Rebuilding America’s National Government
With the inauguration of President Ronald Reagan in January 1981, we began a four-decade-long effort to deconstruct the U.S. national government. Yes, we kept the Defense Department and even built up something we call “homeland security,” but the anti-government ideology of Barry Goldwater and Ronald Reagan created an anti-government paradigm that still finds voice in the U.S. Congress and throughout America. Today’s level of corporate and income tax is far lower than the one that supported the national government during the 1950s and 1960s. Starting in the 1980s, many Democrats, as well as most Republicans, accepted the idea that government was too big. Bill Clinton famously ended “welfare as we know it” and worked to make government more effective but smaller. Barack Obama had ambitions such as national health care, but despite some success, he was overwhelmed by the rigid ideology and political strategy of Republicans determined to win power at any cost. Obama may not have thought government was too big, but his eight years in office saw little change in the status quo.
It has taken a crisis to challenge the anti-government ethos of the past four decades. The COVID-19 pandemic taught many Americans the importance of a competent, activist national government. The one COVID-related national priority that President Trump accomplished was to develop a vaccine. He demonstrated that national resources and simple, specific policies could have an impact. While he managed to get one thing right, he punted on everything else: testing, tracing, purchasing personal protective equipment, securing ventilators and finally, vaccine administration. To President Trump and his inexperienced team of federal amateurs, those were state rather than national responsibilities. The result was an out-of-control virus and the politicization of routine public health measures. The outcome was massive death and economic catastrophe.
The failed response to the pandemic cost Trump his job, but even while he was in office, the American national government managed to enact two huge bi-partisan pandemic economic relief packages, and now the new Biden administration has enacted another nearly two-trillion-dollar package — notably without a single Republican vote. Democrats joined with Republicans under Trump to save the economy. Once Biden took office, the COVID crisis was not enough to overcome the Republican drive to return to power at any cost.
Last week the Biden administration introduced a $2 trillion infrastructure proposal that provides for a strong federal role in rebuilding our decaying transportation, water and energy systems. The plan also pays for the development of a system for caring for the elderly — something not typically considered infrastructure. But to resurrect our economy, those who can work must be relieved of some childcare and eldercare responsibilities. The Biden proposal calls for combining this effort at reconstruction with decarbonization. It funds some of this program through a rise in corporate taxes to a level that is still considerably lower than the one in place prior to the Trump tax cut. The political process to enact this program will be messy, but the Democrats will necessarily unite behind some version of the bill if only to ensure the political success of their fragile governing coalition. I recognize that there are already Democrats arguing for changes in the proposal, and some change will come. But if the Democrats don’t unite behind some version of Biden’s plan, they risk losing the thin majority they now hold.
We are at a critical juncture in the American experiment. The complexity of the technology, economic relations and environmental impacts of the global economy requires an active, responsive and competent American national government. The posturing and bumbling we saw under Trump cost us over half a million lives and trillions of dollars. The American national government must lead a partnership with the private sector and state and local governments to end the COVID-19 pandemic and return the country to normality. The first test of that partnership is the vaccine rollout, which has already reached three million shots a day, resulted in over 100 million injections and is demonstrating that America is capable of determined, competent action. The next test will be the distribution of the new COVID economic relief package. The results of that effort will be measured in job growth and restored confidence in our economy. While there will be mistakes and failures along the way, the Biden administration’s effort to restore our national government faces a crucial test in the days leading up to July 4. The measures are simple: Are infections going down, and is employment going up?
While these early tests of the administration are underway, the debate over the infrastructure bill will soon hit the Congressional legislative sausage factory. My hope is that what emerges from that process will begin the transformation and modernization of the American economy. As big as the bill is, its true success will be determined by its ability to entice private investment to complement the public’s treasure. The U.S economy requires public investment for transportation and energy systems but also needs private investment to ensure that the public’s spending pays off. Charging stations are only helpful if car companies make reasonably priced electric vehicles. Water systems need homes to connect to. The operation and maintenance of these systems require a revenue stream generated by products and services produced by the private sector. The government might subsidize an airport’s access roads and runways, but the airlines and their customers pay the costs over the long run.
The modern economy is a mixed one with both public and private players. The sooner ideologues get over glorifying one sector over the other, the sooner we can get to developing the partnerships really required. Some parts of our economy require public subsidies; others do not. Some policy objectives like affordable housing and ending childhood poverty are not going to attract private investment. But others like a low-cost, reliable system of renewable energy generation and distribution could very well attract a boatload of private money, and it should be designed to do that.
Nothing less than America’s future as an economic power and a global leader is at stake over these next several months and years. America has a number of advantages in global economic competition. Brute force low salary manufacturing is not one of them. But automated, high-tech manufacturing is an American strength. Perhaps most important is the innovation and creativity that America’s free, multicultural society is able to inspire. The mix of people and experiences from all over the world feeds into the creative stew that has long made our economy the birthplace of new business models like Uber and Airbnb and of new distribution models like Amazon and new retail models like Walmart. America’s music, movies, television, social media, video games and other creative products capture the world’s imagination. America’s research universities lead the world. Most of America’s GDP is in the service economy, but that economy requires national infrastructure investment to remain globally competitive.
The presence of a competent national government capable of investment in the future will enable environmentally sustainable economic growth. An incompetent government only focused on short-term profit and the next election cycle virtually guarantees a future of contagious viruses, anxious workers, extreme income inequality and political instability. Four decades of national disinvestment have threatened our institutions, and they, in turn, have made the operating environment more challenging for the private sector. The absence of regulation brings short-term gains, but it does so at the expense of long-term costs. You may save money today by emitting greenhouse gasses, but you will then end up spending much more money when you respond and repair your business after a climate-induced extreme weather event. The Biden infrastructure proposal addresses our most urgent and persistent national challenges. In a recent Washington Post piece, Colbert King said it well:
“Biden has produced a visionary $2 trillion plan that leaves few of the nation’s most pressing problems unaddressed. You can argue about how far he goes. But unlike Republican and Democratic presidents and Congresses of the recent past, that old guy from Delaware, says this octogenarian, has the guts to try — thank goodness.”
Thank goodness, indeed.