What Comes After Trickle-Down Economics?

Biden needs to look to his left. Photo: Pool/Getty Images

With his first joint address to Congress last week, President Biden did more than introduce a new spending plan to the nation; he also made an announcement. “My fellow Americans, trickle-down economics has never worked,” he said, to cheers from his party. They were bold words, but Biden is hardly the first Democratic president to criticize the idea that tax cuts for the wealthy will gradually lead to prosperity for all. Bill Clinton promised voters a better future in 1992, blaming Republicans for “12 years of trickle-down.” Years later, Barack Obama would take his own shot at trickle-down economics. A “certain crowd” insisted for years that if “we cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger,” he said in 2011. “Here’s the problem: It doesn’t work. It’s never worked.”

Whoever declares the futility of trickle-down sets a hard task for himself. If the policy only enriches the wealthy and leaves everyone else behind, then an alternative becomes necessary. The nature of that alternative eludes most Democrats. No friend to the poor, Clinton slashed welfare spending to encourage “personal responsibility.” The Obama presidency delivered the beginnings of health-care reform, but little else for the poor or even the middle class; Obama left capitalism mostly as he found it.

Biden’s policies, however, somewhat depart from recent history. Biden is not the Marxist of Wall Street’s nightmares, but the American Families Plan he’= has proposed would spend roughly $4 trillion on the public and be paid for partly from increased taxes on the wealthy, an indication that the Biden administration doesn’t intend to wait for anything to trickle down. Biden’s seeming proclivity for spending has at least one clear explanation: The pandemic left him no other choice. Other questions remain: How long will Biden’s commitment to redistribution last? And what prevents this commitment from collapsing in on itself, another victim of a broken political system? Without ideology as a scaffold, Biden’s interest in spending looks vulnerable to pressure from the right.

Republicans like Senators Josh Hawley and Marco Rubio may criticize the excesses of capitalism and even say that the party must come to represent the working class, but with few exceptions, the party has yet to devise substantive policy rebuttals to Biden; it relies instead on culture-war grievance, revealing itself to still be the party of Trump. (When Senator Mitt Romney introduced a child-allowance plan, Rubio objected, as it lacked the punitive function the right customarily assigns to welfare pittances.) Beneath the right’s opposition to redistribution lies a bedrock belief: Wealth is meritorious. “First and foremost, any system of taxation is about values,” the economist Tyler Cowen recently and correctly observed before adding, “The values that the U.S. should prioritize are a valorization of wealth, the encouragement of saving, and the encouragement of children.” Precarity tends to discourage childbearing, an old fact reilluminated by the pandemic baby bust. Cowen’s perspective doesn’t have to line up with observable reality to be worth noting. He merely expresses a view that is common on the right: that the poor are in need of a good lesson. The wealthy learned well and thus have something to teach everyone else; they deserve protection from the tax code and from marauding crusaders like Joe Biden. As an idea, trickle-down economics is certainly in danger; the stagnation of the middle class and the Trump administration’s authorization of cash payments to the public are both serious threats to its survival. Yet certain aspects retain their appeal. The impulse to valorize wealth isn’t going to disappear from the right. It may undergo permutations, reemerge with new branding and different language, but it is too integral to the conservative position to die.

Today’s Democrats may be more amenable to trickle-down alternatives than their elders. A growing progressive faction in Congress exerts newfound influence, and even centrist Democrats like Biden are now eager to be seen as allies to labor and the worker — a position in tension with certain economic ideologies. But the wealthy also never lacked defenders among Democrats. The neoliberal can condemn Trumpism while offering up an economic vision far short of what the times require. Conservative Democrats pose a real threat to Biden’s economic plans. The president could even undermine himself.

In his joint address, Biden sounded like a New Deal liberal, but he also ran as a moderate. Biden is limited, still, by a politics of the past. In his speech to Congress, he appealed to bipartisan sentiment. He revealed concerns about the deficit. “So how do we pay for my jobs and family plan? I made it clear, we can do it without increasing the deficit,” he said. As David Dayen noted in The American Prospect, Biden’s rhetoric resembles that of Treasury Secretary Janet Yellen. Deficits, she said on Meet the Press this week, “need to be contained to keep our federal finances on a sustainable basis.” The fears of deficit hawks can also restrict public spending, which would reduce Biden’s redistribution efforts to something paltry. Once the threat of the pandemic begins to fade, and the immediate economic crisis is over, inequality will remain. American workers will still be underpaid and overworked. The nation’s collective student-debt burden will still grow. Medical bankruptcies will still destroy families.

What’s needed, then, is not a politics of the past but a politics of the future. A world beyond trickle-down economics awaits, but getting there requires political courage and imagination. If liberals are indeed rethinking their old economic positions, they should also rethink their fractious relationship with the left. Leftist ideas derided by so many in the Democratic Party hold the key to a fairer future for all. The left, and not the center or the right, has a transformative plan to redeem the American health-care system from an immiserating hell with Medicare for All. The left fought for years to raise the minimum wage, to defend labor, to end the student-debt crisis. Whatever mainstream credibility these ideas now enjoy is a testament to years of dedicated organizing work, but also to the dire economic straits in which the nation finds itself. The neoliberal alliance with the right exacted a high cost.

The Biden administration already conceded this with its willingness to spend and its desire to raise taxes on the wealthy. While Biden, like Obama and Clinton, evinces no interest in dismantling capitalism, he’s about to find that leftists, not moderates, will be his most dedicated allies in the fight to get the rich to pay their share. If Biden wants trickle-down economics to die at last, he’ll have to do something no Democratic president has risked in decades. He’ll have to listen to the left.

What Comes After Trickle-Down Economics?