The Post-Neoliberal Delusion: And the Tragedy of Bidenomics (Jason Furman, March/April 2025, Foreign Affairs)
[T]he Biden administration’s post-neoliberal turn, the predicted economic transformations of which prompted comparisons to Franklin Roosevelt’s presidency, fell considerably short of its lofty goals. In some respects, the macroeconomic outcomes have been impressive. The U.S. economy has bounced back much faster than it did after previous recessions, and its post-pandemic performance has also outpaced that of many peer countries in terms of economic growth. But the recovery has been uneven, frustrated by inflation at least partly induced by the administration’s own policies. Inflation, unemployment, interest rates, and government debt were all higher in 2024 than they were in 2019. From 2019 to 2023, inflation-adjusted household income fell, and the poverty rate rose.
Even before inflation doomed Biden’s chances for reelection, it undermined the administration’s goals. Despite efforts to raise the child tax credit and the minimum wage, both were considerably lower in inflation-adjusted terms when Biden left office than when he entered. For all the emphasis he placed on American workers, Biden was the first Democratic president in a century who did not permanently expand the social safety net. And despite signing into law an infrastructure bill that committed over $500 billion to rebuilding everything from bridges to broadband, skyrocketing costs of construction have left the United States building less than it was before the law’s passage.
There have been important successes, especially considering the slim congressional majority with which Biden was forced to operate. Massive legislation that he pushed to address climate change is already reducing emissions and likely will continue to do so even in the face of hostility from the Trump administration. Domestic semiconductor production is being revived. But a hoped-for manufacturing renaissance has not materialized, at least not yet. The proportion of people working in manufacturing has been declining for decades and has not ticked back up, and overall domestic industrial production remains stagnant—in part because the fiscal expansion Biden oversaw led to higher costs, a stronger dollar, and higher interest rates, all of which have created headwinds for the manufacturing sectors that received no special subsidies from the legislation he championed.
The Biden administration failed to seriously reckon with budget constraints and to contend with the effects of “crowding out,” when a surge in public-sector spending causes the private sector to invest less. Both missteps reflected a broader unwillingness to contend with tradeoffs in economic policy and allowed Trump to ride a wave of discontent back into the White House. For Democrats, it would be a mistake to think their loss was due solely to a global backlash against incumbents—or worse, to conclude that American voters had simply been insufficiently appreciative of everything Biden did for them.
Truly building back better will require harnessing the Biden administration’s ambitions for economic transformation without discarding conventional economic considerations of budget constraints, tradeoffs, and cost-benefit analysis—in other words, not giving in to the post-neoliberal delusion.