Amid Economic Turmoil, Biden Stays Focused on Longer Term

1 month ago 27
ARTICLE AD

The president’s advisers are pushing their most detailed argument yet for the long-term benefits of a $4 trillion agenda to remake the American economy and improve lives.

President Biden is pushing a rebuilding of public investment, like infrastructure, research and education, as the best way to fuel economic growth and improve families’ lives.
Credit...Doug Mills/The New York Times

Jim Tankersley

May 13, 2021Updated 3:49 p.m. ET

WASHINGTON — President Biden and his economic team are pushing their most detailed case yet for trillions of dollars in new federal spending to rebuild public investment in workers, research and physical infrastructure, focusing on long-term ingredients of economic growth and equality even as the current recovery from recession shows signs of distress.

In a new document from the White House Council of Economic Advisers, obtained by The New York Times, Mr. Biden’s team casts his $4 trillion economic agenda as a way to correct decades of tax-cutting policies that have failed to boost the middle class. Instead, the administration is pushing a rebuilding of public investment, like infrastructure, research and education, as the best way to fuel economic growth and improve families’ lives.

The document provides a deeper economic backbone for arguments that Mr. Biden has made publicly and privately to sell his plans to lawmakers, including his expected comments to a group of Republican senators he has invited to the White House on Thursday to negotiate over an infrastructure package.

It also reflects the administration’s longer-term thinking on economic policy at a time when conservatives have ramped up criticism of the president over slowing job growth and accelerating inflation. Republicans continue to insist that tax cuts, particularly for business, are the key to economic competitiveness and middle-class prosperity. They have refused to negotiate any changes to their party’s signature 2017 tax law as part of an infrastructure agreement, even as they concede some need for a limited version of the new public investments Mr. Biden is calling for.

Administration officials express confidence that recent price surges in used cars, airfare and other sectors of the economy will prove temporary, and that job growth will speed up again as more working-aged Americans are vaccinated against Covid-19 and regain access to child care during work hours. They say Mr. Biden’s $1.9 trillion economic aid package, the “American Rescue Plan,” which he signed in March, will lift job growth in the months to come — and that it is appropriate for the president to look past the current crisis and push efforts to strengthen the economy long-term.

The two halves of Mr. Biden’s $4 trillion agenda, the “American Jobs Plan” and the “American Families Plan,” are premised on the economy returning to a low rate of unemployment where essentially every American who wants to work is able to find a job, Cecilia Rouse, who leads the Council of Economic Advisers, said in an interview.

“The American Rescue Plan was rescue,” Dr. Rouse said. “It was meant as stimulus as we work through this, you know, hopefully once-in-a-century, if not longer, pandemic. The American Jobs Plan, American Families Plan are saying look, that’s behind us, but we knew going into the pandemic that there were structural problems in our country and in our economy.”

Mr. Biden’s plans would raise taxes on high earners and corporations, in order to fund new federal spending on physical infrastructure, care for children and older Americans, expanded access to education, an accelerated transition to low-carbon energy and more.

Those efforts “reflect the empirical evidence that a strong economy depends on a solid foundation of public investment, and that investments in workers, families, and communities can pay off for decades to come,” Mr. Biden’s advisers wrote. “These plans are not emergency legislation, they address longstanding challenges.”

The five-page brief focuses on arguments about what drives productivity, wage growth, innovation and equity in the economy. All are issues that predate the coronavirus recession and recovery, and which Democrats, in particular, have pledged for years to address.

It begins by attacking the “old orthodoxy” of tax-cutting policies by presidents and Congress, including the 2017 tax cut law passed by Republicans under President Donald J. Trump. A driving rationale behind those cuts was an effort to encourage more investment by private firms, boosting what economists call the nation’s capital stock. The brief faults those policies for not producing the rapid gains in economic growth that the champions of those policies promised, and it says that raising taxes on high earners “will help ensure that the gains from economic growth are more broadly shared.”

It also recounts what it calls the federal government’s underinvestment in policies that help educate children and adults, facilitate the development of new technologies and industries and support parents so that they are able to work and earn more. It singles out the wave of fast-developed Covid-19 vaccines from Pfizer and Moderna, which grew out of publicly funded research, as an example of public investments yielding private-sector innovation.

“Those started with ideas that were funded by the public sector decades ago,” Dr. Rouse said. “And then the private sector built on top of that, so it’s really, the private sector needs to work with the public sector. We are all very grateful that the public sector was willing to take that risk, and it didn’t pay off right away.”

“In many ways, the federal government should be patient,” she said. “We are a kind of entity, we should be patient. So I’m not saying we have to wait a million years for something to pay off, but we don’t need to have the kind of immediate payoff that a private company might need to see.”

That argument is, in many ways, a departure from how administrations typically pitch economic policies during a crisis. There is no focus in the brief on immediate job creation or a quick bump in economic growth.

Weeks after Mr. Biden detailed both halves of his plan, the administration still has offered no projections about the impact of his policies on jobs or growth. Instead, Dr. Rouse and others in the administration have taken to citing forecasts by the Moody’s Analytics economist Mark Zandi, which are among the more favorable outside analyses of Mr. Biden’s agenda.

Administration officials say there is no need for their economic team to produce such forecasts. Congressional Republicans have repeatedly called for the White House to produce an estimate of how many jobs would be created by his plans.

Read Entire Article