The Break with Corporate Neoliberalism That Wasn’t—The Biden Years

In May 2024, demand for food pantries in the Chicago area reportedly had risen 26 percent, a year after food stamp benefits had been cut nationally by an average of $328 per family of four. Nationally, a $24 billion childcare subsidy program ended in October 2023.

Student loan payments, paused for three-and-a-half years, resumed then, too—on average reducing the after-payment income of the nation’s 42.8 million student loan borrowers by an estimated $500 a month.

The social welfare state expansion that occurred early in the pandemic—first under Donald Trump and then under Joe Biden—is now gone.

The number of children in poverty, according to US Census Bureau data, climbed from 5.2 percent (3.829 million) to 13.7 percent (9.962 million) between 2021 and 2023, while the number of people of all ages in poverty climbed from 25.58 million to 42.84 million, an increase of over 17 million people or 5.1 percentage points. As sociology professor and poverty expert Mark Rank explains, the 13.7 percent childhood poverty figure in 2023 represents “the highest [poverty] rate since 2018.”

Meanwhile, by the fall of 2024, Medicaid—the leading federal program that provides healthcare for low-income Americans—had seen enrollment fall by 13 million people from its peak in April 2023, reducing people’s access to healthcare.

And who occupied the White House during this time? None other than President Joe Biden. The social welfare state expansion that occurred early in the pandemic—first under Donald Trump and then under Joe Biden—is now gone. As Branko Marcetic observed in Jacobin, there was a “massive contraction in the US social safety net.”

The Inflation Election?

A lot has been written about the effect of inflation on the 2024 election. Indeed, this year’s poll has widely been called the inflation election. But too little has been written about the rising cost of living. And that cost of living depends not just on prices and wages but also on the value of government benefits.

For many Americans, even if wages kept pace with inflation, wages plus benefits did not.

If nearly 38 million American families received monthly child tax credit payments in 2021—$250 per child age six to 17 and $300 per child under the age of six—and then saw that payment diminish or disappear the following year, their cost of living just got higher. High enough, in fact, to push millions of families back into poverty.

The same logic applies to food, health, and childcare benefits, as well as resumed student loan payments—all of which affected millions—sometimes tens of millions—of people.

In short, for many Americans, even if wages kept pace with inflation, wages plus benefits did not. This may be why, according to one 2024 election day exit poll, 45 percent of respondents said they were personally worse off economically than four years before, compared to 25 percent who said they were better off, even in an economy with a relatively low unemployment rate (4.1 percent as of October 2024).

An Attempt to Move Beyond Neoliberalism

It’s important to recognize that the system under which we lived from 1981 to 2021, neoliberalism—the idea that you were going to rely on markets and let all the money go to the top because people at the top would invest more efficiently than if the government got involved either through regulation or taxes—that system Joe Biden very deliberately deconstructed, and replaced with the system we had had before that that did work for everybody.

Heather Cox Richardson, The Weekly Show with Jon Stewart, Nov. 8, 2024

Why list benefit rollbacks of the past three years? Well, as the above quote from Richardson—a Boston College historian whose Substack column has over 1.8 million subscribers—makes clear, the dominant liberal discourse is quite different.

If we believe, as Richardson and others argue, that Biden’s team vanquished neoliberalism—albeit now at risk of being revived by President-elect Donald Trump—then the problem that faced the campaign of Vice President Kamala Harris and the Democrats was merely one of bad messaging. Americans, in this story, simply didn’t realize how successful the Biden administration was!

Biden, as this account often goes, has been a transformational president. Indeed, as recently as 2023, he was widely compared with Franklin Delano Roosevelt. Alas, the myth is not true.

As Susan Glasser noted aptly in The New Yorker during a time of peak Biden enthusiasm in early 2021: “Proposing historic legislation is not transformative; passing it is.”

Now, the Biden administration certainly had its legislative wins. Most notably, these included the initial 2021 American Rescue Plan COVID relief bill, the infrastructure bill, the climate bill (Inflation Reduction Act), and the CHIPS and Science Act (which subsidizes US-based semiconductor manufacturing).

But Biden and his allies also experienced many losses. Understanding what was achieved and where Biden and his team fell short is critical to understanding why the supposed break from corporate-dominated neoliberalism is far less than advertised.

Did Biden and his team want to be transformational? Surely, they tried. Had legislation like Build Back Better passed, then the child tax credit of 2021 would still be in place, along with additional federal childcare subsidies, free community college and pre-kindergarten, expanded federal housing support, paid family leave, and long-term care subsidies.

But none of these proposals became law. And while some reductions in student loan payments did occur, direct federal student loan debt remains $1.62 trillion. Biden’s main debt reduction plan, of course, was blocked by a US Supreme Court ruling.

Taxation also did not significantly change. The Inflation Reduction Act did include three revenue measures: increasing the Internal Revenue Service budget (to reduce tax evasion by the wealthy) and establishing two new taxes—a 15 percent corporate minimum tax and a 1 percent tax on corporate stock buybacks.

However, more ambitious Biden proposals to reduce income inequality by raising corporate income tax rates and taxes on households earning over $400,000 a year died in Congress.

In terms of regulatory changes, some attempted to move the federal government beyond neoliberalism, but failed. There were some wins, though.

For instance, the National Labor Relations Board began to enforce labor law (which is supposed to encourage unionization according to the original 1935 Wagner Act) and ruled that mandatory employee attendance of “captive audience” meetings violates labor law. Alas, after the 2024 elections, this action will likely be of short duration

One can also cite stepped-up antitrust enforcement, new consumer rules (such as airline refund rules), and greater attention to banks’ community reinvestment obligations.

But many regulation proposals were blocked. In this case, the culprit has primarily been (largely Republican) federal courts, which have stymied many Biden administration rules, including measures designed to restore net neutrality, extend overtime protections, and limit the use of noncompete agreements.

One more area where the Biden administration tried to break with past practice was by using industrial policy, which involves leveraging federal spending and purchasing to advance social justice goals.

The Justice40 initiative, which sought to direct 40 percent of federal environmental spending to disadvantaged communities, is one example. Even here, in a 2022 paper written for the Roosevelt Institute, economists Lenore Palladino and Isabel Estevez warned that “without specific course corrections by policymakers, US industrial policy will be embedded in the existing corporate orientation.”

In plain English, this means that many government programs, even in areas of Biden wins, such as climate crisis legislation (Inflation Reduction Act), relied heavily on corporate subsidies.

Why Does Neoliberalism Still Have Life?

Even before the pandemic, in the wake of the Great Recession, it had become clear that the ideological justification for “neoliberal” policies that emphasized privatization, reduced social services, a tax shift from the wealthy to ordinary people, and corporate-friendly regulation (misleadingly labeled “deregulation”) stood on shaky ground. By 2021, neoliberalism had been “dislodged,” as I put it at the time, but not yet replaced.

Earlier this year in NPQ, urban historian Claire Dunning argued that for a progressive economic paradigm to replace neoliberalism, there must be “public goods provided by public agencies [that] have accountability, transparency, and legitimacy” rather than the current system of contracting services out to either corporations—or, as she noted, nonprofits. “Otherwise,” she warned, “the much-sought new economic framework will bear too much resemblance to the old.”

In short, wishing for neoliberalism’s demise does not make it so. Given the extent of concentrated corporate power in the United States, corporations that continue to dominate US politics should surprise no one.

It takes a lot to successfully reduce concentrated corporate power. Notably, in the 1930s, FDR benefited from electoral supermajorities, including over a 200-seat majority in the US House of Representatives. Biden did not.

At present, a national majority wants an alternative to the status quo. Gallup polls have shown a strong majority agreeing that the United States is on the “wrong track” for years. But there is no consensus as to what that alternative might be, which is one reason why elections have oscillated so much in the past two decades. 

What Now?

Not long ago, I wrote that pursuing economic justice today requires building a new common sense. That requires vision—and it requires relational, year-round organizing.

It will require challenging sexism, racism, and other structures of power that divide ordinary people from each other. It will require challenging corporations, including passing laws (such as pro-union legislation) that limit corporate power. It will require raising taxes on the wealthy, reducing their power.

It will require making compromises, to be sure, because politics always requires compromise—but it also requires communicating what those compromises are. And it requires honesty. Changing our economic system can be done, but it won’t be easy and is certain to meet resistance.

Presumably, for instance, the Biden–Harris administration did not seek to reduce the social benefits that Americans receive. In many instances, they were pushed by Republican-dominated courts, and, during these last two years, a historically unproductive Republican-led House of Representatives stood in the way of legislation.

But regardless of the cause, the social benefits rollback happened.

Meanwhile, the Biden–Harris team, by failing to acknowledge that many of their goals were blocked and instead loudly touting their work as if it were an unblemished record of achievement, risked the precise election outcome that occurred.

This is why, in the future, to move beyond neoliberalism and build a multiracial democracy, it is important not only to name the goal of social, political, and economic transformation clearly but also to keep an honest score, identify when obstacles arise, and name who is responsible for stymieing critical steps toward that goal.