https://www.wsj.com/articles/hes-from-the-government-and-hes-here-to-help-11615331246?reflink=desktopwebshare_twitter‘He’s From the Government and He’s Here to Help’
Biden goal: Trump lows of unemployment.
President Joe Biden greets workers at a hardware store in Washington on Tuesday.
Team Biden is setting expectations for the results of its massive economic interventions, and American voters should hold them to it. Specifically, the administration aims to match the employment levels of the pre-Covid U.S. economy. Some voters may naturally ask themselves why they fired America’s chief executive for a successor who now aims merely to duplicate the record of the man he replaced. The more pressing question is how President Joe Biden will enable another era of historically low unemployment with a completely different set of policies.
Setting the bar for Bidenomics is Treasury Secretary Janet Yellen, who appeared Monday on MSNBC with Stephanie Ruhle. Ms. Yellen shared her hopes for the pending $1.9 trillion federal spending extravaganza:
I`m anticipating, if all goes well, that our economy will be back to full employment—where we were before the pandemic—next year, and the Congressional Budget Office estimated that without this, it could probably take until 2024.
In another recent interview, Ms. Yellen made clear that she is not just talking about the unemployment rate. On Friday Martin Crutsinger of the Associated Press reported on her comments in a PBS interview:
Yellen said the unemployment rate, which fell to 6.2% in February, was overstating the improvement in the labor force because it does not count the 4 million people who have stopped looking for work and have dropped out of the job market. She said the real unemployment rate is 10%.
Before the pandemic, in February 2020, the unemployment rate was 3.5% and the labor-force participation rate was 63.3%. Like all Americans, this column hopes that Mr. Biden can now help replicate that pre-Covid Trump-era job market. But that success was fueled by reducing the government burden on business. Mr. Biden has something else on his mind.
In another AP story, Lisa Mascaro and Josh Boak explain:
President Joe Biden wants America to know that he’s from the government and he’s here to help... Biden is now staking his presidency on the idea that the government can use his $1.9 trillion coronavirus relief plan not only to stop a pandemic and jobs crisis but also to catapult the country forward to tackle deep issues of poverty, inequality and more...
“People have lost faith government can do good for them,” says Senate Majority Leader Chuck Schumer, who spoke daily with Biden while ushering the bill through the Senate last weekend. Now, as vaccines become more available and other changes take place, “people are going to see that government actually is making their lives better — which is how Americans used to think of it, and we’ve gotten away from it.”
But plenty of Democratic economists have their doubts about the massive spending plan. The AP reports:
“We haven’t done this before,” said Syracuse University economics professor Len Burman, a co-founder of the Tax Policy Center. “If it actually does work the way it does in theory and the economy is back at full employment in a year, that would be amazing. It would save a lot of hardship and suffering.”
But Burman also has misgivings about the design of Biden’s package because it distributes direct payments and other benefits to almost every household in the United States, rather than directing the money to the poor and to businesses and organizations most damaged by the pandemic and ensuing shutdowns.
“It kind of reminded me of this idea when I was in grad school of helicopter money — which was basically dropping money from the air and seeing if it raised incomes,” he said. “The money could have been better targeted.”
In her MSNBC interview Ms. Yellen dismissed the idea that the huge federal spending increase, poured on top of an already reviving economy, might fuel a dangerous inflation. So the Biden bar is set: low inflation and historically high employment. Americans should hold Democrats accountable for clearing it.
