Pandemic may give rise to a progressive new era if White House economic team has its way

As they chart the country’s tentative economic recovery, White House officials see possibility in the wake of the pandemic — an opportunity to dive full bore into pursuing the most transformative progressive policies in decades.

Holed up in offices in the cavernous Eisenhower Executive Office Building, top White House economic officials are combing through reams of data from the dramatic emergency measures deployed to address the dual economic and public health crises created by the pandemic, the kind of real-time information progressive economists have only been able to dream about during past economic downturns.

They contend that data shows their policy priorities are having a tangible effect — and that it helps make the case for doubling down in the form of a massive infrastructure and jobs package, even if Republicans aren’t on board.

It’s not just that the series of unprecedented measures implemented over the course of the last year, punctuated by President Joe Biden $1.9 trillion Covid relief package, are helping to address the pandemic, though that’s what the numbers show, said Charlie Anderson, director of economic policy and budget for Biden’s Covid-19 response team.

“But (it) also sets in place the foundation for us to do what we should’ve been doing all along,” Anderson said in an interview with CNN.

The result is an administration that is hardly running from the GOP attack that they are going too big, several White House officials told CNN over the past several weeks. Biden and his team say it’s a moment that cannot be missed, one that should be driven by addressing what they view as long-standing structural deficiencies in the economy.

That posture underscores why both Democrats and Republicans on Capitol Hill see a bipartisan deal as increasingly unlikely.

Biden has made clear he plans to negotiate with Republicans, and will have several to the White House next week. White House officials view the legislative process as different from how it was for the sweeping emergency package enacted in March; it will take time, almost certainly lead to changes and include space and openings for Republicans to come to the table.

But the first prong of an expected $4 trillion proposal put on the table, while the opening marker, isn’t one White House officials want to see dramatically scaled back.

“He sees this as a moment for taking action,” one senior administration official told CNN. “It’s not a feint or a negotiating ploy. What he’s putting on the table is what he thinks is necessary to address systemic problems we’ve faced not just over the last year, but for several decades.”

That Biden would be the president to lead the push for dramatic change is surprising to those who worked with and around him during his 36 years on Capitol Hill — particularly Republicans, some of whom still don’t believe he’s driving the train. But Biden’s top advisers are quick to make clear he is — and also note he’s grown increasingly keen on the legacy such transformative change would create for his presidency.

The pandemic has created that opening and, in a sense, the unprecedented measures deployed over the last year — some under President Donald Trump — are providing a real-world roadmap for key provisions in what’s coming next from the Biden administration.

A moment for transformation

Beyond keeping individuals and households afloat, some of the policies are helping stop the spread of the virus, data suggests, boosting Biden’s whole-of-government approach to rein in and quash the pandemic. From data on personal income and employment to food security, housing and educational disruption, the range of nearly real-time information is broadening the understanding of the intersection between the immediate shock the pandemic dealt to the economy and the way it exposed existing underlying economic problems.

As Covid-19 laid bare the visceral fragility in segments of the US economy — like long-standing inequities in minority communities and the vulnerabilities of front-line workers — top Biden advisers have for months zeroed in on polling that shows Americans open to the kind of aggressive government economic action that has been largely absent for decades.

Perhaps most importantly, Biden himself has embraced the expansive view of what the federal government can do to boost the US economy. His repeated mentions of shifting “the paradigm” economically aren’t hyperbolic, aides say. He sees this as a moment for transformation — and has no plans to back off plans with a scale and ambition unseen for decades.

That’s not to say there aren’t risks. Political popularity can be fickle, particularly as Republican officials say they are prepared to launch major, and well-funded, attacks on Biden’s proposals if he doesn’t move to scale them back in negotiations. A narrow House majority and a Senate controlled by Democrats with the slimmest of possible margins mean virtually any single Democrat who breaks ranks can force Biden to recalibrate.

The threat looms of overheating an economy awash in newly deployed trillions of dollars, though administration officials are quick to say they are keeping a close eye on things and that the risks of not doing enough far outweigh that threat.

But Biden is surrounded by an economic team that, in many cases, has spent years writing, teaching or speaking about a dramatic rebalancing of the federal government’s role in driving economic outcomes. Cecilia Rouse, the chair of Biden’s Council of Economic Advisers, called the pandemic “an opportunity to build a better economy in its wake,” when she was introduced as Biden’s nominee last year.

“Structural inequities that have always existed within our economy have not just been exposed, but exacerbated, their impact more devastating than ever before,” Rouse said earlier this year.

Bharat Ramamurti, a key senior adviser to progressive stalwart Sen. Elizabeth Warren, now plays a central role as deputy director at the National Economic Council. Jared Bernstein, chief economic adviser to Biden when he was vice president, has brought his progressive bona fides to the CEA with Rouse.

Heather Boushey, a member of Biden’s Council of Economic Advisers and a key voice inside the West Wing, even authored a 2019 piece in Democracy Journal talking about how the influx of new economic data and research have driven a dramatic shift in progressive economics. The piece was titled “A New Economic Paradigm.”

Finding validation in data

Since entering the White House, top Biden economic officials have been combing through sets of data that simply haven’t been available in real time in past recessions — providing near immediate feedback to the on-the-ground effects of policies as they came online.

From US Census Bureau household pulse surveys, academics providing a regular stream of information and even cell phone data, there’s a new window into an economy in shock — and into what it looks like as it shifts toward recovery.

Biden’s $1.9 trillion Covid relief law marked a cornerstone legislative victory, but a largely temporary one. It extended crucial emergency provisions signed into law by Trump, distributed a third round of direct payments, extended tax credits for paid sick and family leave and extended tens of billions of dollars for rental relief and food aid, all as it enacted significant expansions of the child tax and earned income tax credits. The administration also extended a federal foreclosure moratorium.

While the full — and expectedly significant — effects of the child tax and earned income tax credits won’t be understood for months, the effect of the direct payments, unemployment benefits, paid leave provisions and eviction moratorium already have data behind them — data White House officials have taken into account.

One study on the paid leave provisions, published in Health Affairs, showed that in the 38 states that didn’t already have paid sick leave mandates, the new provisions were associated with approximately 400 fewer Covid cases per day.

A National Bureau of Economic Research working paper published by Duke University researchers showed that policies to limit evictions were found to reduce infections by 3.8% and deaths by 11%.

Biden’s team points to that kind of research to back up the idea that economic support is interconnected with health outcomes, which can create a level of stability for sectors of the economy that have seen anything but over the course of the last decade.

“All this real-time data has really allowed us to trace and have a deeper understanding of the supply side shocks of the pandemic and how that’s playing out for our economy,” Boushey, who spends much of her day tracking the incoming data, told CNN in an interview.

Having access to that data, especially on the effects of emergency economic measures deployed to battle the pandemic, has bolstered the case Biden and his team are making for what’s coming down the road, officials say.

What’s next is not only a sweeping $2.25 trillion public works and infrastructure package that includes hundreds of billions for home care, climate spending and investments to historically underserved communities, but also a second proposal that officials say will move to transform the health, education and child care model in the US.

Ready to go big

Nothing in that data — or the scale of the instability exposed in the dual crises ushered in by the pandemic — has dissuaded Biden’s economic officials from their desire to go big in the months ahead.

“What 2020 did was it unmasked these fragilities across our economy and across our society,” Boushey said. “Ones that were long-standing, but that this crisis brought to the fore and showed us that the long-term cost of not doing something like paid leave can actually be quite devastating in a year like this year.”

Paid leave will be a key component of the second phase of Biden’s sweeping recovery proposal, officials tell CNN. So will a longer-term extension of the child tax credit expansion, a provision Anderson — the top economic official on Biden’s Covid team — played a major role in crafting when he was a senior Senate staffer. Economists project its current iteration, in place for one year, could halve child poverty.

Anita Dunn, senior adviser to Biden, circulated a March 31 memo laying out polling data that she said proved Biden’s proposal was “overwhelmingly popular,” according to a copy obtained by CNN. Among the breakout policies in the memo: expansions of paid leave and childcare options — both central elements of the second prong of Biden’s sweeping $4 trillion jobs and infrastructure package set for release in the coming weeks.

Senate Minority Leader Mitch McConnell has taken to calling Biden’s infrastructure proposal a “Trojan horse” of tax increases and progressive policies hidden under the umbrella of infrastructure, an issue that traditionally draws bipartisan support.

“This is a bold left-wing administration,” McConnell told reporters last week while back home in Kentucky. “I don’t think they have a mandate to do what they’re doing.”

Republicans have communicated to White House officials, both publicly and privately, that they are willing to come the table on a more scaled back infrastructure proposal, GOP congressional aides say.

If that doesn’t happen, Republicans are gearing up to launch full scale attacks against Biden’s sweeping new legislative proposals, GOP officials tell CNN — both from Capitol Hill and from outside groups prepared to spend millions of dollars to try and move the public sharply away from the Democratic White House.

Biden’s aides, despite the barest of majorities in the House and the Senate, disagree that they lack the mandate. That, officials say, comes from the popularity of the proposals themselves — with clear majorities in the memo circulated by Dunn.

White House officials note that much of what Biden is set to unveil in the coming weeks should not be a surprise — the bulk of it was in his campaign economic proposals, even if the details were glossed over in a campaign dominated by the pandemic and his predecessor’s response to the damage it left in its wake.

The sweeping policy proposals made regular appearances in Biden’s public remarks, an early hint that the candidate who predicted the “fever would break” in the partisan rancor that has consumed Washington, had grander policy ambitions than most expected.

“You won’t see this pain if your scorecard is how things are going on Wall Street, but you will see it very clearly if you examine what the twin crises of a pandemic and this sinking economy have laid bare,” Biden said six days before he took office.

Since taking office, Biden has tended toward public references to President Lyndon Johnson’s Great Society initiatives and Franklin Delano Roosevelt’s New Deal — far from subtle indications of how he views his approach.

“This is the first time we’ve been able to, since the Johnson administration and maybe even before that, to begin to change the paradigm,” Biden said in March, underscoring his desire to transform how the US government approaches economic policy.

Whether the popularity, and the scale of Biden’s policy ambition, holds over the course of the next several months of negotiations is an open question, particularly amid the prospect of withering Republican attacks. It is one that aides on both sides of Pennsylvania Avenue acknowledge may not get its first firm answer until the November 2022 midterm elections.

But it is clear the pandemic ripped open long-standing economic issues — and on its way has created an opportunity to address long-standing Democratic policy priorities. And Biden, advisers say, doesn’t plan to let that opportunity pass.

“I want to change the paradigm,” Biden said in late March, the use of that word once again emphasizing the scale of his intentions.