In a hundred days, Joe Biden seems to have started an economic revolution in the United States.
The new American president has proposed a vast plan to support employment, a program of investment in infrastructure of historic magnitude and he wishes to finance the whole while making more use of the richest.
And the tech giants are not left out, since the tenant of the White House has also suggested being open to more regulation in order to correct the market excesses that have allowed them to occupy a dominant position.
To top it off, he plans to revalue the minimum wage upwards.
Another “New Deal”?
What to rain, in the media, the comparisons between Joe Biden and Franklin D. Roosevelt, one of the historical icons of the Democratic camp, president of the United States between 1933 and 1945.
The parallels appear obvious.
The two presidents came to power in the midst of an acute crisis.
Franklin D. Roosevelt arrived after the economic slump of 1929, while Joe Biden took office as the Covid-19 pandemic rocked the country deeply.
To overcome the ordeal, they also both opted for vast investment plans to put the economy back in working order. The first made history with its “New Deal”, the second announces a budget of 2,000 billion dollars to renovate infrastructure, put the economy “green” while reducing inequalities.
Finally, Franklin D. Roosevelt and Joe Biden seem to have broken with the dominant economic thought of their time. The 32nd President of the United States was the first to use “fiscal policy to stabilize the economy in the United States,” recalls Christophe Blot, a specialist in the American economy at the French Observatory of Economic Conjunctures (OFCE). As such, he became the “Keynesian” president par excellence, in reference to economist John Maynard Keynes who asserted in the 1930s that the state had a key role to play in stimulating demand and supporting activity. .
The economic policy initiated by the current tenant of the White House appears, for its part, light years away from budgetary rigor and advocates a more important role for the welfare state, in contrast to all presidents, Democrats as well as Republicans. , since Ronald Reagan in the 1980s. “The actions carried out so far by Joe Biden move American economic policy away from this hitherto dominant doctrine which is called 'Washington consensus'” or American neoliberalism, recognizes Max Steinhardt, professor of economics at the John F. Kennedy Institute of the Free University of Berlin, contacted by France 24.
It would then be tempting to suggest that Joe Biden buried, in 100 days, nearly 40 years of economic consensus “based, to put it simply, on the belief that the state must play a limited role, that deficits must be brought under control, that the tax rate must be low and that inflation must be meticulously scrutinized ”, summarizes Thomas Gift, director of the Center for Research on American Policy at University College London, contacted by France 24.“ It is true that even compared to Barack Obama, Joe Biden has a more proactive approach to economic policy which marks a deeper break, ”notes Christophe Blot.
The “Washington consensus” never far away
But from there to making Joe Biden the great gravedigger, all by himself, of the “Washington consensus”, there is a step that the specialists interviewed by France 24 hesitate to take. The current president “is not necessarily the one who initiated this movement to move away from neoliberal orthodoxy, and it is a political will that is not found only among Democrats,” says Thomas Gift.
“It was already reflected in Donald Trump, even if the political goal pursued was not the same,” confirms Christophe Blot. The former president had little regard for the control of deficits when he passed, in 2017, his tax reform which weighed heavily on finances. Ditto for the first plans to support the economy after the start of the Covid-19 pandemic, of which sending checks to every American is one of the emblematic measures. The goal of Donald Trump was not, unlike Joe Biden, to create a more “climate-compatible” American economy or to fight against inequalities, but the measures were already far removed from the neoliberal precepts of the “consensus of Washington".
The Fed has also distanced itself in recent years from controlling inflation, which has long been the main religion of central banks.
“She was able to be very creative in supporting activity and fighting unemployment,” recalls Christophe Blot.
Joe Biden, in this sense, has only accentuated the rejection of neoliberal economic logic.
And above all, "it is not a law or two that will make him the reincarnation of Franklin D. Roosevelt", warns Thomas Gift.
In other words: let's wait and see the evolution of this presidency before burying the “Washington consensus”. Indeed, “the turn to the left of Joe Biden, who presented himself as economically centrist during the campaign, is partly due to the victory of the Democrats in the elections in Georgia, which gave them a majority in Congress. The White House probably thought that there was a unique opportunity to present really significant reforms ”, analyzes Thomas Gift.
But the White House should quickly find a more aggressive Republican minority in Congress, wants to believe this expert. “Joe Biden used a large part of his political capital to push through the stimulus package in February,” says Thomas Gift. “From now on it will be interesting to see how he will succeed in reconciling his economic ambitions with the wishes of the Congress”, adds Christophe Blot. According to him, the next test to assess Joe Biden's determination to end the “Washington consensus” will be the battle over the minimum wage. It began on Tuesday, April 27, with the announcement of an increase to 15 dollars per day of the minimum wage for providers working for the US administration. It's a beginning.
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