The Last Thing the Economy Needs Is Joe Biden’s Austerity
Joe Biden represents something now rare in American politics: he's a dyed-in-the-wool true believer in austerity and deficit reduction. To climb out of our current economic hole, we'll need massive public investment and income support — but if current patterns hold, Biden will opt for austerity and half-measures instead.
US president-elect Joe Biden in Wilmington, Delaware. (Joe Raedle / Getty Images)
Millions of Americans who object to the Trump administration’s handling of the coronavirus pandemic have spent the last two weeks celebrating his defeat. Amid the revelry, more news hit: first Pfizer and now Moderna have developed vaccines that they report are over 90 percent effective in protecting against the virus. To many, it appears there’s a light at the end of the tunnel.
If we can stop the spread of the virus, that will be a triumph in itself — the sooner we can distribute a vaccine, the more lives will be saved. But recent economic figures complicate a rosy picture of the future. The incoming presidential administration will inherit a ravaged job market: the nation is down ten million jobs from the beginning of the pandemic, more than eleven million if you factor in the predicted job growth that was thwarted by the crisis. The coronavirus pandemic has inflicted deep wounds in the US economy, wounds that will leave lasting scars unless the Biden administration makes an unlikely break with Biden’s own tradition of austerity.
The millions of lost jobs will not be automatically restored when all lockdowns end and all businesses reopen, as many already have. Something like that might have happened if the United States had opted to follow in the footsteps of many European countries and “deep freeze” the economy with social spending to replenish income and preserve jobs, allowing it to safely “thaw out” at the end of the health crisis. But the tightfisted — well, tightfisted unless you’re a massive corporation or wealthy individual — US government did not take that route. The consequence of that decision is that pandemic-induced job losses will likely take a long time to recover from.
The eleven million figure undersells the extent of the damage, too. The Economic Policy Institute estimates that twenty-five million workers have taken a big hit over the course of the pandemic, a number that includes seven million who’ve experienced cuts in pay and hours, three million who are unemployed but misclassified, and four and a half million who’ve dropped out of the labor force.
The hardship is not theirs alone, either — behind every number is a family suffering from lost income, businesses suffering from lost revenue, local governments suffering from lost tax revenue. Plus, a slack labor market puts all workers at a disadvantage, as a vast reserve army of people willing to take their place for less weakens their leverage to negotiate wages and working conditions. All told, this is not an economic divot, it’s an economic crater that will take a large-scale government mobilization to fill in.
Biden will not engage in Trump’s brand of alarming medical denialism, and for this we can be grateful. Unfortunately for the American working class, however, Biden is a longtime proponent of weathering crises with austerity rather than social spending, the same mentality that led us to this impasse.
Joe “Ebenezer” Biden
As Jacobin’s Branko Marcetic, author of the Biden deep-dive Yesterday’s Man put it, early on in Biden’s career the senator “fended off Republican challenges to his seat by embracing right-wing doctrine — specifically, that restraining federal spending is more important during economic downturns than priming the pump. This fiscal austerity would become a core conviction of Biden’s and help animate a lifelong belief that compromise and reaching across the aisle are the perennial solution to what ails America.”
A crucial but overlooked detail in our nation’s recent political history is that Biden was chosen as Barack Obama’s running-mate in 2008 in order to placate affluent voters and donors by softening Obama’s (largely erroneous and undeserved) progressive image. Biden was able to serve this function because he had a reputation as a fiscal conservative, a deficit hawk who was not just willing but eager to knock down the pillars of the US welfare state.
As vice president, Biden lived up to his reputation. He responded to the Great Recession by continuing to hand-wring about deficits, welfare “fraud,” and government “waste.” When Obama put Biden in charge of the $800 billion stimulus in 2009, intended to reboot the nation’s economy, Biden focused most of his energy on making sure the money didn’t fall into the wrong hands, that the money wasn’t “misspent,” and that taxpayers weren’t “scammed” by cunning, undeserving recipients. (These are real quotes, taken from Yesterday’s Man.)
The following year, as chief negotiator on the Simpson-Bowles Commission, Biden gave Mitch McConnell more or less whatever he wanted in the way of budget cuts, shocking and offending even centrist Democrats like Dianne Feinstein, who expressed alarm at the size of Biden’s concessions, and Harry Reid, who begged Obama not to let Biden negotiate with McConnell anymore. At one point, Biden even spontaneously offered $200 billion in cuts that the Republicans had not even asked for.
Biden developed this taste for austerity early in his career and honed his fiscal conservative instincts in the Third Way era, when flaunting one’s rejection of the principles of the New Deal was understood as a sign of responsibility and maturity in the increasingly conservative Democratic Party. The tendency is now ingrained, reflexive, habitual, and you can bet that Biden will attempt to solve the current economic crisis with yet more performative penny-pinching.
To get out of this hole, the United States needs to invest in the working class. That means fully funding existing federal social programs and creating new ones, and giving states the resources and the mandate to do the same. The recovery will be long and painful if we rely, as the Obama administration did for the most part, on trickle-down economics, prioritizing business and the wealthy in blind hope that they will create good jobs rather than hoard the gold furnished by the public.
In other words, we need to stimulate the economy from the bottom up. Every single person needs money in their pocket, a roof over their head, and food on the table, and that’s where any recovery plan ought to start. Unfortunately, we should prepare for a mismatch between Biden’s impulses and what must be done.