What’s next for the Democrats’ economic agenda?
With votes still being counted in a number of tight races, control of Congress has not yet been decided. However, with Republicans ahead in the competition for a House majority, the prospect of divided government for the next two years is something President Joe Biden and the Democratic Party are likely preparing for.
So, how might a Congress with one or both chambers controlled by Republicans affect economic policy? To get an answer from each side, “Marketplace Morning Report” host David Brancaccio spoke to experts at Roosevelt Forward, which leans liberal, and the American Enterprise Institute, which leans conservative.
The following is an edited transcript of his conversation with Roosevelt Forward CEO Felicia Wong.
David Brancaccio: One way or another, it appears power will be divided in Washington. Does nothing get done in terms of economic policy for the next two years?
Felicia Wong: Well, no, David. A lot is going to get done in economic policy over the next few years, in part because there’s so much to do to implement all of the legislation that’s already been passed — the climate law, the CHIPS and Science law, the infrastructure law — so there is a lot to be done. These are 10-year laws, right? These are laws that are going to take a tremendous amount of work from the White House, from federal agencies like Treasury or the Department of Energy. It’s going to take a lot of work to actually implement those, and that is work that is out of the legislature and in the executive branch. So there remains a lot of runway to both make sure that money gets out to communities and serves real people. And frankly, David, a lot of work to make sure that politicians, elected officials, know how to talk about that and explain that to voters.
Brancaccio: I was, frankly, a little surprised to see some Republicans speaking out loud prior to Election Day, talking about cuts to Social Security, or implying them. I thought, look, I’m no political expert, but seems risky.
Wong: Yeah, it’s a really, I think, kind of out-of-touch politics, which is why you did not see the kind of Republican success, the kind of “red tsunami” that many in the media had predicted. Because I think a lot of what the Republicans actually had to offer on inflation, on people’s pocketbook issues like health insurance, like Social Security, retirement, the Republicans actually didn’t have a lot to say that was affirmative, and I think the American people noticed.
Brancaccio: But that said, I saw several polls before the election talking about a 13-point margin of voters believing the GOP would do a better job dealing with inflation. CBS/YouGov had something not quite that margin, but something like 9%. I mean, the Democrats aren’t making their case either.
Wong: Well, that’s very true. And there is a lot that Democrats need to do to be able to speak more plainly about the economic agenda that they really do have. But when you look at the exit polls, what you’ll see is that the two top issues for voters, kind of evenly split, were abortion and inflation. So what’s interesting to me is that you can sort of say yes, maybe women’s reproductive rights and inflation sort of fought to a draw for voters. But ultimately, what I think that shows is that many voters who said that inflation and the economy and job creation were their top issues still ended up voting for Democrats. And I do think that is, in part, because Democrats actually have a plan and actions on the economy. And I further think that that is because the Democrats actually had a track record to run on. In part, that was because the Democrats really demonstrated, especially with the American Rescue Plan, that they knew how to create jobs and how to keep Americans at least in the game with respect to their own household economics, even in the face of that COVID recession. So in part, the Democrats really did have something to point to and to run on. I mean, just think about the counterfactual. This election would have been far worse for Democrats if you had not only record-high inflation but also 10% unemployment.
Brancaccio: Right, but some of those programs were, by design, stimulative and fed into inflation. So how are these Democrats gonna get some credibility in fighting inflation?
Wong: Well, I definitely think that Democratic plans on inflation are stronger than Republican plans. In part, you know, what Democrats are doing and saying about inflation is pointing to corporate behavior, corporate price increases, shall we say, as a cause. And you know, Democratic candidates who did that, like [Sen.-elect] John Fetterman in Pennsylvania, that’s how Fetterman talked about the causes of inflation. And he had a critique of price gouging, he had a critique of union busting, he had a critique of corporate monopolies. And people who did that were actually successful on Tuesday night. So what we’ve seen is that this way of talking about inflation by challenging corporate power, we’ve seen that it’s good politics. I’ll also say that it’s good policy. You know, economists, including my colleagues here at the Roosevelt Institute, Mike Konczal and Niko Lusiani, they’ve really found a substantive and historic link between too much power in any given economic sector and high prices in that sector. So this effective political message is also sound on a policy basis.
Brancaccio: But so we fully understand the argument, there is inflation, but you’re saying what about companies when they get too powerful?
Wong: Yes, there is inflation. And there are a couple of different causes. Some people will point to federal spending as part of that cause. But in addition to that, in addition, of course, to the war in Ukraine, which has really caused energy prices to spike, you also have to look at corporate behavior. Companies are raising prices more than the increase in their own input costs. And so that is part of what is causing inflation.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
