These are very frustrating times for a lot of us because Manchin and Sinema and Gottheimer and Schrader and a handful of Democrats who exist to represent big donors instead of their constituents are torpedoing the Democratic agenda before a midterm election when it’s going to be tough for Democrats to hold onto the House and Senate. But as the historian Gary Gerstle notes here, it’s also quite striking that unlike 20 years ago or even 10 years ago, these donor-centric moderates are a small minority inside an increasingly unified party that is standing for real social democracy.
It’s exhausting simply to read through the list of the second infrastructural bill’s major provisions: universal preschool, subsidies for child and elder care, a program of school lunches, paid medical leave, expansion of Medicare (and Obamacare and Medicaid), massive investments in a green economy, additional investments in physical infrastructure, a Civilian Climate Corps (modelled on FDR’s storied Civilian Conservation Corps), affordable housing, Native American infrastructure, support for historically black colleges and universities, and an expanded green card program for immigrant workers and their families. We’ve heard a lot about the way in which the filibuster warps American democracy and about the arcane process of “reconciliation” that, in a few instances, allows for a filibuster “workaround.” We’ve heard a lot less about how the Democrats, in difficult political circumstances, have come within two Senate votes of achieving a legislative breakthrough on a scale that rivals FDR’s legendary 100 days.
And despite pundit declarations to the contrary, Democrats’ attempt at breakthrough is not yet dead. It is true that the reconciliation infrastructural bill no longer has a chance of reaching an expenditure level of $4tn. If such a bill passes, it is likely to be in the $1.5-2tn range. The many major initiatives currently contained within it may have to be shrunk by a third. That will disappoint Bernie Sanders and Alexandria Ocasio-Cortez and their supporters, who had originally set their eyes on a $6tn package. Yet, history offers a different perspective. The Biden administration might still deliver a package of programs across its first year totaling $5tn: an estimated $2tn for a downsized reconciliation infrastructural bill; $2tn for America’s Rescue Plan already approved; and the $1tn for the bipartisan infrastructure bill that is sure to pass the House at some point. This “shrunken” 2021 package as a whole would still rival (as a percentage of GDP) government expenditures during the most expensive years of the second world war. It would exceed by more than five times the size of Obama’s 2009 economic recovery plan.
The ambition of Biden’s spending package reveals the distance that US politics has travelled since the Great Recession, when Obama relied for economic guidance on a group of economic advisors drawn from the neoliberal world of Robert Rubin and Goldman Sachs, and of Wall Street more broadly—figures such as Timothy Geithner, Lawrence Summers, Peter Orszag, and Michael Froman. Elizabeth Warren had not then launched her political career, and Sanders was a lonely voice in the Senate. They were certainly not regarded as Democratic Party heavyweights. They now are. That Biden ultimately sided with the progressives during the 27 September week is a sure sign of their influence.
The progressives’ influence is equally apparent in Biden’s decision, in the days leading up to the expected vote on the bipartisan infrastructure bill, to nominate Saule Omarova to be Comptroller of the Currency. Omarova, a law professor at Cornell University, is a radical who wants to democratize and nationalize finance in America in ways never done before. In her legal writings, she has argued that the Federal Reserve ought to be turned into a people’s bank where Americans would keep their deposit accounts (rather than in private banks, as is currently the case). This newly configured Fed, in her vision, would also establish a “national investment authority” charged with directing Federal Reserve capital to projects that serve the public interest. Omarova may not receive confirmation from the Senate; even if she does, she may simply be a pawn in Biden’s campaign to get the mainstream Jerome Powell reappointed as Fed chairman. But by nominating Omarova, Biden has spurred a conversation already underway about how to restructure the Fed in ways that make it less of a cloistered institution serving elite interests and both more transparent and more responsive to the democratic will.
As Gerstle points out, the real tell is how much further to the left the Biden administration is than Obama. Biden might blow in the wind a bit, which is OK in a president. But Obama was a true believer in neoliberalism and surrounded himself with people he was comfortable with, like Rahm Emanuel and Larry Summers. Gross. Those guys are now basically persona non grata in the leading economic circles in the Democratic Party. There’s a lot to do and we aren’t there yet, but the shift has been quite stark, even if it doesn’t feel like it sometimes.