Joe Biden dropped out of the U.S. presidential election on July 21, 2024.BRENDAN SMIALOWSKI/Getty Images
John Rapley is an author and academic who divides his time among London, Johannesburg and Ottawa. His books include Why Empires Fall (Yale University Press, 2023) and Twilight of the Money Gods (Simon and Schuster, 2017).
It was probably the most difficult decision of his life, and the one he least wanted to make. But in choosing not to run for re-election, U.S. President Joe Biden may have given his economic legacy its best chance of surviving.
It’s hard to overstate the enormous amount that he accomplished in just four years. In economic terms, Mr. Biden can reasonably lay claim to being the most transformative president since at least Ronald Reagan, if not Franklin Delano Roosevelt. Within the Democratic Party, he marginalized the neoliberal faction that had dominated since the presidency of Bill Clinton – it was a sign of things to come that phone calls to the White House from then Treasury official Larry Summers no longer got returned. Clinging instead to the legacy of FDR, a man who is as iconic to Democrats as Reagan is to Republicans, Mr. Biden unabashedly said that government wasn’t always the problem, but could be a solution.
Scrapping the small-state, free-market orientation that had governed American politics since the 1980s, Mr. Biden first engineered a massive stimulus program to protect ordinary Americans through the pandemic, then subsequently enacted one of the most ambitious industrial policies the country has seen in modern history. Subsidies and tax breaks to stimulate the creation of renewable energy companies drew in a wave of private investment, powering the economy forward and creating a stock market boom. He promoted unionization and empowered his regulators to go after monopolies, corporate concentration and union-busting.
Not only did Mr. Biden help turn the American economy in a new direction, building the industries of the future instead of clinging to those of the past, but his policies ensured the U.S. would tower above its peers in economic performance, being the only G7 country to achieve steady growth since the pandemic recession. Unemployment stayed low, real wages rose – not least at the lower end of the income spectrum – and the country sucked in investment from all over, as excitement over the AI boom took off.
But for all Mr. Biden’s achievement, his legacy rests on a fragile foundation. Fiscal deficits are out of control, and the country’s debt is on an unsustainable path. Congressional Republicans are salivating at the prospect of trashing all of Mr. Biden’s industrial policy to tackle it.
Politically, it’s a tall order to bring the fiscal accounts back toward balance while preserving the legacy of Bidenomics. The best route is allowing Donald Trump’s 2017 tax cuts to expire, rather than making them permanent. That would require Democrats winning either the presidency or one of the houses of Congress in November. And with Mr. Biden on the ticket, that prospect looked doubtful.
As Mr. Biden’s economic team keep reminding us, inflation has come back down. But the problem is that few people think of inflation the way economists do, namely as the rate at which prices are increasing. They just compare what they pay today to what they paid four years ago, and it’s a lot more. For now, Americans feel worse off.
To counter that narrative, the Democratic Party needs an articulate messenger, and it had become painfully clear to just about everyone but Joe Biden that he was no longer the man to deliver the message. Sadly, he was barely able to deliver any coherent message. The time had come for him to pass the torch.
The odds still favour a Trump victory in the November election. But whereas the Democrats looked certain to lose with Mr. Biden as their candidate, they now have a fighting chance. Almost as importantly, with the party uniting quickly, supporters re-energized and donors coming back on board, they have improved their chances in the congressional elections. And if they can take one or even both houses of Congress, which would be a long-shot but not impossible, they would be able to block the sort of sweeping end Mr. Trump plans to bring to Mr. Biden’s changes.
So even though he would have preferred to be the one to secure it, by stepping aside, Joe Biden has given his legacy the best chance it has of enduring. If that is his last gift to the nation, and if the decision leads to Democratic victories in November, history will look kindly on his presidency.