There’s something strange in the DC air these days. It smells a bit like …
competence.
Seriously, it
has been amazing to watch the media narrative on the Biden administration
change. Just a few weeks ago US President Joe Biden was portrayed as hapless,
on the edge of presiding over a failed presidency. Then came the Inflation
Reduction Act, a big employment report and some good news on inflation, and
suddenly we are hearing a lot about his accomplishments.
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But I still do
not think the media narrative gets it quite right. Biden has indeed
accomplished a lot — in some ways more than he is getting credit for, even now.
On the other hand, America is a huge nation with a huge economy, and his
policies do not look as impressive when you compare them with the scale of the
nation’s problems.
Furthermore, at
this point, Biden is arguably benefiting from the soft bigotry of low
expectations. His policy achievements are big by modern standards, but they
would not have seemed astounding in an earlier era — the era before the
radicalization of the Republican Party made it almost impossible to pursue real
solutions to real problems.
So, what has
Biden accomplished?
As I see it, he
came into office with three main domestic policy goals: investing in America’s
fraying infrastructure, taking serious action against climate change, and expanding
the social safety net, especially for families with children. He got most of
two and a bit of the third.
Last year’s
infrastructure bill gets remarkably little media attention; only about
one-quarter of voters even know that it passed. But we should remember that
Barack Obama wanted to invest in infrastructure but could not; Donald Trump
promised to do it but did not (and “It is infrastructure week!” became a
running joke); then Biden got it done.
By contrast, the
Inflation Reduction Act, which is mainly a climate law, has received a lot of
attention, and deservedly so. America is finally taking action against the
biggest existential threat of our times. Energy experts believe that it will
have large direct effects in reducing greenhouse gas emissions.
These are
significant achievements, and a big contrast with the last administration,
whose only major domestic policy change was a tax cut that had almost no
visible positive effects.
There are reasons to hope that the climate law will have a sort of catalytic effect in promoting a transition to clean energy. And some economists believe that boosting the budget of the resource-starved IRS will greatly reduce tax evasion and hence increase revenue.
But when I see
news reports describe these laws as “massive” or huge, I wonder whether the
writers have done the math. The infrastructure law will add roughly $500
billion in spending over the next decade. The Inflation Reduction Act will
increase spending by roughly an additional half trillion. A law to promote US
semiconductor production will add around $50 billion more. Overall, then, we
are talking about a bit more than $1 trillion in public investment over 10
years.
To put this in
perspective, the Congressional Budget Office expects cumulative gross domestic
product to be more than $300 trillion over the next decade. So the Biden agenda
will amount to around one-third of 1 percent of GDP. Massive it is not.
True, some of
what Biden has done may have effects much bigger than the dollar sums might
suggest. There are reasons to hope that the climate law will have a sort of
catalytic effect in promoting a transition to clean energy. And some economists
believe that boosting the budget of the resource-starved IRS will greatly
reduce tax evasion and hence increase revenue.
And can we say a
word about foreign policy? Biden got immense flak over the Taliban’s takeover
of Afghanistan, although the critics offered few suggestions about what he
should have done differently. But the narrative on foreign affairs has changed,
too; I am no expert, but it looks to me as if the Biden administration has done
a remarkable job assembling and holding together a coalition to help Ukraine
resist Russian aggression.
OK, I can
already hear people yelling in response to any citation of Biden’s achievements,
what about inflation? Indeed, the Biden administration failed to appreciate the
risks of an inflation surge. However, so did many others, including the Federal
Reserve (and yours truly). And it does seem worth pointing out that other
countries, notably Britain, are also suffering from high inflation, even though
they did not follow anything like Biden-style policies. In fact, Britain’s
inflation problem looks worse than ours, on multiple dimensions.
And both the
public and financial markets expect inflation to be brought under control. So
it does not look as if this admittedly big misstep will do enduring damage.
Again, I do not
want to sound Trumpian and claim that Biden is doing an awesome job, a perfect
job, the best job anyone has ever seen. What he has done — and was doing even
before the media narrative turned — is deal, reasonably effectively, with the
real problems America is facing.
The thing is, what we
are getting from Biden should be routine in a wealthy, sophisticated nation;
indeed, it was routine before the GOP took its hard right turn. At this point,
however, competent, reality-based government comes as a shock.
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