’s needs. We need the government to invest aggressively in clean energy and green jobs. We also need programs that guarantee people healthcare, food and housing.
No time for complacency
Politically, it’s clear enough why welfare has gone by the wayside — the attempt to pass a more permanent expansion of the welfare state in the form of Build Back Better (BBB) failed in Congress. It was the obstinance of conservative Democrats such as Sen. Joe Manchin (D-W.V.) that ultimately sank BBB. Yet there’s a strong case to be made that Biden and other Democratic leaders gave away the store by failing to use their leverage. Progressives wanted to attach a vote on BBB to the Bipartisan Infrastructure Bill, which Manchin strongly supported. By allowing the vote on the infrastructure bill to proceed first, party leadership gave away much of its negotiating power to get Manchin to agree to BBB. The saga called into question the authenticity of the Biden administration’s commitment to the social spending bill in the first place.
But Biden still has opportunities to help working people, and there are plenty of actions that he and national Democrats could take now to make people’s lives better and to shore up political support. That will mean making aggressive use of executive power. First and most obvious, the Biden administration should extend the student loan repayment pause, and it should also use all powers at its disposal to actually make good on its promise to cancel student loan debt. This spring, the Congressional Progressive Caucus put forward a list of other items that Biden could enact through executive orders. These include providing generous sick leave and vacation by strengthening Service Contract Act regulations, and expanding access to healthcare premium subsidies.
Biden could also make the overwhelmingly popular move of legalizing marijuana on the federal level. The administration just announced a plan to negotiate lower prices on a number of drugs for seniors under Medicare, but Biden could take even more aggressive action to lower pharmaceutical prices across the board. Though they are currently stymied by a Republican House majority and a razor-thin Senate majority, congressional Democrats can campaign on no-brainer welfare-state measures like Rep. Rashida Tlaib’s (D-Mich.) End Child Poverty Act which would provide direct child allowances.
With 2024 presidential polls showing Biden in a dead heat with presumptive Republican nominee Donald Trump, Democratic complacency is extremely dangerous. A second Trump presidency is likely to be far worse than the first, given that the former president and his team would come in with experience and a real plan. They are planning on, among other things, cleaning house in the federal bureaucracy and filling it with loyalists, invoking the unitary executive theory to give Trump complete control over the executive branch while shielding him from prosecution, and rolling back already-insufficient progress on climate change. A Trump administration would also almost certainly replace Biden’s pro-worker National Labor Relations Board with a virulently anti-labor board.
To avoid this bleak scenario, Democrats should take Americans’ negative views of the economy seriously. This means taking action to provide material benefits to working people while improving their economic security. It also requires offering an exciting, positive alternative political vision to counter the GOP’s grievance-mongering. It will be up to progressives and the Left in and outside of Congress to articulate such a vision — and demand that Biden and the Democratic Party act on it.
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Nick French is an associate editor at Jacobin.
