The Biden presidency, Phase II
What is the Biden administration for? If you had asked me that question in 2021, I would have said the Biden administration’s chief purpose is to narrow the economic chasm. America is bitterly divided between highly educated people who live in places that are thriving and less educated people who live in places that are left behind. That economic and social divide threatens our politics, our shared prosperity and the nation’s social fabric.
In its first two years, the administration successfully began to tackle this fundamental problem. Through the infrastructure law and many other measures, Team Biden directed huge amounts of money to create working-class jobs and to increase benefits to working-class families. That spending contributed to white-hot labor markets that have lifted wages, brought people back into the labor force and turbocharged American capitalism.
Yes, inflation surged. Yes, the nation is still bitterly divided. But things would have been immeasurably worse if the struggling places were left to founder in the same economic mire. The Biden policies were more than worth it.
If you ask me now what the Biden administration is for, my answer would be different. Today, its main purpose is to prepare the nation for a period of accelerating and explosive change.
Writing in Tablet magazine this week, the scholar and columnist Walter Russell Mead notes that there have been three periods of transformational change over the course of human history: the Neolithic period, which brought about settled farming, writing and the birth of cities; the Industrial Revolution, which gave us factories, mass production and cars; and the information age.
Until a few years ago, the information age seemed like the least consequential of the three. Computers and TikTok are nice, but they haven’t produced the kind of societyaltering transformations we saw during the other two civilizational turning points.
That seems to be changing. The information age is accelerating and growing more disruptive. The first cause is artificial intelligence. AI will produce pervasive breakthroughs and threats that none of us can now predict. Another cause is the emerging cold war with China. This will produce a remorseless technological competition that will turbocharge developments in biotech, energy, chip manufacturing, trade flows, political alliances and many other spheres.
We’re living in the first stages of what my colleague Thomas Friedman a few years ago called “the age of acceleration,” an age of both stunning advances and horrific dislocations. This is a period of radical uncertainty, a period in which predictions are likely to be wrong and midrange plans are likely to become obsolete. We’re going to need governments that are able to pivot quickly and throw tidal waves of money at suddenly emerging problems, from technologically driven mass unemployment to war in the Pacific.
When COVID hit, the United States successfully pivoted and threw trillions of dollars at that problem. But the United States may not be able to mobilize that kind of response in the future. That’s because we’re now manacled by debt.
During the Trump administration, the debt increased by roughly $7.8 trillion, and during the Biden administration, it has increased by about $3.7 trillion. Over the past 50 years, the annual federal deficit has averaged about 3.5% of GDP. Over the next 10 years, the Congressional Budget Office expects that deficits will average 6.1% of GDP.
The United States is projected to spend roughly $640 billion this year merely paying interest on that debt, a figure that is expected to more than double by 2033. Any prudent family saves money as hurricane season approaches, so it can deal with the coming storms. With self-destructive recklessness, the United States is doing the exact opposite.
Seen from this perspective, the debt ceiling fight looks different. Yes, it’s insane that Republicans are playing a game of chicken that could send the world economy into turmoil. But the fact is that the debt ceiling has often been an occasion to put a brake on excessive spending. Of the past 43 debt limit increases or suspensions, 27 were attached to other legislation, according to Maya MacGuineas of the Committee for a Responsible Federal Budget. Republicans play this game harder, but Democrats have played it too.
Given the historical circumstances, President Joe Biden should absolutely negotiate with Republicans over a debt reduction deal.
Yes, Republicans are being reckless. But the central truth remains: We need to bring down deficits so that we have the flexibility and resources to handle the storms ahead.
There are many ways to do this. I would favor a progressive consumption tax that could be raised or lowered as the coming turmoil rages and ebbs.
But first, Biden has to redefine his presidency to keep up with emerging realities. It’s not 2021 anymore. We’re entering an era of rapid transformation. In contrast to Donald Trump, who is all about himself, Biden can be the source of security in times of chaos. For that to happen, we need a government that is fiscally sound and ready for anything.