In 2020, more than one liberal scoffed at candidate Joe Biden’s “optimistic bonhomie” about reaching across the aisle to get things done.
And yet, in the last year, President Biden proposed, and Congress passed, two key bills that are transforming the economy — and he did it with Republican votes. Indeed, six recent economic indicators are making the president’s bipartisanship case for him.
First, real wages from June 2022 to June 2023 rose 2.2 percent. This is serious good news for Main Street; a “real wage increase” is the gain after inflation is accounted for.
Second, and closely related, inflation is now down to 3 percent. As of June, Europe was at a 6 percent annual rate of increasing prices.
Third comes the most amazing part. Real wages are up and inflation is down when employment is growing. That’s rare, and there’s no better sign of a robust economy. Nationally, unemployment dropped one-tenth of a point to 3.6 percent from May to June, nearing a 50-year low. Women’s employment is at an all-time high.
Fourth, “the rally in consumer sentiment,” Axios reports, “is looking pretty broad.” Fifth, the Federal Reserve predicts no recession in the near term. Sixth, the nation’s economy is growing at 2.4 percent, more than double the European economy’s growth rate of 1.1 percent. Morgan Stanley attributes this American success to Bidenomics.
It’s clear that behind that success is the bipartisan passage of legislation a year ago.
Take a close look, for example, at the “wildly fast rate” of building manufacturing plants, according to Business Insider: “The sudden rise in factory construction corresponds with passage of the CHIPS and Science Act in July 2022, which provided $280 billion in funding to boost manufacturing of semiconductors, as well as the Inflation Reduction Act in August 2022.”
Significantly, the IRA passed with support from 19 Republican senators and 13 Republican House members. Its goal was “to create new jobs in manufacturing, construction, and renewable energy, estimated to create up to 1.5 million jobs by 2030.”
In January, the specialized outlet Manufacturing Dive reported on how positive economic news and good environmental news was merging under the two pieces of bipartisan legislation, describing seven new projects bringing manufacturing plants back onshore to make solar panels, renewable batteries and microchips.
And with the CHIPS Act sending revenues into states like Alabama for expanding broadband and other needs, even conservative Sen. Tommy Tuberville (R-Ala.), who voted against the legislation, has sought credit.
We shouldn’t miss the key role of a nonpartisan structural component of the U.S. financial system in helping to tame rising prices while avoiding an economic downturn. Over the past two years, the Federal Reserve has walked the tightrope between inflation and recession with the balance of the Flying Wallendas.
What enables the Fed to do so is its independence from any political party — even though it has roots in both. Under the Federal Reserve Act of 1913, members of the Fed’s Board of Governors are appointed by the president to 14 year terms. The president also appoints the Fed chair to a four-year term. Chairs are usually reappointed for as long as they are willing and able to serve, as President Biden did in 2021 with Fed Chair Jay Powell, a Republican.
Crucially, no president can command the Fed or its chair to lower the interest rate at which commercial banks borrow money from it (money those banks then lend businesses and consumers to feed the economy). The Fed’s independence permits objective policymaking by resisting inevitable political pressures.
We should not ignore the looming threat to that independence. In a bombshell report on the Trump campaign’s “2025 Plan” to bring all independent government agencies under White House control, the New York Times predicted that if “Mr. Trump and his allies get another shot at power, the independence of the Federal Reserve — an institution Mr. Trump publicly railed at as president — could be up for debate.”
Signaling an intent to make the Fed subservient to a Trump White House, the former president’s ally Russell T. Vought, who ran Trump’s Office of Management and Budget, told the Times, “It’s very hard to square the Fed’s independence with the Constitution.”
By insulating monetary policy from politics, the Fed’s independence protects the economy and the financial well-being of every American. Our near brush in 2008 with a second Great Depression reminded us how mismanaging the economy can bring severe joblessness, metastasizing home evictions and poverty.
For now, we can be thankful for the Fed’s structural independence, and we can work to preserve it in 2024. That independence, along with occasional legislative bipartisanship of the kind championed by 2020 candidate and now-President Joe Biden, has created an economic future of promise for America.
Dennis Aftergut is a former federal prosecutor and civil litigator, currently of counsel to Lawyers Defending American Democracy.