What to make of Joe Biden’s plans for a second term (2024)

Some politicians are shy about revealing their ideas before elections for fear of alarming the voters. Others simply do not have very much to say. Which type is Joe Biden, as he pitches for a second presidential term? His domestic-policy plans have received much less scrutiny than Donald Trump’s. Our briefing this week is a first attempt to make up for that. The most positive thing to say about this president’s platform is that the alternative is a lot worse.

Mr Biden came to power in 2021 with a grand vision to remake the American economy for the middle class. His foreign policy was organised around this goal, too. FDR was mentioned. In office he was constrained by the Senate. Without the votes to overcome the filibuster, Bidenomics had to be implemented through giant budget bills and regulations. Some of the results have been beneficial, particularly in spurring investment in green technology. But overall, Mr Biden has placed far too much faith in regulation, protection and intervention, rather than animal spirits, to boost the economy.

A second term would be more timid. Team Biden talks of creating universal pre-school and other big reforms, but will surely achieve far less. On tax, trade and antitrust its ideas are a mix of promising and retrograde, reflecting compromises to placate the party’s coalition. What it lacks is a realistic appraisal of how the economy is doing, or a vision of where America could be in ten years.

On fiscal policy Team Biden would like to restore the top marginal rate of income tax to 39%, where it was before Trump-era cuts reduced it to 37%. Given the vast budget deficit, this makes sense. The president’s team would like to eliminate the “stepped-up basis” loophole for capital-gains tax, which is a good idea, too. But Mr Biden is also committed to sparing those earning less than $400,000 a year from any new taxes, a sop to the left-populists who think that the super-rich can fund all their spending plans.

On antitrust, the administration has pursued useful cases against health-care and credit-card firms. But the head of the Federal Trade Commission, Lina Khan, has wasted energy on a quixotic mission to restrain big tech firms, despite evidence that competition between them is fierce. On trade, the Biden administration has been marginally better than its predecessor. The president has lowered barriers to European and Japanese steel and aluminium. A trade initiative in Asia, IPEF, makes the right noises, but has not amounted to much. When it comes to trade with China, alas, Bidenomics has often just been a more competent version of Trumpism.

The Biden policy algorithm is: do not get outflanked by Donald Trump on China or trade. Do not raise taxes on anyone without a yacht. Do not do anything to annoy unions or to worsen racial disparities. The result is a defensive crouch. For example, Team Biden wants to decarbonise the economy but not look soft on China or unfriendly to unions. So it places tariffs on imports of Chinese electric vehicles and solar panels, slowing decarbonisation without doing much to create union jobs.

This defensive crouch is odd, given the strength of America’s economy. Real wages for the bottom fifth of workers have risen by nearly a tenth in four years, thanks to low unemployment, falling inflation and copious deficit spending. The black-white employment gap has almost vanished. Yet progressives are convinced that the economy must be remade.

Mr Trump also thinks the economy is broken, and proposes to fix it by funding the government largely through tariffs, which is both impossible and dangerous. His tax plan would worsen the deficit and could stoke inflation. Compared with that, four more years of low-ambition Bidenomics sounds appealing. But so does a cold shower. ■