Bidenomics

There was a story in the New York Times yesterday about Joe Biden’s fiscal plan as he enters office. The plan calls for $1.9 trillion in spending.

That’s a lot of money. I like it.

Obviously, the fastest way to launch a strong recovery from the pandemic is to end it. The plan invests heavily in vaccine production and distribution, centralizing and coordinating those efforts in a way that the Trump administration never has. The President-elect aims to vaccinate one hundred million Americans in his first hundred days in office. That’s still way too slow (Israel has been vaccinating at the rate of one percent per day), but it’s vastly faster than the botched county- and state-led programs have achieved so far.

While that work is underway, the fiscal plan pays for testing and support to allow schools to reopen, supports businesses and increases direct payments to citizens.

But the best thing about the plan is that it learns from the mistakes that the Obama administration made in its response to the financial crisis of 2008.

Reed Hundt, a board member at Intel, was a senior advisor to Obama during the transition into his first term. Hundt was a close observer of the policy debates that led to the fiscal stimulus and TARP programs Obama deployed in response to the Great Recession.

Hundt wrote A Crisis Wasted as a critique of those programs and of Obama’s response in general. It’s a good book. Its central point is that the President elected to shore up big banks and companies, not homeowners. He argues, compellingly, that that failure led to the widespread anger against Democrats and contributed to Hillary Clinton’s defeat in 2016.

The Biden plan was written by advisors who’ve clearly read Hundt’s book. Spending is aimed at programs to benefit people first of all — everybody is going to notice when they get a shot, and will recognize the impact of letting schools, restaurants and bars reopen. The direct cash grants were a popular promise in the January 5 Georgia runoff election.

I ache for a political debate that isn’t centered on Donald Trump. I’m so glad to see Biden concentrating on popular programs that benefit ordinary Americans. The Democratic and Republican mainstream have thought too little about the lives of regular voters. This is a refreshing turnabout.

This will drive a further spike in the national debt, on top of a seven-trillion-dollar increase under President Trump. Two things convince me that the money is worth spending anyway.

The richest nation in the history of the world must be able to spend in order to solve urgent crises. We want a return to normal life, whatever that turns out to be after COVID. We can’t get there until the virus is well and truly beaten. Time is of the essence.

Besides that, I expect to see thoughtful tax reform, particularly raising taxes on high-income people who got steep tax cuts under the Trump tax plan. Only way we pay down the debt is by spending less than we bring in. As a matter of fiscal policy, but also as a matter of fairness to middle- and lower-income taxpayers, higher-bracket folks ought to pay more.

I’m feeling optimistic.