On Biden's Economic Legacy

Dylan Matthews at Vox has a piece out this morning that claims Biden does not have “much of an enduring domestic policy legacy,” which stems from his “refus[al] to choose” at key moments in his presidency. I want to respond to some of the claims in the piece and use it as a jumping-off point to discuss Biden’s economic legacy.

First, some context. Biden came to office with a narrow 10-seat majority in the House of Representatives and an evenly split Senate. With those significant constraints, he passed the American Rescue Plan (which Matthews casually admits late in his piece did “rescue the economy”); an infrastructure package that will connect every American to high-speed internet, improve the country’s roads, bridges, and airports, and more; clean energy incentives that have already catalyzed hundreds of billions of dollars in clean energy investments and are projected to induce even more investment in the years to come; reforms to Medicare drug pricing that will bring down the cost of ten new commonly used prescription drugs each year, saving seniors and taxpayers hundreds of billions of dollars; incentives for onshoring microchip production, which have already resulted in the world’s leading companies investing hundreds of billions of dollars to grow US operations; a massive expansion of veterans health care benefits; and a bill that stabilizes the finances of the Postal Service and protects its long-term operations.

The world is an uncertain place, but I would bet that the overwhelming majority of these accomplishments will be preserved even with Republican control of Congress and the presidency in the coming years. The American Rescue Plan has already done its job and produced the world’s best economic recovery from the post-COVID recession. The infrastructure, microchips, veterans health care, and Postal Service bills were bipartisan and are unlikely to be reversed. The clean energy incentives may be pared back but because they have produced investment that overwhelmingly benefits Republican congressional districts, much of it is probably safe. And while there are rumblings of Republicans trying to repeal Medicare drug price negotiation, it would be outrageously unpopular — and expensive, at a time when Republicans are trying to identify cost savings to partially offset the next round of massive tax cuts they are pursuing.

Do I wish we had been able to pass even more legislation? Of course. But given the composition of the legislature, this track record was a vast overperformance. You only need to look back at Trump’s first two years in office — where, with a 50-seat House majority and a 54-46 Senate, he failed entirely in his primary goal of repealing and replacing Obamacare and then passed a tax bill with significant portions that expire this year — to see a worse performance relative to legislative potential.

Matthews’ premise doesn’t hold water. But his explanation of why Biden purportedly failed —that he “refused to choose” — is even more strained.

On the American Rescue Plan, Matthews claims that Biden simply accepted Senate Majority Leader Schumer’s demands for what should be in the package and made no choices himself. As someone involved in the process of developing and negotiating the ARP, that is not true. Biden decided, for example, that he would not include student debt relief in the package and instead consider pursuing relief through administrative means. He decided — to much consternation from some parts of his party and the public — that although he had campaigned on “$2000 checks,” the package would include $1400 checks for middle-class individuals (to supplement the $600 checks that had been approved in December 2020). Both of these decision reduced the size of the ARP by hundreds of billions of dollars.

Matthews then claims the following:

Matthews does not link to any reporting to support these claims. And they are not true. As I explained above, the President made key decisions about the size and design of the ARP. He decided the $1400 checks, unemployment insurance expansion, child tax credit expansion, renter and homeowner relief, and small business support were the most important elements (alongside public health measures for vaccine distribution). He pared back the size of the checks out of concern about the cost of the bill and its macroeconomic impact. And as Matthews’ former Vox colleague reported, in his initial rollout of the ARP, Biden specifically raised the idea of “automatic stabilizers” — which would automatically dial up or down unemployment insurance based on economic conditions — but unfortunately, after much engagement with Congress, it became clear it was a nonstarter.

Matthews also claims the “Build Back Better” process suffered from a failure of Biden to choose. I have written previously about how I think we could have handled the BBB process better in retrospect. But as Matthews notes, the BBB was severely constrained by Senators Manchin and Sinema: Manchin was on board with many of the proposed tax increases on the wealthy and corporations, but stoutly opposed to most expansions of the social safety net; Sinema, by contrast, was steadfastly opposed to nearly every individual or corporate tax increase, but generally supportive of social safety net expansions. The resulting Venn Diagram was quite small.

For example, Matthews asks why the White House did not simply accept Senator Manchin’s $1.8 trillion proposal relatively early on in the process, which would have included climate funding, health care tax credits, and universal pre-K. First, that package included new taxes that Senator Sinema opposed, so it would run into that problem right away. Second, as Matthews notes, the Manchin proposal did not include any extension of the child tax credit in any form. Ironically, here was another clear example of Biden choosing — choosing to go to the mat for the child tax credit expansion for both moral and economic reasons. He personally met with Senator Manchin several times to make the case for the expanded child tax credit, but because of a profoundly mistaken belief that recipients of the expanded credit used the money to buy drugs rather than necessities, Manchin refused to budge.

Ultimately, Biden passed and signed a bill that represented the most that he could get out of Senators Manchin and Sinema while keeping the rest his narrow congressional majority on board. That bill — while far less than the sweeping BBB proposal that launched the process — still achieved two very important things for the country (Medicare drug price negotiation and transformative clean energy investment) that were also long-standing Democratic priorities. Matthews speculates that maybe a different set of negotiating tactics could have yielded an even larger bill with certain social safety net expansions — hand-waving away Manchin’s staunch opposition to those measures — and laments the administration’s failure to achieve that goal. I share that disappointment, but it is bizarre to blame the President who tried desperately for months to try to secure that outcome rather than the Senator (and deciding vote) who proudly stood up and declared that it was his goal to make sure that outcome did not happen.

That brings me to the last part of Matthews’ piece. After spending thousands of words bashing Biden for his Hamlet-esque indecision and legislative underperformance, Matthews sharply pivots to say that actually Biden may have passed a lot of stuff but it was poor implementation of those measures that truly defined his failed presidency:

Here, again, the examples Matthews provides do not buttress his thesis. He asserts the administration “lard[ed] on so many requirements for manufacturers to meet” to receive funding under the administration’s microchips bill that it “hobbled implementation.” How? All of the leading microchip manufacturers (as well as many other smaller ones) have satisfied the requirements for applying for government funding under the program and have received grants. As noted above, TSMC has already started producing microchips at its new Arizona facility. Micron is using the new grant to invest $50 billion and build new microchip fabs in New York and Idaho. If these requirements were supposedly so onerous, why did all of these companies satisfy them?

Next, he claims that the infrastructure law’s $42 billion in funding for new high-speed internet infrastructure was so “hard to access that, as of this writing, exactly 0 people have gotten broadband as a result of that money.” This misunderstands how the administration and Congress designed this program. From the very beginning, the goal of the program was to connect every household by 2030. It was not intended to be an emergency program that put "shovels in the ground” as soon as possible. The program Congress designed and wrote into statute was intentionally lengthy and careful: first, the FCC has to finish its broadband map to determine which parts of the country did and did not have suitable internet access (a process that all bill negotiators knew would take a year or more); then the Commerce Department would issue rules to determine how the $42 billion would be allocated across states based on the number of households without service; then states would have to submit plans on how they would use their allocated funding to connect every household in the state with affordable service; then, if Commerce was satisfied with the plan, the state would receive its allocation and go through its own bidding process with private and public entities to actually finalize contracts to build out the new infrastructure.

Congress and the Administration designed the program that way for two reasons. First, Congress and the Biden Administration had already dedicated billions of dollars to fast broadband infrastructure buildout in the American Rescue Plan. That program (which Matthews are other critics ignore) disbursed nearly $7 billion for internet access by 2023 and was projected at that time to connect nearly 2 million businesses and households. Congress and the Administration knew that the ARP program could provide a bridge while the new infrastructure bill program progressed. Second, the bipartisan negotiating group in Congress wanted the new $42 billion program to go through a painstaking process at both the federal and state level after previous efforts had not ended up producing affordable and reliable internet. Congress (and the Administration) decided it was worth going through a more thoughtful process on the front end to avoid outcomes like that in West Virginia several years ago, where hundreds of millions of dollars in federal aid did not produce the broadband expansion that the private company promised when receiving the grants.

As I have said before, the most salient critique of Biden’s economic legacy is not that it is too meager but that it is too diffuse and long term. Americans will benefit from connecting every household to high-speed internet, from road and bridges and ports that move goods more quickly and reliably, from cheaper prescription drugs, from robust domestic microchip production, and from a surge in domestic clean energy production — they will just benefit 5 or 10 or 30 years from now. At a time of acute public concern about the cost of living today, the Biden economic agenda was more geared towards addressing long-standing problems that could weigh down the economy decades hence. The irony of criticizing Biden for a faint economic legacy is that his record was too much legacy and not enough immediacy.