Since the 1980s, Democrats have offered a constant refrain about the information-age economy: that it makes the rich richer, suppresses middle-class wages, and leaves the poor increasingly more behind. To reduce inequality and expand opportunity, their economic advisers have prescribed public investment in education, health care, training, infrastructure and support for families, all funded by higher taxes on the wealthy.
A political era favoring lower taxes and a reduced government allowed them only limited success.
But the Republican opposition has thwarted their attempts to secure greater investment in “human capital” and economic change. Major legislative measures on priorities such as expanding early childhood education, upgrading infrastructure and reducing carbon emissions to slow global warming have been dropped.
Federal spending on popular retiree benefit programs continued to rise. Federal spending for the future — capital investment, research and development, education and training — has eroded. From a peak of more than 6% in the 1960s, these budgetary investments have fallen by more than half.
“The Biden administration was not strategic about this,” complained David Autor, a professor at the Massachusetts Institute of Technology, a leading authority on the economic changes that have kept many Americans from going to school. before. He fears the window for major action is closing.
“We’ve been doing this for four decades: underinvesting in ourselves, cutting taxes and running away from the future,” Autor said. “It only contributes to the American decline.”
Republican economists say the extent of stagnating wages and shrinking opportunities has been exaggerated. Michael Strain of the conservative American Enterprise Institute, author of the 2020 book “The American Dream Is Not Dead”, insists that Build Back Better would have set back the economy with wasteful and poorly designed programs.
University of Maryland economist Melissa Kearney, a moderate Republican who favors much of Biden’s agenda, called the continued stalemate a “terrible outcome.” She still hopes for a compromise.
“Investing in children is such a win-win. Millions of poor children would do better in school, contribute more to our economy, and depend less on safety net programs.”
Biden continues to make the case, including during his West Coast swing last week. “We haven’t invested in ourselves,” the president told donors at a fundraiser in Seattle.
His best-case scenario remaining is half of last year’s $3.5 trillion plan, with much of the new tax revenue going to deficit reduction rather than new spending. Potential items: $500 billion to fight climate change, limits on the price of some prescription drugs, Obamacare subsidies and spending to expand early childhood education.
It wouldn’t be what he or his advisers had hoped for. But that would be something.
“I don’t know when another opportunity will present itself,” Furman said, “that’s why I’m hoping they can pull a rabbit out of a hat.”
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