Some of the changes are obvious: Compared with the economic strategies of former Presidents Bill Clinton and Barack Obama, Joe Biden is proposing more new spending and more new taxes than either of his Democratic predecessors, and he’s abandoned their support for negotiating new free-trade agreements.
But Biden is also diverging from his predecessors’ approaches in ways that have drawn much less attention—yet may prove even more consequential. Particularly on racial-, gender-, and class-inequality issues, Biden’s separation from those past presidents reflects both an evolution in thinking among Democratic-leaning economists and a bet that boldness may be a better political strategy than moderation.
The effect is that the Biden administration’s analysis of the economy is converging with that of the Democratic Party’s liberal wing, which felt largely excluded in the Clinton years and only slightly more welcome during the Obama presidency. “There’s a huge change, really quite dramatic,” says Robert Reich, who served as Clinton’s labor secretary but later became a leading liberal critic of the party’s centrist wing. “There’s a much closer continuity between Clinton and Obama than between even Obama and Biden.”
This shift is evident in Biden’s hiring: He’s largely sidelined the kind of Wall Street–connected centrists that his predecessors installed in key economic positions (think Larry Summers and Tim Geithner). Instead, he’s mostly elevated individuals who either clashed with previous administrations (such as the Council of Economic Advisers members Heather Boushey and Jared Bernstein), or are part of a new generation that’s more explicitly focused on questions of race and gender (such as Janelle Jones, the Labor Department’s chief economist, and Joelle Gamble at the National Economic Council).
But the split from past Democratic presidents is also evident in the White House’s bedrock beliefs. Both of the earlier administrations tended to view widening inequality as a kind of natural phenomenon—the inevitable result of structural changes in the economy, led by greater automation and more global economic competition. The Biden team views inequality much more as something molded by human hands—the result of policies that have weakened workers and strengthened corporations’ marketplace leverage. To a greater degree than Obama’s and especially Clinton’s teams, it believes that generating widely shared prosperity isn’t possible without aggressive government intervention.
The same difference is clear when it comes to racial and gender disparities. Biden has already shown himself much more willing to target government benefits explicitly by race. And while Clinton and Obama tended to prioritize efforts to foster high-skill, high-wage, typically high-tech jobs, Biden has a different focus: child-care providers and home-health-care workers, a typically low-wage segment of the economy dominated by women of color. “This is something we’ve been thinking a lot about: You don’t address racial equity without targeting racial equity,” one senior administration official, who spoke on the condition of anonymity in order to talk about internal discussions, told me.
At the same time, Biden has proposed programs to benefit families further up the income ladder than Clinton or Obama typically sought to help, such as the enhanced child tax credit and enlarged health-care subsidies. This dual-track approach—in which he’s offering policies that are simultaneously more universal on income and more targeted by race—underscores the extraordinary breadth of progressive economic goals Biden is trying to meet. And he’s doing all this with razor-thin congressional majorities, and within a deeply divided country that has given him a job-approval rating just slightly above 50 percent.
The result, according to Biden critics (and even some allies): This expansive suite of new initiatives could overload the political system and/or overheat the economy, rekindling inflation. In an interview with me this week at The Atlantic’s Future Economy Summit, Treasury Secretary Janet Yellen acknowledged that, given Biden’s proposed spending increases, interest rates may have “to rise somewhat to make sure that our economy doesn’t overheat.” Beyond inflation, Biden is also risking the kind of ideological backlash from the right that cost both Clinton and Obama unified control of Congress in their first midterm elections. “You can’t do everything,” says former Congressional Budget Office Director Douglas Holtz-Eakin, now president of the center-right think tank American Action Forum. “And they are pretending they can.”
When President Biden touted his economic plan in his recent speech to Congress, he spotlighted an unusual data point: “Nearly 90 percent of the infrastructure jobs created in the American Jobs Plan do not require a college degree; 75 percent don’t require an associate’s degree.”
It’s hard to imagine Clinton or Obama highlighting such a fact, much less touting it as a benefit, Democratic policy experts told me. Both men centered their economic agenda on the belief that many jobs considered “low skill” were doomed to disappear, because of either automation or global economic competition. The key to sustaining middle-class incomes, they believed, was to train more Americans for higher-paying jobs in advanced industries. That conviction undergirded their support for free-trade pacts such as Clinton’s North American Free Trade Agreement and Obama’s (never realized) Trans-Pacific Partnership, which they portrayed as levers to create such jobs. “We cannot stop global change,” Clinton declared when he signed NAFTA in 1993. “We can only harness the energy to our benefit … Every worker must receive the education and training he or she needs to reap the rewards of international competition rather than to bear its burdens.” More than 20 years later, Obama distantly echoed those remarks when pushing his Asian trade deal.
But both presidents’ analysis always drew intense resistance from the Democrats’ left flank. Since the 1990s, critics have insisted that the party’s free-trade advocates understated the number of manufacturing jobs that would be destroyed by policies meant to lower trade barriers. More fundamentally, the left rejected the idea that the principal reason for accelerating economic inequality was the so-called skills gap.
For years, the Economic Policy Institute, a think tank close to organized labor (and where Bernstein, Boushey, and Jones each worked for a time) functioned as the locus of Democratic opposition to Clinton’s and Obama’s approach. The skills explanation offered both administrations “an excuse for what was a systematic deploying of policy to disempower workers,” argues Larry Mishel, a senior fellow at EPI who previously served as its president.
To Mishel and like-minded critics, the skills-gap theory couldn’t account for two key trends: the rising share of income and wealth concentrating in the top 1 percent, and the slowdown in wage growth even among college graduates, who were supposed to benefit from the digital revolution. And for many progressive skeptics, the skills gap also carried an unpleasant whiff of blaming workers for their stagnating wages, with the implication that they could solve their problems if they just devoted themselves to obtaining more education. “The center-left has totally abandoned, and appropriately so, that framework for understanding wage suppression and inequality,” Mishel told me. “What’s replaced it is a greater attention to the increases in employer power.”
Reich, now a public-policy professor at UC Berkeley, tracks the party’s shifting center of gravity in similar terms. In the ’90s, the administration was “fixated on education as the magic bullet for curing widening inequality. It was the solution. And Clinton—I’m embarrassed to say, at my urging—would often say, ‘What you earn is what you learn,’” Reich told me. In retrospect, that diagnosis was “naive and inaccurate … The problems are embedded deep in the structure of how markets are organized, the decline of organized labor, the rise of monopolies, and the extraordinary power in the hands of relatively few big companies.”
That view on inequality is widely shared in the Biden administration. Like Clinton and Obama before him, Biden has pushed to significantly expand access to education, including universal preschool and tuition-free community college. But the Biden team doesn’t claim that more education can be the sole, or even principal, answer to widening inequality or racial gaps in earnings. Instead, it has emphasized the link between inequality and long-term dynamics that have shifted the balance of power away from workers and toward employers. “I believe that a good-quality education is the foundation of any progress we’re going to see,” Cecilia Rouse, the chair of Biden’s CEA, told me during an interview for The Atlantic’s recent forum on race relations. But “that is not, in and of itself, sufficient.” Yellen echoed that conclusion in our interview this week: “There is more to do than simply investing in education,” she said. Questions of employees’ “power to stand up to” employers, and “a decrease in competition in the economy” must “be addressed directly as well.”
Two of the most visible markers of Biden’s different approach to economic inequality: his public advocacy for increased union membership and his support of legislation to ease union-organizing campaigns. For the first two years of the Clinton and Obama administrations, “Democrats had the House and Senate—that was a golden opportunity for labor-law reform,” Reich said. “But neither Obama nor Clinton got near it; they just didn’t want to spend political capital on it.” Biden has also emphasized his support for increasing the minimum wage earlier than Clinton or Obama did. (Clinton helped modestly raise the minimum wage once in his presidency; Obama never succeeded in doing so.)
An even more important change is embedded in Biden’s emphasis on bolstering workers who are part of the “care economy.” These low-paid child-care and home-health workers—many of them female and people of color—could become as closely associated with Biden’s presidency as the behemoths of the Information Age economy were with Obama. “Obama loved hanging out with Silicon Valley people,” Jason Furman, who served as a young staff economist on Clinton’s CEA and as the council’s chairman under Obama, told me. “Some of that was wanting to be associated with high-tech and the future, and thinking that was cool, and that’s not where Biden’s comfort zone is.”
Through his care-economy initiatives, Biden doesn’t want to retrain these workers to pursue “higher-skill” jobs; he wants to improve pay, benefits, and working conditions to make the jobs they have now more remunerative and satisfying. He operates from the assumption that the economy will always need workers to do these jobs; indeed, it’ll likely need even more of them in the years ahead, as the number of seniors rapidly rises. That’s a subtle, but unmistakable, difference from Clinton and Obama. The Biden agenda is “not about ‘Spend X years getting educated and then you’ll be okay,’” the senior Biden-administration official told me. “It’s also about [how] we have to make sure that you have quality job options starting now.”
Biden’s focus on the care economy reveals another key difference from Clinton and Obama: The president is offering proposals that are both more universal by income and more targeted by race. The common link between these proposals is that they show Biden willing to take on political fights that both of his predecessors considered unwise, if not unwinnable.
Democrats have long debated whether it is preferable, on both political and economic grounds, to target new government benefits primarily at economically struggling families, versus spreading them more broadly across the middle class—typically a much more expensive proposition. Biden has long leaned strongly toward the latter strategy in that internal dispute. That instinct is clear in how broad his administration made eligibility for key benefits in the coronavirus stimulus plan Biden signed earlier this year. Americans well into the upper-middle class qualified for the $1,400 checks, enlarged child tax credit, and expanded subsidies for purchasing insurance through the Affordable Care Act. Likewise, the universal-preschool and tuition-free community-college programs he unveiled last week would operate with no income limits for eligibility.
Yet even as Biden has pushed to structure government programs in a more universal manner than Clinton or Obama generally did in terms of income, he’s moved away from their definition of universality when measured by race. Both Clinton and Obama were devotees of the prominent Black sociologist William Julius Wilson, and embraced his approach on both policy and political grounds. One of Wilson’s core beliefs was that the best way to close racial opportunity gaps is to focus on programs that offer benefits to all low-income Americans regardless of their race. His theory was that such initiatives would still disproportionately benefit minority groups with the greatest need.
Even as Obama strongly supported the enforcement of civil-rights protections, he generally downplayed the role of overt racial discrimination in persistent economic gaps, pushing back against Black intellectuals who wanted him to more directly target the Black community’s needs. “I’ve got to look out for all Americans, and do things based on what will help people across the board who are vulnerable and who need help,” Obama told the scholar Michael Eric Dyson in a 2010 interview.
Biden’s greater willingness to channel benefits by race is one of the biggest surprises of his presidency. His infrastructure plan includes billions to ensure the participation of historically Black colleges and universities in new federal research on clean energy; to train more women and people of color for the clean-energy jobs his plan would create; and even to ameliorate the historic impact of highway construction in isolating minority and low-income neighborhoods. The family plan announced last week includes several targeted grants for higher-education institutions serving mostly minority or low-income students.
The senior official said that no policy is discussed without explicit consideration of its impact on racial disparities. “I think it’s clear from our policy agenda that we don’t think [you can] achieve the kind of racial equity that Biden and Harris seek by crossing your fingers and hoping that your universal programs reach into places that have been left behind,” the official said. “This is marching orders coming from the top, and coming from the top regularly, that we have to be totally intentional about our efforts to close racial gaps and to promote racial equity.”
For Clinton’s and Obama’s liberal dissenters, this is, again, a long overdue concession to reality—that seemingly race-neutral programs can disadvantage Black Americans and other minorities who lack the prerequisites to take advantage of them, whether those are higher education or family wealth needed to access homeownership incentives. The Biden administration is saying, “We are not going to pretend anymore. We are not going to pretend, in the face of all the disparities we know [exist], that you can throw something at the wall and everybody is going to get help,” William Spriggs, the chief economist at the AFL-CIO and a former assistant labor secretary under Obama, told me.
Janelle Jones has argued that economic policy should be assessed by what she called the “Black women best” standard: “If Black women—who, since our nation’s founding, have been among the most excluded and exploited by the rules that structure our society—can one day thrive in the economy, then it must finally be working for everyone.”
Biden hasn’t adopted that rhetorical framework, nor has he advanced some of the most ambitious proposals Jones offered within it: reparations for slavery, single-payer health care, a guaranteed universal income. But, as Jones told me in an interview, Biden “is really thinking about and centering women, particularly women of color, in the economic policies he is putting forth.” Given that “three-fourths of domestic workers are women of color,” by directing resources into the care economy, “you are investing in Black and brown women and their families and their communities,” she added. “That is what will happen to that money.” (Though it’s gone virtually unnoticed, Biden has also engineered a crucial break from Clinton’s legacy by supporting the child tax credit’s extension to parents who have no income—severing the link between employment and government aid that Clinton had reinforced by imposing work requirements on welfare recipients in the ’90s.)
In all these ways, Biden has absorbed the economic worldview of his party’s progressive wing much more than his predecessors. While Clinton and Obama were constrained by mainstream economic opinion—and their fear of how the financial markets would react to an aggressively liberal agenda—within the Biden administration “there is no constraint being placed on anything they do,” Holtz-Eakin, the conservative economist, said. “They are not respectful of conventional orthodoxies, and the previous administrations were very much so.” Holtz-Eakin thinks this will end in tears for Democrats, with Biden courting consequences from so much spending—including inflation and asset bubbles in the economy, and a voter backlash that could propel big Republican gains in 2022.
Mishel, the former EPI president who often sparred with the so-called neoliberals who worked for Clinton and Obama, envisions a very different endpoint. He sees Biden restoring to the center of Democratic economics the financial well-being of the modestly educated workers who dominated the party for decades, starting in the era of Franklin D. Roosevelt. “Joe Biden is so old that some of his core beliefs are from before the neoliberal era. It’s almost Hubert Humphrey–esque,” Mishel told me, referring to the former Minnesota senator and vice president who’s come to symbolize an earlier generation of big-spending liberals.
In those days, long before the Clinton or Obama presidencies, the Democratic Party’s credo— coined by the legendary FDR adviser Harry Hopkins—was “tax and tax, and spend and spend, and elect and elect.” With an economic agenda whose total proposed cost so far has soared past $5 trillion, with trillions of dollars in tax increases to fund it, Biden has wholeheartedly embraced the first two parts of that mantra, while adding a modern twist with his greater concern for equity. The first test will come soon enough on whether the third part of Hopkins’s famous catechism still applies after that much taxing and spending.