Latest news with #Bidenomics
Yahoo
23-05-2025
- Business
- Yahoo
Opinion - Economic populism from both parties fails working Americans
President Trump's startling win in 2016 ushered in a new era of economic populism. Ever since, both parties have been vying to offer a new economic deal to blue-collar Americans, whose earning power had been declining for decades. They could use a new deal. According to the Federal Reserve, real median earnings for non-college workers fell 14 percent over the past 40 years, while those for workers with a bachelor's degree or higher have grown by 14 percent. Opportunity in America looks very different to people on opposite sides of the diploma divide. Whereas non-college workers contend with downward mobility, the highly educated rise into tonier precincts of upper-middle-class affluence. This disparity disfigures our society, and populists across the political spectrum are right to want to redress it. Unfortunately, they have proved better at posturing as working-class tribunes than at tangibly improving their lives. President Biden presided over a nearly $5 trillion public spending binge aimed at rebuilding a pandemic-stricken U.S. economy 'from the bottom up and middle out.' But Bidenomics ultimately struck out with working families, who identified it with rising living costs and eroding purchasing power. Although he owes his reelection mainly to inflation, it didn't take Trump long to break his promise to focus on batting it down. Instead, he's launched a global trade war that's driving prices back up for consumers and businesses, choking economic growth and provoking retaliatory tariffs on U.S. exports. An angry Trump lashed out at Walmart last week for announcing price increases, instructing the retail giant to 'eat the tariffs.' That's not an option for thousands of smaller businesses operating on slim profit margins. After four years of steady growth, the U.S. economy has shrunk 0.3 percent since Trump's return to the White House. Like Bidenomics before it, MAGA populism is failing working Americans. Both are based on dubious premises about what's gone wrong and how to fix it. Populists blame trade agreements and globalization for decimating factory jobs. This ignores structural changes that have affected all advanced economies — rising education levels, more women working, growing demand for services, the digital revolution. It also vastly overstates the power of policy to either cause or reverse deindustrialization. Trump is taxing most imports to shield U.S. companies from foreign competition and induce them to bring manufacturing jobs home. Yet America already has nearly half a million unfilled factory jobs. The share of U.S. workers in manufacturing has been falling steadily since 1950, to just eight percent today. Is it worth risking a new bout of inflation and possibly a recession to bump that number up a few points? Americans aren't buying Trump's prescription for a 'new golden age' built upon protectionism and autarchy. The Chicago Council on Global Affairs reports that 84 percent of Americans say trade is good for their standard of living and good for the U.S. economy (79 percent). Strikingly, 55 percent — including nearly half of Republicans — want Washington to pursue a global free trade policy, up from 34 percent in 2024. No wonder Trump is crawfishing away from his 'beautiful' tariffs and trying to cut new trade deals with Great Britain and China. Yet even as his right-wing economic populism implodes, progressives continue to clamor for a left-wing version. They see it as the antidote to 'neoliberalism,' which they define as a fixation with free markets, free trade, global economic integration and fiscal austerity that supposedly gripped both parties over the last four decades. The populist left demands a 'post-neoliberal' agenda — conveniently forgetting that in Bidenomics, it already got one. In his first major decision, Biden sided with progressive economists pushing for a massive $1.9 trillion stimulus bill. They dismissed warnings that a big dose of deficit spending would ignite inflation. Biden also put trade policy in the deep freeze, left some Trump tariffs in place and embraced industrial policies to 'reshore' factories and supply chains, nurture domestic chip manufacturing and invest billions in electric cars and clean energy production. The White House hired a left-wing academic to launch an unsuccessful bid to break up America's most successful tech companies. And Biden made good on his promise to be the most pro-union president ever, intervening on labor's behalf in organizing drives and even walking a picket line with striking workers. While Biden can take credit for new investments in chip fabs and clean energy production, much of his spending on education and infrastructure, including on rural broadband, has yet to yield positive results. From January 2023 to January 2025, manufacturing jobs dropped. And while union membership under Biden saw a modest uptick (240,000 workers), the share of unionized workers fell below 10 percent as the workforce grew. Bidenomics won raves from progressives but Bronx cheers from working-class voters. They linked heavy government spending to high prices and resented what they saw as Democrats' inattention to their economic struggles. As The Atlantic's Jonathan Chait concluded in a Bidenomics post-mortem, 'The notion that there is a populist economic formula to reversing the rightward drift of the working class has been tried, and, as clearly as these things can be proved by real-world experimentation, it has failed.' Non-college Americans aren't asking for statist 'solutions' — protectionism, unrestrained deficit spending and industrial policies larded with superfluous social policy mandates — that flout basic economics and common sense. Populism, as practiced by Biden and Trump, has foundered on the patronizing premise that working families want yesterday's factory jobs back. But they know the economy has changed and want to be part of where it's going, not where it has been. Will Marshall is president and founder of the Progressive Policy Institute. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
23-05-2025
- Business
- The Hill
Economic populism from both parties fails working Americans
President Trump's startling win in 2016 ushered in a new era of economic populism. Ever since, both parties have been vying to offer a new economic deal to blue-collar Americans, whose earning power had been declining for decades. They could use a new deal. According to the Federal Reserve, real median earnings for non-college workers fell 14 percent over the past 40 years, while those for workers with a bachelor's degree or higher have grown by 14 percent. Opportunity in America looks very different to people on opposite sides of the diploma divide. Whereas non-college workers contend with downward mobility, the highly educated rise into tonier precincts of upper-middle-class affluence. This disparity disfigures our society, and populists across the political spectrum are right to want to redress it. Unfortunately, they have proved better at posturing as working-class tribunes than at tangibly improving their lives. President Biden presided over a nearly $5 trillion public spending binge aimed at rebuilding a pandemic-stricken U.S. economy 'from the bottom up and middle out.' But Bidenomics ultimately struck out with working families, who identified it with rising living costs and eroding purchasing power. Although he owes his reelection mainly to inflation, it didn't take Trump long to break his promise to focus on batting it down. Instead, he's launched a global trade war that's driving prices back up for consumers and businesses, choking economic growth and provoking retaliatory tariffs on U.S. exports. An angry Trump lashed out at Walmart last week for announcing price increases, instructing the retail giant to 'eat the tariffs.' That's not an option for thousands of smaller businesses operating on slim profit margins. After four years of steady growth, the U.S. economy has shrunk 0.3 percent since Trump's return to the White House. Like Bidenomics before it, MAGA populism is failing working Americans. Both are based on dubious premises about what's gone wrong and how to fix it. Populists blame trade agreements and globalization for decimating factory jobs. This ignores structural changes that have affected all advanced economies — rising education levels, more women working, growing demand for services, the digital revolution. It also vastly overstates the power of policy to either cause or reverse deindustrialization. Trump is taxing most imports to shield U.S. companies from foreign competition and induce them to bring manufacturing jobs home. Yet America already has nearly half a million unfilled factory jobs. The share of U.S. workers in manufacturing has been falling steadily since 1950, to just eight percent today. Is it worth risking a new bout of inflation and possibly a recession to bump that number up a few points? Americans aren't buying Trump's prescription for a 'new golden age' built upon protectionism and autarchy. The Chicago Council on Global Affairs reports that 84 percent of Americans say trade is good for their standard of living and good for the U.S. economy (79 percent). Strikingly, 55 percent — including nearly half of Republicans — want Washington to pursue a global free trade policy, up from 34 percent in 2024. No wonder Trump is crawfishing away from his 'beautiful' tariffs and trying to cut new trade deals with Great Britain and China. Yet even as his right-wing economic populism implodes, progressives continue to clamor for a left-wing version. They see it as the antidote to 'neoliberalism,' which they define as a fixation with free markets, free trade, global economic integration and fiscal austerity that supposedly gripped both parties over the last four decades. The populist left demands a 'post-neoliberal' agenda — conveniently forgetting that in Bidenomics, it already got one. In his first major decision, Biden sided with progressive economists pushing for a massive $1.9 trillion stimulus bill. They dismissed warnings that a big dose of deficit spending would ignite inflation. Biden also put trade policy in the deep freeze, left some Trump tariffs in place and embraced industrial policies to 'reshore' factories and supply chains, nurture domestic chip manufacturing and invest billions in electric cars and clean energy production. The White House hired a left-wing academic to launch an unsuccessful bid to break up America's most successful tech companies. And Biden made good on his promise to be the most pro-union president ever, intervening on labor's behalf in organizing drives and even walking a picket line with striking workers. While Biden can take credit for new investments in chip fabs and clean energy production, much of his spending on education and infrastructure, including on rural broadband, has yet to yield positive results. From January 2023 to January 2025, manufacturing jobs dropped. And while union membership under Biden saw a modest uptick (240,000 workers), the share of unionized workers fell below 10 percent as the workforce grew. Bidenomics won raves from progressives but Bronx cheers from working-class voters. They linked heavy government spending to high prices and resented what they saw as Democrats' inattention to their economic struggles. As The Atlantic's Jonathan Chait concluded in a Bidenomics post-mortem, 'The notion that there is a populist economic formula to reversing the rightward drift of the working class has been tried, and, as clearly as these things can be proved by real-world experimentation, it has failed.' Non-college Americans aren't asking for statist 'solutions' — protectionism, unrestrained deficit spending and industrial policies larded with superfluous social policy mandates — that flout basic economics and common sense. Populism, as practiced by Biden and Trump, has foundered on the patronizing premise that working families want yesterday's factory jobs back. But they know the economy has changed and want to be part of where it's going, not where it has been. Will Marshall is president and founder of the Progressive Policy Institute.
Yahoo
13-05-2025
- Business
- Yahoo
The Debate That Will Determine How Democrats Govern Next Time
Donald Trump's 2016 victory inspired a revolution in economic thinking among Democrats. His 2024 restoration now threatens to kill off that revolution for good. Following the 2016 election, a large share of the American left-of-center concluded that Trump's victory could be blamed, at least in part, on half a century of 'neoliberal' economic policy that was too deferential to free markets. When Joe Biden took office in 2021, his administration adopted a new, more populist approach, sometimes called 'post-neoliberalism' or simply 'Bidenomics,' centered on a much more active role for government in the economy. Its supporters believed that the new approach would not only help achieve key national goals but also help Democrats win back the working class. Then, in 2024, working-class voters abandoned Democrats even more thoroughly than they had eight years prior. For many economists, pundits, and party insiders, the obvious upshot was that Biden's economic populism had failed. Headlines such as 'The Architects of Bidenomics Are in Denial' (The Wall Street Journal), 'How Bidenomics Boosted Growth but Failed Americans' (The Financial Times), and 'Why Bidenomics Was Such a Bust' (The Nation) proliferated in the weeks and months following the election. Perhaps the most comprehensive critique came from Jason Furman, who chaired Barack Obama's Council of Economic Advisers and is now a sort of unofficial spokesperson of center-left economics. In a February Foreign Affairs essay titled 'The Post-Neoliberal Delusion,' Furman argued that Biden's economic policies had caused inflation to spike, failed to help the working class, and ultimately generated a backlash that Trump rode right back to the White House. 'Policymakers should never again ignore the basics in pursuit of fanciful heterodox solutions,' Furman concluded. The backlash to Bidenomics has set off a heated debate among the economics intelligentsia, including lengthy rebuttals from several of Biden's former senior advisers. The outcome of that debate will go a long way toward shaping the agenda that Democrats adopt to try to win back working-class support—and, ultimately, power—from the Trump coalition. Did Democrats lose in 2024 despite Biden's embrace of post-neoliberalism, or because of it? The term neoliberalism is infamously hard to define—and, on both the left and the populist right, often devolves into a catchall meme for everything bad in the world—but the long-standing bipartisan consensus that it describes is real and meaningful. Starting in the late 1970s, leaders in both parties embraced free trade, disavowed large-scale public investment (sometimes called 'industrial policy'), favored market-friendly solutions to big social problems, and backed away from antitrust enforcement. Underlying those choices was a belief that free markets should largely be left to their own devices to maximize economic growth. The central economic disagreement between the parties was over tax rates and the size of the social safety net. The fallout of the 2008 financial crisis, and the growing gap between the country's haves and have-nots, convinced much of the American left that neoliberalism had been a failure. That view caught on even more widely after 2016, when working-class voters—especially in the places that had fallen behind during the era of neoliberalism and globalization—flocked to Trump. [Rogé Karma: The impossible plight of the pro-tariff liberals] Some on the left first responded to this failure by flirting with Bernie Sanders–style democratic socialism. But the set of ideas that eventually won out, associated more with Elizabeth Warren and her acolytes, argued that capitalism needs to be reformed, not rejected. First, the government should be more willing to intervene to pursue important goals that free markets won't address on their own, such as slashing carbon emissions and building domestic supply chains. Second, instead of just redistributing existing resources, government should make the distribution of resources more equal to begin with, namely by creating well-paying, unionized jobs for middle-class workers. Third, and perhaps most important, policies should be designed not only to maximize economic efficiency but also to generate positive political outcomes. The Biden administration, which was packed with Warren disciples, embraced this approach. Its economic agenda centered on three laws—the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act—designed to encourage private investment in important sectors and create a blue-collar-jobs boom. (Biden also followed a post-neoliberal path on trade and antitrust, but the effects of those shifts are not as immediate or measurable, so they've featured less in the current debate.) On the investment front, the administration's efforts worked wonders. In 2024 alone, private companies invested more in building factories for computer and electronics manufacturing in the U.S. than they had in the 20 years before CHIPS was passed. The world's leading semiconductor manufacturer, TSMC, is spending $165 billion to expand its sprawling megafactory in Arizona. Investment in clean-energy technology and infrastructure increased by 71 percent in the years following the passage of the IRA, and the law is projected to more than double the yearly pace at which the U.S. lowers emissions, according to estimates from Princeton University's REPEAT Project. About a year into the law's implementation, three-quarters of announced investment was slated for counties with a median income below the national average. The promised manufacturing-jobs boom, however, has not yet materialized. In fact, on Biden's watch, the share of American workers in manufacturing continued its long-term decline. But it is perhaps too early to declare Biden's efforts there an outright failure: During his presidency, investment in building new factories more than tripled, to its highest level on record. All of those factories need to be built before they can employ workers. In the meantime, there has been strong job growth—just in the construction sector, not in manufacturing. Perhaps most crucially, the Biden agenda was designed to be politically resilient. For decades, Democrats' go-to policy to fight climate change was imposing a price or tax on carbon. Economists argued that this would be the most efficient way to lower emissions. But carbon taxes are deeply unpopular among voters—they are, after all, taxes—and climate policies that raise prices tend to inspire political backlash. No carbon tax had any chance of getting through Congress during Biden's tenure, and even if it had somehow become law, it would probably have been repealed by a subsequent Republican majority. So the Biden administration tried a completely different strategy. Rather than making dirty energy more expensive, the IRA aimed to make clean energy cheaper—so much cheaper that consumers would switch over to it voluntarily. The approach proved to be a political winner. Most major policies tend to mobilize voters against the party that passed them. (Think of the Affordable Care Act or the 2017 tax cut.) Not the Inflation Reduction Act. Republican politicians barely mentioned the law on the campaign trail in 2022 or 2024, apart from occasionally trying to take credit for it themselves. The ultimate test is whether the law can now survive a Republican trifecta that is desperate to offset the fiscally dangerous effects of extending the 2017 tax cuts. Yesterday, the House Ways and Means Committee released an initial proposal that would obliterate most of the IRA's clean-energy tax credits and, according to Heatmap News, 'appears to amount to a back-door full repeal of the climate law.' The final shape of the GOP's must-pass tax bill is yet to be determined, however, and the fact that roughly 80 percent of IRA investments so far have gone to red congressional districts makes the politics of repeal complex. According to E&E News by Politico, Capitol Hill 'has been flooded lately with clean energy lobbyists and companies' begging lawmakers to preserve the IRA, and, in mid-March, 21 House Republicans wrote an open letter to congressional leadership asking them to preserve the legislation's central tax credits. A functional repeal of the IRA would be a crushing defeat for Biden's economic experiment. If, however, core portions of the law survive, one of post-neoliberalism's central conceits will be validated: that policy should be designed to be politically durable, even if it means that economists consider it 'inefficient.' The critics of post-neoliberalism acknowledge most of its successes. For them, however, the Biden administration's wins were merely the subplot of a story that ended in complete, avoidable disaster. The first critique is that, despite all of the investment, very little stuff was actually built. The Bipartisan Infrastructure Law, for instance, included funding for half a million electric-vehicle charging stations; three years after its passage, just 58 charging stations were up and running. The same law's $42 billion investment to expand rural broadband had yet to connect a single household by the end of Biden's term. According to a Financial Times investigation from August, 40 percent of the large manufacturing projects announced in the year following the passage of the IRA and CHIPS were either delayed significantly or paused indefinitely. Many were set back by, among other things, the complex thicket of rules and requirements that apply to any large project in the United States. [Marc J. Dunkelman: How progressives broke the government] This helps explain why post-neoliberal policies failed to pay off politically for Democrats last year. Publicly funded broadband or charging stations or factories mean little to voters until they've actually been built and can be experienced firsthand. 'The Biden administration believed in the politics of delivery,' Ezra Klein wrote in The New York Times last month. 'But the bills it passed will complete projects so slowly that it will be Trump, or even his successor, who benefits politically.' Many former Biden officials accept the core of that analysis. 'It's clear we didn't do enough to make it easier to build,' Brian Deese, the head of Biden's National Economic Council, told me. He points out that the administration issued several executive orders to fast-track projects and supported multiple (failed) legislative attempts to reform the onerous federal permitting process. But those efforts proved to be too little and too late. Perhaps if the post-neoliberals had been more attentive from the beginning to the ways in which government can get in the way of its own goals, they might have had more success. Some critics go beyond saying that post-neoliberalism didn't deliver—they argue that Bidenomics was politically harmful. The story goes something like this: In the spring of 2021, the Biden administration, influenced by post-neoliberal ideas, passed a $1.9 trillion stimulus package known as the American Rescue Plan (ARP). The stimulus payments provided consumers with record amounts of savings, and when the economy reopened, they spent like never before. With too much money chasing too few goods, inflation spiked. Consumer sentiment cratered, and Trump rode a wave of mass frustration back to the White House. This, Furman told me, is the 'tragedy of Bidenomics': The economic philosophy that was supposed to counter Trump triggered the inflationary crisis that brought him back to power. Biden's defenders dispute just about every part of that story. They point out that rich countries around the world experienced high inflation despite the fact that none passed stimulus bills remotely as big as the U.S. did, and that voters nearly everywhere responded to this inflationary malaise by throwing out incumbent leaders. A global trend, Biden's defenders argue, must have a global explanation: not the stimulus, but the coronavirus pandemic. From there, the debate devolves into more technical points. When you dig into the specifics, however, it turns out that there isn't as much disagreement as first appears. Jared Bernstein, who chaired Biden's Council of Economic Advisers, told me that the ARP probably contributed 0.5 to two points to inflation; Furman argues that it was closer to three points. That difference is significant, but it probably would not have radically changed what Americans thought about the economy. A separate question is whether the size of the pandemic stimulus was actually inspired by post-neoliberal economics in the first place. According to Biden officials, the question of whether the Rescue Plan should have been $2 trillion, $1 trillion, or $500 billion had much more to do with risk management than with ideology. 'The idea that the Rescue Plan's size reflected an embrace of some brand-new economic theory is ridiculous,' Bernstein told me. The administration ultimately concluded that in the face of uncertainty, it was better to err on the side of doing too much stimulus, and risking some inflation, as opposed to doing too little, and risking high unemployment. That belief was by no means exclusive to post-neoliberal progressives. In late 2020, the Trump-appointed Federal Reserve Chair Jerome Powell warned that 'too little support' from policy makers 'would lead to a weak recovery, creating unnecessary hardship for households and businesses,' whereas 'the risks of overdoing it seem, for now, to be smaller.' [Annie Lowrey: The cost-of-living crisis explains everything] Both its critics and defenders tend to treat the Biden presidency as a natural experiment in the effectiveness of post-neoliberal ideas. But the sources of political success and failure don't always map neatly onto ideology. Perhaps the Biden administration's gravest political mistake was to preside over what appears to have been the largest surge of migration in American history. And open borders, which are a form of eliminating barriers to free markets for the sake of maximizing economic growth, are a longtime fantasy of some free-market economists. In that sense, one might argue that the administration's error here was being too neoliberal. The post-neoliberals interpreted Trump's 2016 victory as the product of a failed economic paradigm and convinced themselves that by correcting those failures, they could completely shift American politics. They were wrong. Today, however, it is their critics who are at risk of making the same mistake. For all of its flaws, post-neoliberalism was a healthy correction to an economic system that was often too deferential to markets and too inattentive to the realities of politics. Abandoning it over its failures would be easy; the challenge is to find a way to build on its successes. Article originally published at The Atlantic
Atlantic
13-05-2025
- Business
- Atlantic
Will the ‘Neoliberalism' Debate Ever End?
Donald Trump's 2016 victory inspired a revolution in economic thinking among Democrats. His 2024 restoration now threatens to kill off that revolution for good. Following the 2016 election, a large share of the American left-of-center concluded that Trump's victory could be blamed, at least in part, on half a century of 'neoliberal' economic policy that was too deferential to free markets. When Joe Biden took office in 2021, his administration adopted a new, more populist approach, sometimes called 'post-neoliberalism' or simply 'Bidenomics,' centered on a much more active role for government in the economy. Its supporters believed that the new approach would not only help achieve key national goals but also help Democrats win back the working class. Then, in 2024, working-class voters abandoned Democrats even more thoroughly than they had eight years prior. For many economists, pundits, and party insiders, the obvious upshot was that Biden's economic populism had failed. Headlines such as 'The Architects of Bidenomics Are in Denial' (The Wall Street Journal), 'How Bidenomics Boosted Growth but Failed Americans' (The Financial Times), and 'Why Bidenomics Was Such a Bust' (The Nation) proliferated in the weeks and months following the election. Perhaps the most comprehensive critique came from Jason Furman, who chaired Barack Obama's Council of Economic Advisers and is now a sort of unofficial spokesperson of center-left economics. In a February Foreign Affairs essay titled 'The Post-Neoliberal Delusion,' Furman argued that Biden's economic policies had caused inflation to spike, failed to help the working class, and ultimately generated a backlash that Trump rode right back to the White House. 'Policymakers should never again ignore the basics in pursuit of fanciful heterodox solutions,' Furman concluded. The backlash to Bidenomics has set off a heated debate among the economics intelligentsia, including lengthy rebuttals from several of Biden's former senior advisers. The outcome of that debate will go a long way toward shaping the agenda that Democrats adopt to try to win back working-class support—and, ultimately, power—from the Trump coalition. Did Democrats lose in 2024 despite Biden's embrace of post-neoliberalism, or because of it? The term neoliberalism is infamously hard to define—and, on both the left and the populist right, often devolves into a catchall meme for everything bad in the world—but the long-standing bipartisan consensus that it describes is real and meaningful. Starting in the late 1970s, leaders in both parties embraced free trade, disavowed large-scale public investment (sometimes called 'industrial policy'), favored market-friendly solutions to big social problems, and backed away from antitrust enforcement. Underlying those choices was a belief that free markets should largely be left to their own devices to maximize economic growth. The central economic disagreement between the parties was over tax rates and the size of the social safety net. The fallout of the 2008 financial crisis, and the growing gap between the country's haves and have-nots, convinced much of the American left that neoliberalism had been a failure. That view caught on even more widely after 2016, when working-class voters—especially in the places that had fallen behind during the era of neoliberalism and globalization—flocked to Trump. Rogé Karma: The impossible plight of the pro-tariff liberals Some on the left first responded to this failure by flirting with Bernie Sanders–style democratic socialism. But the set of ideas that eventually won out, associated more with Elizabeth Warren and her acolytes, argued that capitalism needs to be reformed, not rejected. First, the government should be more willing to intervene to pursue important goals that free markets won't address on their own, such as slashing carbon emissions and building domestic supply chains. Second, instead of just redistributing existing resources, government should make the distribution of resources more equal to begin with, namely by creating well-paying, unionized jobs for middle-class workers. Third, and perhaps most important, policies should be designed not only to maximize economic efficiency but also to generate positive political outcomes. The Biden administration, which was packed with Warren disciples, embraced this approach. Its economic agenda centered on three laws—the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act—designed to encourage private investment in important sectors and create a blue-collar-jobs boom. (Biden also followed a post-neoliberal path on trade and antitrust, but the effects of those shifts are not as immediate or measurable, so they've featured less in the current debate.) On the investment front, the administration's efforts worked wonders. In 2024 alone, private companies invested more in building factories for computer and electronics manufacturing in the U.S. than they had in the 20 years before CHIPS was passed. The world's leading semiconductor manufacturer, TSMC, is spending $165 billion to expand its sprawling megafactory in Arizona. Investment in clean-energy technology and infrastructure increased by 71 percent in the years following the passage of the IRA, and the law is projected to more than double the yearly pace at which the U.S. lowers emissions, according to estimates from Princeton University's REPEAT Project. About a year into the law's implementation, three-quarters of announced investment was slated for counties with a median income below the national average. The promised manufacturing-jobs boom, however, has not yet materialized. In fact, on Biden's watch, the share of American workers in manufacturing continued its long-term decline. But it is perhaps too early to declare Biden's efforts there an outright failure: During his presidency, investment in building new factories more than tripled, to its highest level on record. All of those factories need to be built before they can employ workers. In the meantime, there has been job growth—just in the construction sector, not in manufacturing. Perhaps most crucially, the Biden agenda was designed to be politically resilient. For decades, Democrats' go-to policy to fight climate change was imposing a price or tax on carbon. Economists argued that this would be the most efficient way to lower emissions. But carbon taxes are deeply unpopular among voters—they are, after all, taxes —and climate policies that raise prices tend to inspire political backlash. No carbon tax had any chance of getting through Congress during Biden's tenure, and even if it had somehow become law, it would probably have been repealed by a subsequent Republican majority. So the Biden administration tried a completely different strategy. Rather than making dirty energy more expensive, the IRA aimed to make clean energy cheaper—so much cheaper that consumers would switch over to it voluntarily. The approach proved to be a political winner. Most major policies tend to mobilize voters against the party that passed them. (Think of the Affordable Care Act or the 2017 tax cut.) Not the Inflation Reduction Act. Republican politicians barely mentioned the law on the campaign trail in 2022 or 2024, apart from occasionally trying to take credit for it themselves. The ultimate test is whether the law can now survive a Republican trifecta that is desperate to offset the fiscally dangerous effects of extending the 2017 tax cuts. Yesterday, the House Ways and Means Committee released an initial proposal that would obliterate most of the IRA's clean-energy tax credits and, according to Heatmap News, 'appears to amount to a back-door full repeal of the climate law.' The final shape of the GOP's must-pass tax bill is yet to be determined, however, and the fact that roughly 80 percent of IRA investments so far have gone to red congressional districts makes the politics of repeal complex. According to E&E News by Politico, Capitol Hill 'has been flooded lately with clean energy lobbyists and companies' begging lawmakers to preserve the IRA, and, in mid-March, 21 House Republicans wrote an open letter to congressional leadership asking them to preserve the legislation's central tax credits. A functional repeal of the IRA would be a crushing defeat for Biden's economic experiment. If, however, core portions of the law survive, one of post-neoliberalism's central conceits will be validated: that policy should be designed to be politically durable, even if it means that economists consider it 'inefficient.' The critics of post-neoliberalism acknowledge most of its successes. For them, however, the Biden administration's wins were merely the subplot of a story that ended in complete, avoidable disaster. The first critique is that, despite all of the investment, very little stuff was actually built. The Bipartisan Infrastructure Law, for instance, included funding for half a million elective-vehicle charging stations; three years after its passage, just 58 charging stations were up and running. The same law's $42 billion investment to expand rural broadband had yet to connect a single household by the end of Biden's term. According to a Financial Times investigation from August, 40 percent of the large manufacturing projects announced in the year following the passage of the IRA and CHIPS were either delayed significantly or paused indefinitely. Many were set back by, among other things, the complex thicket of rules and requirements that apply to any large project in the United States. Marc J. Dunkelman: How progressives broke the government This helps explain why post-neoliberal policies failed to pay off politically for Democrats last year. Publicly funded broadband or charging stations or factories mean little to voters until they've actually been built and can be experienced firsthand. 'The Biden administration believed in the politics of delivery,' Ezra Klein wrote in The New York Times last month. 'But the bills it passed will complete projects so slowly that it will be Trump, or even his successor, who benefits politically.' Many former Biden officials accept the core of that analysis. 'It's clear we didn't do enough to make it easier to build,' Brian Deese, the head of Biden's National Economic Council, told me. He points out that the administration issued several executive orders to fast-track projects and supported multiple (failed) legislative attempts to reform the onerous federal permitting process. But those efforts proved to be too little and too late. Perhaps if the post-neoliberals had been more attentive from the beginning to the ways in which government can get in the way of its own goals, they might have had more success. Some critics go beyond saying that post-neoliberalism didn't deliver—they argue that Bidenomics was politically harmful. The story goes something like this: In the spring of 2021, the Biden administration, influenced by post-neoliberal ideas, passed a $1.9 trillion stimulus package known as the American Rescue Plan (ARP). The stimulus payments provided consumers with record amounts of savings, and when the economy reopened, they spent like never before. With too much money chasing too few goods, inflation spiked. Consumer sentiment cratered, and Trump rode a wave of mass frustration back to the White House. This, Furman told me, is the 'tragedy of Bidenomics': The economic philosophy that was supposed to counter Trump triggered the inflationary crisis that brought him back to power. Biden's defenders dispute just about every part of that story. They point out that rich countries around the world experienced high inflation despite the fact that none passed stimulus bills remotely as big as the U.S. did, and that voters nearly everywhere responded to this inflationary malaise by throwing out incumbent leaders. A global trend, Biden's defenders argue, must have a global explanation: not the stimulus, but the coronavirus pandemic. From there, the debate devolves into more technical points. When you dig into the specifics, however, it turns out that there isn't as much disagreement as first appears. Jared Bernstein, who chaired Biden's Council of Economic Advisers, told me that the ARP probably contributed 0.5 to two points to inflation; Furman argues that it was closer to three points. That difference is significant, but it probably would not have radically changed what Americans thought about the economy. A separate question is whether the size of the pandemic stimulus was actually inspired by post-neoliberal economics in the first place. According to Biden officials, the question of whether the Rescue Plan should have been $2 trillion, $1 trillion, or $500 billion had much more to do with risk management than with ideology. 'The idea that the Rescue Plan's size reflected an embrace of some brand-new economic theory is ridiculous,' Bernstein told me. The administration ultimately concluded that in the face of uncertainty, it was better to err on the side of doing too much stimulus, and risking some inflation, as opposed to doing too little, and risking high unemployment. That belief was by no means exclusive to post-neoliberal progressives. In late 2020, the Trump-appointed Federal Reserve Chair Jerome Powell warned that 'too little support' from policy makers 'would lead to a weak recovery, creating unnecessary hardship for households and businesses,' whereas 'the risks of overdoing it seem, for now, to be smaller.' Annie Lowrey: The cost-of-living crisis explains everything Both its critics and defenders tend to treat the Biden presidency as a natural experiment in the effectiveness of post-neoliberal ideas. But the sources of political success and failure don't always map neatly onto ideology. Perhaps the Biden administration's gravest political mistake was to preside over what appears to have been the largest surge of migration in American history. And open borders, which are a form of eliminating barriers to free markets for the sake of maximizing economic growth, are a longtime fantasy of some free-market economists. In that sense, one might argue that the administration's error here was being too neoliberal. The post-neoliberals interpreted Trump's 2016 victory as the product of a failed economic paradigm and convinced themselves that by correcting those failures, they could completely shift American politics. They were wrong. Today, however, it is their critics who are at risk of making the same mistake. For all of its flaws, post-neoliberalism was a healthy correction to an economic system that was often too deferential to markets and too inattentive to the realities of politics. Abandoning it over its failures would be easy; the challenge is to find a way to build on its successes.
Yahoo
09-05-2025
- Business
- Yahoo
Trump calls emptying U.S. ports a ‘good thing' despite supply-chain panic because ‘that means we lose less money'
Shipping volumes at U.S. ports have decreased drastically as a result of sweeping tariffs. Despite supply-chain professionals warning the port traffic slowdown could lead to goods shortages and increased consumer prices, President Donald Trump said emptying ports was a 'good thing' because it means less trade with China. As logistics professionals sound the alarms on emptying U.S. ports as a result of steep tariffs, President Donald Trump said those major import slowdowns are actually a boon. Following Trump's introduction of sweeping tariffs, shipping volumes have fallen considerably, according to data from container-tracking software company Vizion. In the period between the five weeks before and five weeks after Trump introduced and implemented his tariff plan, virtually all major U.S. ports saw a decline in the number of container books. The Port of Portland in Oregon saw a 50% drop in exports, and the Port of Los Angeles, the U.S.'s largest outpost, had 17% lower exports. From the week ending April 28, Vizion reported a 43% week-over-week decrease in containers. Port of Los Angeles executive director Gene Seroka warned last month of a 'precipitous drop' in shipping volumes, saying American retailers will have fully stocked shelves for only about another six weeks. Trump not only acknowledged the shipping slowdown in a Thursday press briefing announcing a trade deal with the UK; he seemed heartened by it. "We're seeing as a result that ports here in the U.S., the traffic has really slowed and now thousands of dockworkers and truck drivers are worried about their jobs," a reporter said in the press briefing. "That means we lose less money,' Trump said. 'When you say it slowed down, that's a good thing, not a bad thing.' Trump has doubled down on the need for tariffs to help reverse a trade deficit to China, which he says is $1 trillion. "From 500 billion to 1.1 trillion…frankly if we didn't do business we would've been better off," he said on Thursday. China exported goods worth about $525 billion to the U.S. last year, which accounts for about 15% of its exports, according to data from China's General Administration of Customs. The U.S. estimates it received about $439 billion in Chinese exports in 2024, with $143.5 billion of U.S. goods exported to China. The goods-trade deficit was about $295 billion in 2024. Trump has seemed to waver on the severity with which to tax China. As of Friday, he's floating an 80% levy on Chinese goods, a substantial cut from the 145% tariff already in place, though some investors warn the steep tax would still be prohibitive to trade. 'The Trump administration is delivering relief to the American people from the disaster of Bidenomics while laying the groundwork for a long-term restoration of American Greatness,' White House deputy press secretary Kush Desai told Fortune in a statement, citing data from the White House reporting a 22% increase in gross domestic investment in March, as well as cooling inflation, albeit before much of the tariffs' implementation. Desai told Fortune the U.S. can't rely on foreign imports because of the Covid-era pharmaceuticals and computer-chip shortages. While Trump claims plummeting U.S. port traffic will help save money, supply-chain professionals have sounded the alarm on the ramifications of these shipping disruptions to the logistics industry and consumers alike. The threat of tariffs caused companies to pull forward shipments to avoid the taxes, but the influx of goods now may mean either excess inventory or shortages down the line, Peter Sand, chief analyst of freight analytics platform Xeneta, previously told Fortune. Shortages may mean higher prices for companies, which are likely to get passed down to consumers. To manage excess inventory, companies may have to invest more heavily in storage warehouses or ground freight for deliveries. 'Global supply chains work really well when they can go steady, so when you have stop-and-go, or when you have all of a sudden a rush of cargo like you see right now, that's really putting a strain on global supply chains, maritime supply chains,' Sand said. A decline in port activity could have adverse effects on labor as well. Port of LA executive director Seroka told CNN that shipment slowdowns could mean less reliable work schedules for dock workers and truckers. Beyond supply-chain woes, some economists take issue with the foundation of Trump's arguments for tariffs, saying that a trade deficit with China isn't entirely a bad thing. 'We get incredibly valuable things from China,' Jason Furman, Harvard University professor of economic policy, told Fortune. 'If we want to diversify that, it's something we should do over time, not by just halting all the ships coming in today.' While trade deficits can exacerbate a dependency on another country and create some economic vulnerabilities, Furman said, they also provide desirable products to the U.S. Other economists argue tariffs would effectively sever trade with China, ending a period of expanding globalization. According to Furman, the U.S. should stop focusing on steep taxes to sectors like consumer goods, such as produce, clothing and toys. Trump, seeming to admit tariffs could create some shortages for consumers, said last week that little girls can make do with two dolls, instead of 30. 'Tariffs on targeted sectors that are important for national security could play a role,' Furman said. 'But discouraging American children from buying dolls is not a way to make America great again.' This story was originally featured on
