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Biden's economic agenda isn't quite as 'transformational' as it seems

That superlative descriptor has attached itself to President Joe Biden’s economic agenda as firmly as “polarized” sticks to political parties or “gridlocked” to Congress. And the combined $4 trillion price tag for his American Jobs Plan and Families Plan is only one of the reasons.
“Transformational” thrills Democratic liberals as much as it alarms Republican conservatives, so both ends of the ideological spectrum embrace the term. It sounds right to many commentators since the new President’s proposals to build infrastructure, expand education and help struggling families buck the tide of the only political era they’ve known.
But a longer view of the relationship between Americans and their government suggests a subtler reality.
Bracing as the size and scope of the new President’s program is, much of it would build on federal initiatives that have evolved over decades. It would return spending and tax levels that existed as young Joe Biden came of age in the mid-20th century, before the rise of conservatism bent on constraining government.
“Biden has the opportunity to be a restorational president,” said Douglas Brinkley, a Rice University presidential historian. At 78, he “is trying to restore the America that was his America until the Reagan Revolution became dominant.”
Government’s role in economic life has grown with the nation throughout American history. Canals, railroads and land-grant colleges in the 19th century gave way to electrification, interstate highways and social insurance in the 20th. A progressive era constitutional amendment paved the way for federal income taxes on individuals as well as corporations.
As Washington financed President Dwight Eisenhower’s highway system, John F. Kennedy’s moon mission, and Lyndon Johnson’s Great Society, federal investment in infrastructure, research and development and education peaked at 6.4% of the size of America’s economy in the 1960s. It declined thereafter, to 2.6% by 2019.
Had it remained at 6.4% that year, federal investment would have been $800 billion higher. That’s twice the $400 billion annual cost of Biden’s agenda spread over 10 years.
Biden’s tax proposals appear modest in the context of recent history. The 1981 tax cut Ronald Reagan signed cut the top personal income rate from 70% to 50%. Biden proposes an uptick from 37% to 39.6% — where the top rate stood before President Donald Trump’s 2017 tax cuts.
The corporate tax rate topped 30% for decades before Trump slashed it to 21%. Once the source of more than one-third of federal revenue, the corporate tax provided just 6.6% by 2019.
“Over the last three years, corporate tax collections have fallen to their lowest level in my lifetime — 1% in GDP,” Treasury Secretary Janet Yellen told CNN via email. Biden would nudge it up to 28%, though he has signaled he could compromise as low as 25%.
“On both taxes and level of public investment, we are returning to levels (and) structures reflected in past periods of progress,” said Brian Deese, director of Biden’s National Economic Council. “The element that is more transformational is the focus on doing public investment in a way that supports everyone.”
Indeed, Biden explicitly frames expansion of familiar programs around lifting those previously left behind, from African American farmers and home health workers, to Hispanic students and restauranteurs, to working-class women kept from the labor force for lack of affordable child care. That unabashed response to the racial and demographic contours of contemporary inequality reflects the evolving coalition that elected him.

He can’t do it alone

Unlike Democratic predecessors, Biden has not proposed a singular new federal landmark such as Social Security, Medicare, Medicaid or the Affordable Care Act. But he breaks new ground with his thoroughgoing emphasis on action to curb climate change.
Trump spent half what Biden proposes on a set of tax cuts that have shown no sign of durably boosting the US economy. But the cumulative cost of Biden’s current proposals — on top of his already enacted $1.9 trillion for Covid relief — would well exceed what the government spent to win World War II in inflation-adjusted terms.
And forty years after Ronald Reagan shaped a political generation by telling Americans “government is the problem,” Biden’s emphatic declaration of the opposite sounds as jolting as the sticker shock.
“That’s a long time, so that feels transformational,” observed presidential biographer Doris Kearns Goodwin. “It’s not just the programs he’s bringing back, but the philosophy.”
Of course, Biden won’t transform anything unless his program clears Congress. A few Republicans call for compromise, but their Senate leader Mitch McConnell vows unrelenting opposition to Biden’s tax hikes and the scale of his spending plans.
Democrats could act alone, as they did on Covid relief. Yet repeating that path makes some nervous now that the impetus of immediate crisis has passed.
The Great Depression fueled Franklin D. Roosevelt’s New Deal. The slain JFK’s fallen banner, then his own historic landslide, propelled Johnson’s agenda.
Biden’s quest for a comparable legacy rests on party unity and the plain-spoken, grandfatherly mien he has brought to the Oval Office to replace Trump’s bombast.
“He’s not a naturally gifted salesman,” Brinkley said. “In order to be a transformational president, he first has to be a restorational one.”
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