U.S. President Joe Biden has decided to go big. In response to the economic and social crisis of the COVID-19 pandemic, his administration has launched a historical expansion of government spending and the American state. Some have heralded this as social democracy coming to the United States, with the Biden administration deliberately harkening back to former U.S. President Franklin Roosevelt’s New Deal. But what should we make of these emergency, make-shift measures? Will they mark a lasting expansion of the U.S. welfare state?
Biden’s proposals reflect a shift in public views of the state’s positive role in the economy. But his approach also reflects the weaknesses of the U.S. state. Because he has focused on more spending rather than new social programs, it is not yet clear if Biden can overcome those weaknesses.
Historically, external shocks like the pandemic have been important drivers of policy innovation. They form what political scientists call “critical junctures,” when the scale of events shakes up political systems. Yet you can often see the seeds of change before those moments. In 19th century Europe, intellectuals and activists extensively debated “the social question”—the massive rise in economic insecurity and inequality that accompanied industrialization. Yet it would take the massive shock of the Great Depression and World War II to secure universal welfare institutions across Europe and North America.
The decade after the 2008 financial crisis saw a widespread debate about what society could call “the new social question”—rising inequality, wage stagnation, precarious jobs, and a spiraling cost of living. Yet politics never quite caught up with the debate. COVID-19 might change that. Biden is promising to build on emergency measures fighting the pandemic’s economic fallout to address these much larger, structural issues.
So far, Biden’s signature achievement has been his new pandemic relief bill, the American Rescue Plan, building on support already passed under the Trump administration. In addition to direct cash payments, the size of which was hotly debated within the Democratic Party, Biden’s rescue plan provided a glimpse of his welfare state strategy, including more generous health care subsidies and expansions to family tax credits. But now, Biden is proposing a raft of ambitious programs that would make the temporary relief in those bills permanent. The American Jobs Plan focuses on infrastructure but includes extensive efforts to enhance the quality of jobs in the care economy. The American Families Plan would spend $1.8 trillion to expand child tax credit, provide funding for universal kindergarten and free community college, and create the United States’ first national family and medical leave provisions.
These are only plans, of course, and Biden would have to get them through his razor-thin majority in the Senate. But Biden’s proposals reflect a change in the U.S. center-left’s attitude toward the economy and the welfare state. The pandemic is accelerating a shift that was already happening in U.S. attitudes toward the welfare state. A study by my colleagues at King’s College London found that reminding Americans of the pandemic’s toll increased support for government spending and raising taxes. Alongside this change in popular attitude is a shift in influential policy views. The Biden administration has elevated economists and other experts who believe that rising inequality is due to failed government policies, not globalization.
The pandemic has thrown these policy failures into sharp relief, revealing the extent that the United States’ hypermarket society depends on low-waged service work, especially in the care sector. What happens to the economy when schools and nurseries close? What’s particularly notable in Biden’s proposals is the focus of these plans on care work. In addition to expanded cash support for low-income families through tax credits, Biden is proposing extensive investment in early childhood education and expanded child care tax credits. Perhaps more significantly, the Biden administration also wants to enhance wages and working conditions in the care sector—work that is largely done by women and people of color.
More generally, this focus on low-wage care work by the Biden administration reflects a shift in the center-left’s attitude toward inequality. For the past 30 years, the dominant view was the key to inequality was job retraining and “upskilling,” so workers could compete in a new global economy. This contributed to the creation of a “winner-takes-all” economy, where a subset of high-skilled workers could leverage their position to capture some of the gains of new technology and trade. Yet the vast majority of workers were left behind, moving into low-wage service jobs that were also essential to the new economy. As political philosopher Joshua Preiss argues, this amounted to an abandonment of the American dream—the idea that hard work should be sufficient to secure a good job with good wages. Biden’s proposals embody the belated recognition that such good jobs are not going to create themselves—and the government can and should play a central role in ensuring the economy works for everyone.
Biden’s economic agenda, then, also depends on his efforts to rebuild the U.S. labor movement. In addition to directly enhancing the well-being of workers, unions are key drivers of popular mobilization for new social welfare programs. Keeping with the United States’ historically liberal attitude toward labor markets, these proposals for extra spending also do not fundamentally alter the power dynamic between workers and their bosses. Unlike the Obama administration though, Biden has invested some political energy in passing the Protecting the Right to Organize Act, which would enhance the workers’ ability to unionize.
Yet there are limitations to the reach of Biden’s proposals. When it comes to legislating, U.S. democracy remains as dysfunctional as ever. And Biden will likely be the victim of that. He was able to pass his relief bill through the budget reconciliation process. But without new legislation, it’s unclear if his ambitions can have a lasting impact on inequality and precarity. It remains to be seen if Biden will attempt to bring in new, large-scale programs that would compare to Roosevelt’s and former U.S. President Lyndon Johnson’s legislative accomplishments
Biden has proposed large-scale, new spending, financed through deficits and new taxes, but this spending would largely be channeled through existing channels. Biden is not proposing much in the way of new policy programs. And this reflects the strength and weakness of the American state. Due to the U.S. dollar’s global position as a reserve currency, the U.S. government faces almost no constraints on government spending—and the Biden administration has deliberately tried to overshoot what it thinks is necessary to support the economy.
This is part of a larger debate on the U.S. center-left about the relative benefits of targeted cash programs versus universal services. Within the Democratic Party, the preference for direct cash programs had, until recently, tended to win out over those calling for welfare programs that would embody a direct entitlement to a service. The Affordable Care Act, with its complex system of subsidies, is a prime example. Many on the party’s left have been calling for a return to creating new, bigger programs, such as expanding eligibility for Medicare. Although the Biden administration has accepted more left-leaning views on inequality and the labor market, it has not yet embraced this focus on large-scale programs. The successful creation of new welfare institutions builds programs with lasting symbolic power and institutional entrenchment—think of the Social Security card every U.S. citizen receives. Democrats are hoping Biden’s spending will create a similar sort of lasting attachment for the public. But without new, programmatic welfare institutions with a name and identity, Biden’s project will be more vulnerable—spending can always be cut, but programs are here to stay.
