Since Joe Biden took office, Democrats have supported federal spending the likes of which the country hasn’t seen in decades—some of which they’ve actually managed to pass into law. Jacob Hacker and Paul Pierson are right that this agenda has been a far cry from the timid, moderate approach the president’s recent predecessors took to economic policy.
There are many factors behind this shift, as Hacker and Pierson note. A notable one is that Democrats appear to have internalized a hard-won lesson from the Great Recession: aiming for policies that appear moderate but don’t live up to the scale of a disaster won’t buy them any political favor. All it does is extend mass misery and put them at risk of taking the blame.
When, in late 2008, President-elect Barack Obama was deciding how much money he would ask Congress for to combat mass unemployment, foreclosures, and economic suffering, Christina Romer, the incoming chair of his Council of Economic Advisers, ran an analysis that found that the package should be at least $1.2 trillion. But in a meeting with Obama’s top economic advisors—Romer, Larry Summers, Jason Furman, Timothy Geithner, and Peter Orszag—chief of staff Rahm Emanuel worried that Congress would balk at that figure, deciding that Obama should ask for $775 million at most. Congress ultimately passed $787 billion.
By October 2009, unemployment had soared into the double digits; it didn’t fall to its pre-recession rate for seven years, and wage growth remained incredibly sluggish. In Obama’s own words, the party suffered a “shellacking” in the 2010 midterm elections. But instead of asking Congress to do more to ease the economic pain, Obama pivoted to seeking a grand bargain, and in 2011 he inked a deal that made a dollar-for-dollar exchange of spending cuts for increases in the debt ceiling. The result hurt GDP and job growth; for an entire decade economic misery endured. And contrary to their expectations, Obama and the party got no credit for moderation. Republicans still accused them of being socialist extremists.
By the time the pandemic hit, Democrats were ready to respond in a completely different manner. “Immediately after the financial crisis there was this notion that the old economic paradigm has decisively failed and we need a whole new kind of economics,” J. W. Mason, an associate professor of economics at John Jay College, City University of New York, told me in early 2022. “When I am in D.C. and I talk to younger staff people on Capitol Hill, it just feels very different. It feels like they have really internalized this idea that the stimulus in 2009 was inadequate.”
Alexandria Ocasio-Cortez speaks the same way. “I came of age watching Democratic governance fail me and fail my family,” she said in 2021. Even former Obama administration officials have echoed this lesson: that the response to 2008 was too small and led to unnecessary suffering. In mid-2020, during the Democratic primary, Obama himself said that he wanted the party’s candidates “to propose beyond what we were able to get done then, because the politics have changed.”
So when Biden was debating how far to go with the American Rescue Plan, the same people pushed him to be expansive. “If we look back and think this plan was too big, that would be a regret that would be fine to live with,” Furman told CNN Business early in Biden’s term. The $1.9 trillion package, which Hacker and Pierson neglect to mention, ultimately expanded the child tax credit and made it monthly for the first time, gave the child care industry the largest lump of federal funding it has ever received, and sent out another round of stimulus checks, among other things.
Big federal spending is why the pandemic recession lasted for just two months. Unemployment hit 14.7 percent in April 2020 but sank into the single digits within four months. It has stayed at or below 4 percent since the end of 2021. Despite historically high unemployment and huge disruptions to the entire economy, poverty fell to the lowest level on record in 2020, and then it fell again in 2021. Wage growth has been strong, particularly at the bottom of the income scale, leading to a decline in inequality. Moody’s has estimated that without federal aid packages, the country would have ended up in a double-dip recession in 2021, unemployment would have stayed in the double digits through most of 2021, the jobs lost wouldn’t have been regained until 2026, and wage growth would have been at an all-time low. Instead, GDP growth far outpaced all other advanced economies last year and is projected to do it again this year.
The pandemic experience, including both the American Rescue Plan and the waves of aid that came before it, proved that the government can protect people in a downturn and also create the conditions for a booming labor market like the one we have today, giving Americans a higher standard of living and more financial security.
Does their new economic agenda stand a chance of helping Democrats win elections? It’s hard to say for sure yet. But we shouldn’t forget an experiment that the party already ran. In the crucial Georgia runoff Senate elections in 2021, both Democratic candidates, Jon Ossoff and Raphael Warnock, campaigned hard on a promise to send people more stimulus checks if elected—with Biden’s backing. They won, handing their party control of the Senate. A third round of stimulus checks went out two months later.
Then there’s the fact that things like a higher minimum wage, higher taxes, and an expanded social safety net regularly do extremely well at the polls, even in deep red states. Democrats have failed to translate this fact into consistent electoral support, but the hunger for a government that does more to buffer Americans against the whims of a market economy is there for the taking.
Family policy, as Hacker and Pierson call it, is particularly fertile ground for pocketbook politics beneficial to both low-income and well-off Americans. Child care is simply unaffordable for nearly all but the upper echelons. As the Baby Boom generation ages, more and more people are being called on to care for them in a country with virtually no elder care system. At some point nearly everyone needs time off from work to care for a new child or family member or to recover from illness or injury. But there is no guarantee they can access paid leave when it happens.
These policies share something in common with stimulus checks: they are universal. That feature is important if Democrats wish to continue advancing a robust safety net that also wins political support. As soon as they start cleaving certain classes out of their proposed programs—as Biden proposed with his Build Back Better child care subsidies—resentments bubble up fast. Holding together a U-shaped constituency means ensuring both ends are seamlessly included.
What Democrats have hopefully internalized at this point is that Republicans will paint them as extremists no matter what they propose. Obama’s quest for consensus won him absolutely nothing from the other side, and voters don’t care about offsets and carefully crafted payfors. They care whether their lives are materially improved and whether they don’t have to constantly stare down financial precarity.
Democrats have policy answers that can achieve those things as long as they keep thinking big.
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