Our most recent book is titled Divided We Stand: The 2020 Elections and American Politics. Our next book will look at the 2024 election.
Inflation was probably the most important reason for the Democrats' defeat.
The administration’s economic strategy included industrial policy, worker power, antitrust policy, a shift away from free trade, and a reorienting of fiscal and monetary policy away from capital toward labor.
Several of these measures yielded tangible results, but the new macroeconomic policy proved fatal for the administration. The Hewlett report insisted that neoliberalism had hurt workers by focusing on inflation rather than unemployment. Why was it, the report asked, that after a long period of rock-bottom interest rates, inflation was “too low”? The report asserted: “If economic developments over the past decade show anything, it is that there is greater headroom for spending without causing undue inflation.” Governments, Hewlett argued, can spend more on efforts to boost demand “without worrying about inflation quite so frantically.”
A few months later, Mr. Biden signed into law the American Rescue Plan, a nearly $2 trillion stimulus package on top of the trillions the Trump administration had spent during the pandemic. Three years later, the consumer-price index showed a 20% overall price increase. The inflation over which the Biden administration presided dramatically undermined Kamala Harris’s electoral prospects.
Some Democratic-leaning economists have argued that inflation was a global, pandemic-induced supply shock on which fiscal stimulus had little or no effect. To his credit, Jared Bernstein, Mr. Biden’s chief economic adviser, doesn’t take this easy way out. In a recent interview with the New York Times, he said the inflation of recent years “was exacerbated by strong demand, no question. So I’m not giving fiscal policy a pass.”
