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- Paul Constant is a writer at Civic Ventures and a frequent cohost of the “Pitchfork Economics” podcast with Nick Hanauer and David Goldstein.
- In the latest episode, hosts Jessyn Farrell and Nick Hanauer spoke with The Economist’s Idrees Kahloon about the economic problems the new Biden administration is facing.
- Biden has an ambitious agenda to reform everything from climate policy to tax policy, but getting it through a divided Congress could be challenging.
- Visit Business Insider’s homepage for more stories.
Millions of us who remember President Barack Obama’s inauguration in January of 2009 can recall the deep feeling of anxiety that hummed in the background of the event. Our nation was facing an unprecedented economic collapse, and there was a genuine sense that the global economy could be completely wiped out.
I remember thinking at the time that I was probably never going to experience anything quite like that anxiety again. In a way, I was right: The anxious uncertainty looming over President Joe Biden’s inauguration this week made 2009’s ambient sense of anxiety feel like gentle elevator music.
The economic crisis caused by the pandemic has exacerbated America’s already-disastrous levels of income inequality to what might be a breaking point.
This K-shaped recovery is unlike anything any nation has ever experienced. It’s the first recession in recorded history that has actually enriched the wealthiest people and corporations, while punishing those at the other end of the spectrum. Economically speaking, our billionaires are doing far better than ever, our white-collar creative class is treading water, and the bottom has completely dropped out for the lowest third of American earners.
In the latest episode of “Pitchfork Economics,” Jessyn Farrell explains some of the economic problems that the new Biden Administration is facing: Record unemployment rates which primarily reflect job losses among communities of color and women, millions of American workers experiencing drastic cuts in pay and hours, a housing crisis unlike any we’ve ever seen, and rampant food insecurity that affects one in four American children. It’s an economic mess unlike any in modern history and President Biden is going to be expected to address it all.
To get a sense of how Biden will respond to these unique economic crises, “Pitchfork Economics” hosts Farrell and Nick Hanauer interviewed The Economist’s Washington correspondent, Idrees Kahloon.
"Containing the fallout" of the economic downturn "is the immediate challenge that President Biden is going to face," Kahloon explained.
"The immediate challenges are the economic ones," Kahloon said. "The fact that still so many Americans are out of work, still so many are having trouble affording food, and affording housing."
Ultimately, he said, "What gives me some hope is that it seems Biden's initial focus, legislatively, is going to be on precisely those questions and trying to do something about them. Those are the kinds of measures that you can see some Republicans going along with."
But if President Biden merely prods the economy back to life after the pandemic, that won't be enough to mark his administration as a success.
Once first aid has been applied to the economy, Biden needs to start looking at medium- and long-term economic goals.
"Before he got elected," Kahloon said, Biden "had a very ambitious agenda that aimed to reform everything from climate policy to tax policy. Getting that through a very narrowly divided Congress is going to be a challenge. But those are the big things that are on his slate and he's going to have to get right to work if he wants to get this stuff accomplished."
President Biden needs to keep in mind "the fact that the economy is shifting, that service sector industries are being disrupted by digitization and technologies," Kahloon said. "Also, the fact that climate change is real and something big needs to be done about it."
Even as he seeks big, meaningful solutions to these generational economic problems, Biden will face obstructionism from Congressional Republicans - likely centered around a renewed concern for deficits and debt that they never manage to muster when spend-happy Republican presidents are in office.
"But we are also living in a time of fairly low interest rates," Kahloon said. "It seems like debt and deficit have been able to increase without very much risk of increasing inflation."
Kahloon doesn't believe Biden will be "daunted by the levels of debt and deficit that we've seen grow not just during the COVID-19 epidemic, but also throughout the Trump presidency, and before."
The fact is, Biden's presidency arrives at a moment when economic thinking is undergoing a paradigm shift - not just about debts and deficits, but also about wages and the true source of economic prosperity in a capitalist economy. And outlets like The Economist, which Kahloon says "prizes evidence-based policy" above all else, are reconsidering their economic assumptions.
We're currently in the midst of one of the greatest economic experiments of all time, Kahloon explains.
"We saw when the CARES Act passed in March that poverty actually declined fairly substantially - by 15 to 20% depending on which measures you look at - despite the pandemic," he said. "The reason for that was, not to be glib, but if you give cash to poor people they become less poor."
"With the $600 unemployment top-ups that people were getting per week, in addition to the $1,200 stimulus checks, we saw what that did to poverty. We saw very clearly," Kahloon said. "We have a natural experiment on what happened."
So in this, the greatest economic crisis of our lifetime, it's possible that President Biden will have an opportunity to rewrite our basic understanding of economics for at least a generation, while simultaneously redefining the relationship between government and its citizens in the 21st century. All the ingredients for a bold new era of economic discovery are in the air. The only question remaining is if our new leader has the will to take us somewhere new.