Neoliberals Are Wrong About Bidenomics

It is by now a familiar story. With the status quo in tatters following the worst financial crisis since the 1930s, a newly elected Barack Obama in 2008 chose not to hold economic elites accountable or initiate serious reforms. Instead, he empowered acolytes of former Treasury Secretary Robert Rubin, who spearheaded the financial deregulation in the 1990s. Going against the public temper, he bailed out the banks and effectively “relinquished populism to his critics,” as Federal Communications Commission chairman and longtime Democratic adviser Reed Hundt described it in his 2019 memoir, “A Crisis Wasted.”

When Joe Biden entered the Oval Office in 2020, it was unclear what course he would follow in pulling the country out of another economic crisis. Given his history, most expected Biden to favor continuity and caution in navigating the post-pandemic downturn. Instead, he swerved left, assembling a team of advisers who emphatically rejected the neoliberal axioms that had shaped economic policy in Washington for decades. He quickly signed the $1.9 trillion American Rescue Plan and unveiled the Build Back Better framework, a $2 trillion package that included universal pre-kindergarten, free community college, paid family and medical leave for workers, and expanded child tax credits. He also appointed reformers to important executive roles, such as Lina Khan at the Federal Trade Commission, attorney Jennifer Abruzzo at the National Labor Relations Board and Rohit Chopra at the Consumer Financial Protection Bureau. Conspicuously absent from his administration: the Rubinites who had dominated Democratic policy-making for a generation. Biden, it was said, was ushering in a “post-neoliberal” paradigm. 

The party’s neoliberal wing did not take kindly to being sidelined. Throughout the Biden administration, former Obama advisers like Larry Summers and Jason Furman have sought to portray “Bidenomics” as dangerously irresponsible. When Vice President Kamala Harris became the candidate in July, they and their allied donors sought to influence a potentially new administration’s economic agenda. Amplified by Beltway commentators like New York’s Jonathan Chait, they implored Harris to distance herself from the president’s economic program and reconsider Biden’s bolder personnel choices (specifically, Khan). Central to this project of rewinding the Democratic policy clock to the 2010s is the argument that “Bidenomics” is a political loser and responsible for the president’s low approval ratings.

As it happens, everything about their argument is wrong. 

National security adviser Jake Sullivan has been a central figure in Biden’s left pivot. Hillary Clinton’s senior policy adviser in 2016 and a former true believer in the Washington consensus, he began to rethink his beliefs in the wake of Donald Trump’s election. In a speech to the Brookings Institution last year, Sullivan described his awakening to the devastation wrought by decades of neoliberal policy and called for new domestic and foreign policies “for the middle class” — a central theme of the Biden doctrine. 

The New York Times’ David Leonhardt — who describes Sullivan’s proposal as the “new centrism” or “neopopulism”— has noted that its policies are “more popular than the planks of the Washington Consensus ever were. There is little doubt he is right about this. Despite Biden’s low approval ratings on the economy, the administration’s key policies poll very well separately, whether it’s the infrastructure bill, the Inflation Reduction Act or its aggressive approach to antitrust. A majority of Americans support curbing corporate power, building up domestic manufacturing and strengthening labor unions, all core goals of “Bidenomics.” 

That support for this agenda has failed to translate to high general scores for Biden does not disqualify the agenda or negate its winning politics. Decades of misguided policies have fostered record levels of inequality and economic precarity, creating a growing cost of living crisis that has fueled public appetite for corrective policies. When it comes to inflation, for example, voters are highly receptive to populist remedies like clamping down on monopolist behavior and using the government’s regulatory powers to lower costs. This broad support for confronting corporate greed suggests that Harris would be wise to lean into populist messaging and embrace a bold reformist agenda — in a word, Bidenomics.  

Fortunately, there have been signs that she is moving in this direction, beginning with her selection of Minnesota Gov. Tim Walz. As governor, Walz signed some of the most progressive and pro-worker legislation in the country, transforming the midwestern state into a “laboratory for progressive policy.” In 2023, Minnesota Democrats expanded union protections, implemented universal paid family and medical leave, funded free public school meals, and enacted the highest child tax credit in the country. Minnesota is one of the best states for workers, with the highest rate of union membership in the region and one of the lowest unemployment rates in the country. 

Harris has hinted that she will bring a similar policy approach to Washington. In a speech delivered last month in North Carolina, the vice president pledged to tackle the cost of living crisis and introduced over a dozen proposals. In addition to expanding current Biden policies like negotiating drug prices through Medicare, Harris tapped into the “greedflation” narrative by calling for a federal ban on price gouging on food. The candidate has since released a slightly more comprehensive outline of her economic plan that incorporates proposals that failed to pass under Biden due to conservative opposition in Congress, such as paid family and medical leave and the Protecting the Right to Organize Act. 

These are all positive signs. Yet questions linger about Harris’s commitment to the current administration’s populist approach to the economy. We know that top donors have been pushing the candidate from behind the scenes to modify her message and step back from some of Biden’s bolder progressive ideas, such as a “billionaires tax” that would touch the unrealized gains of households worth over $100 million (effectively closing a loophole used by the super-rich to avoid paying any taxes). Big donors and bundlers have also mounted a pressure campaign against Khan and Securities and Exchange Commision commissioner Gary Gensler, whose tough regulatory approach has rankled Wall Street. (The billionaire donor Mark Cuban has humbly floated himself as a replacement). 

Influence peddling is a part of politics, and there’s no reason to believe that billionaires will necessarily hold more sway over Harris than, say, labor unions. But there is reason for concern over the influence of figures like Karen Dunn, a corporate attorney who has served as one of the vice president’s top advisers on messaging and policy since she became the nominee. The presence of Dunn is troubling because she is also a high-paid corporate attorney who is currently defending monopolies like Google against the Biden administration. Indeed, the day before Harris debated Trump (for which Dunn helped her prepare) she made Google’s opening remarks in its third antitrust lawsuit. Dunn has previously represented Uber and Apple, and helped prepare Amazon founder Jeff Bezos for his 2020 testimony in front of Congress on antitrust. Another potential bad influence is Harris’s brother-in-law, Tony West, who served as Obama’s associate attorney general and recently took leave from his job as Uber’s chief legal officer to serve as a top adviser to the candidate. 

For what it’s worth, the candidate’s wealthy supporters don’t seem particularly concerned about her public displays of populism. “There’s optimism that this can’t possibly be real,” said entrepreneur and Harris supporter Aaron Levie on the candidate’s support for the “billionaires tax.” Cuban has made similar remarks, noting that Harris is “not an ideologue about any particular program” and “nothing’s been decided yet.” (Translation: she can be pressured).

The polls tell us that Harris would be wise to ignore the billionaires and corporate Democrats currently advising her to regress and embrace the centrist and “pro-business” agendas of the ’90s and 2010s. Following her cost of living speech last month, many economists of the old guard expressed their disapproval on cue. “This is not sensible policy,” griped Obama’s former economic adviser Jason Furman. A YouGov survey taken the following week, however, reflected overwhelming bipartisan support for most of her proposals, including capping out-of-pocket expenses for prescription drugs (72%), increasing the number of drugs eligible for Medicare negotiation (82% support), expanding the Earned Income Tax Credit (73%) and banning price gouging (65%). 

The smart political move for Harris would be to ignore the naysayers and hold a mirror up to Trump’s reactionary agenda while flaunting the mantle of populism. Instead of firing Khan, Harris should tout her crackdown on price gouging and “junk fees.” Instead of backtracking from taxing the rich, she should point out how Trump and his billionaire chums game the tax code to pay lower rates than teachers and nurses. 

During the presidential debate on Sept. 10, Harris won by successfully goading the former president into going on long conspiracy-ridden tangents. This might just convince enough swing voters not to vote for him in November. Yet her performance didn’t inspire confidence on the crucial question of what fate holds for Bidenomics. In comparing their economic plans, the vice president favorably cited an analysis by Goldman Sachs while touting the endorsements of Dick Cheney and 200 prominent Republicans. For swing voters struggling with rising costs, Harris needs to make a bolder pitch that appeals to the widespread conviction that the economy is not working for everyday Americans.

None of the long-term goals pursued by the Biden White House can be achieved in one or two administrations. Transforming America’s energy system, revitalizing its manufacturing base, rebuilding the labor movement, reining in corporate power — all will require a generational commitment by the party and its leaders. In the end, Harris’s ability to advance and deepen this agenda will depend not just on her own willingness to fight for it, but on the people she hires to advise her and operate the most powerful levers of government. So far, Harris has given both sides grounds for hope, mixing up her campaign with longtime confidants, Biden alums like Brian Deese, and old Obama hands such as David Plouffe and Eric Holder. Let’s hope that the Obama hands end up a disempowered minority — at least until they see the light like Jake Sullivan.