How do we avoid stagnation following the Biden boom?

It’s morning in America! People are getting vaccinated at the rate of 2 million a day and rising, suggesting that the pandemic may be largely behind us in a few months. And the Senate has passed a relief bill that should help Americans get through the remaining difficult months, leaving them ready to work and spend again.

Economists have noticed the good news. Forecasters surveyed by Bloomberg predict 5.5% growth this year, the highest rate since the 1990s. Goldman Sachs expects 7.7% growth — something we haven’t seen since 1984.

But then what? I’m very optimistic about economic prospects for the next year or two. Beyond that, however, we’re going to need another big policy initiative to keep the good times rolling.

President Joe Biden’s American Rescue Plan is a short-term relief measure meant to address an economic emergency. There are some elements Democrats hope will become permanent — child tax credits, enhanced subsidies for health insurance — but the bulk of the spending fades out within a year.

And once the big spending is behind us, we’re all too likely to find ourselves back in a condition of “secular

stagnation” — a condition in which the economy has persistent trouble maintaining full employment, even with ultralow interest rates.

This is a bad place to be. There’s a growing consensus among economists that the U.S. economy spent most of the decade after the 2008 financial crisis producing less and employing fewer people than it should have. We may have gotten close to full employment on the eve of the pandemic, but even that isn’t clear.

Exactly why we found ourselves in this condition is a subject of some debate, but a few factors are obvious. A drastic slowdown in growth of the working-age population reduced investment demand; so did an apparent slackening in the pace of technological progress. Whatever the reasons, the prepandemic economy spent most of its time underperforming relative to its potential.

And financial markets are signaling that they expect a return to underperformance once the Biden boom is behind us. How can we avoid that?

The answer is actually obvious: a large program of public investment, paid for largely with borrowing. Such a program would do double duty. Macroeconomics aside, we need to spend a lot to rebuild our crumbling infrastructure, fight climate change and more. And public investment can also be a major source of jobs and growth, helping to pull us out of the stagnation trap.

The good news is that the Biden administration’s economists understand this and by all accounts, they’re already in the process of putting together a very ambitious infrastructure plan.

The bad news is that getting such a plan enacted will be very hard politically. In a well-functioning democracy, putting together a big public investment plan wouldn’t be hard. But every bit of polling evidence I’ve reviewed showed that Americans — including many Republicans — supported the American Rescue Plan. Yet not a single elected Republican voted for it.

Republicans will probably offer similar lock-step opposition to any Democratic plan on infrastructure. What they want, above all, is to see the Biden administration fail.

So the big question is whether Democrats can pull off another political miracle, and pass a second round of crucial economic legislation in the face of scorched-earth Republican opposition. The answer to that question will determine whether the Biden boom will endure.

Paul Krugman writes for The New York Times.