Economic policy over the pandemic looked relatively progressive compared to the preceding 40 years of economic statecraft. But now Donald Trump is president again. This will be bad for economic policy and poses a challenge for progressive economic policy advocates which is imperative to think through together.
Trump’s regime to date has been bad for economic policy in obvious and subtle ways each of which will have consequences not only for the economy, but for the welfare of Americans, and any future government priorities connected to a well-functioning economy. His administration is aiming to overturn more than just the policies of the Biden era: it is both attacking and undermining the basic tools required for the administrative state to enact any economic policy at all.
The Trump Administration has already undone a striking share of the policies of the last four years by passing the “One Big Beautiful Bill”. Where the Biden administration oversaw the fastest wage increases among the lowest-paid workers in decades, the Trump administration has just passed the biggest tax giveaway for the wealthiest of the leisure classes. This will reverse the striking reduction in income inequality produced by Biden administration policies. Where the Inflation Reduction Act aimed at lower energy costs through a renewables-focused “all of the above” approach the One Big Beautiful Bill represents a direct attack on critical industries like solar and wind. This will slow or even stop the process of decarbonization while increasing energy costs for consumers and businesses alike.
The Trump administration intends to go beyond reversing recent progress on achieving progressive socio-economic outcomes through federal policy: they want to destroy the administrative state through which the federal government implements economic policy. Recent struggles over fiscal impoundment challenge the ability of Congress to guarantee that the funds they legally appropriate are actually spent. This is a huge deal: if the President can stop any lawful payments from the government at will, we have a different system of government from the one we had last year, not just a different government. Project 2025 outlines plans to consolidate statistical agencies and remove public data which may already be underway, alongside more aggressive plans to defund and destroy functioning arms of the administrative state. At the same time, DOGE is directly attacking government IT systems and infrastructure while firing the nonpolitical career staff who maintain the institutional knowledge base required to effectively implement economic policy.
For the progressive movement, the challenges of responding to the current moment are particularly complex. With total GOP control of government, there is little that progressive advocates and activists can do through government channels to defend the gains made over the last four years. Even in places where policies were thought to have been made more “secure” by economically favoring red states, calls to reverse those gains have sailed through. Republicans are rolling back programs which represent the first significant implementation of many progressive policy priorities at the federal level, even where they primarily benefitted red states.
Yet we cannot ignore that those pandemic-era progressive policies had been implemented under the messy reality of divided government and global crisis. Divided government meant that the progressive aspects of Bidenomics were thrown together with policies that aimed similar economic strategies at unrelated goals, whether national security, national competitiveness, or technological innovation. At the same time, the ubiquitous economic friction created by the global crisis of the pandemic meant that these policies were being rolled out at a time when the economy was already struggling with operations that had previously been easy.
Beyond the political and implementation challenges, the enacted policies were often meant to be the first step towards a later, more comprehensive and intentional economic program. The IRA was never going to accomplish the scale of transition that our planet needs, but it did represent the first attempt to use the tools of industrial policy to build systems for decarbonization. The unprecedented scale of fiscal policy spending proved successful in pulling the economy out of recession and getting people back to work. Yet without policy commitment to automatic stabilizers, this success may prove one-off. The consensus story now blames fiscal spending for inflation while assuming the labor market would have bounced back after the pandemic, magically and without government support.
If those on the progressive side cannot protect or build on the gains made over the past half-decade, it is not clear why progressive advocates and policymakers would need to uncritically defend the specific politics of the era which produced these policies. It would be as big a mistake for progressives to define the Biden approach as the limit of the possible as it would for Democrats to respond to total GOP control of government by simply giving up and “playing dead”.
Unlike those comfortable with playing dead, those of us who want a better world do not have the luxury of despair. We still need to figure out how to make people’s lives better, because what is coming will hurt a lot of Americans in very concrete ways — higher prices, fewer jobs, worse government and less hope for the future.
What progressive policymakers and advocates must do now is claim their contributions to the program that became “Bidenomics”, demonstrate the straightforward effectiveness of those progressive contributions, and assemble a plan for real economic reconstruction after the rubble of the Trump administration has been cleared.
To understand the contributions progressives can make to shape the future of economic policy, we need to first understand and confidently own how we shaped the program that became Bidenomics.
At first glance, the pandemic seems like the crisis that changed everything about government economic policy. The story makes sense, too: a sudden emergency so severe that it forced policymakers to abandon decades of orthodoxy and embrace massive government intervention and large-scale fiscal spending to solve a one-off problem. But what really happened was more complex.
The pandemic did not suddenly create America’s economic problems or point the way to new policy solutions; it was a virus and a crisis. Instead, the pandemic exposed the kinds of economic vulnerabilities that progressive economists and activists alike had been identifying for over a decade. The market could not take care of itself. A ruthless corporate focus on cost efficiency had cost the US substantial chunks of its domestic productive capacity. Workers became unemployed due to structural factors, not because of anything they had done. Private actors price gouged where shortages struck and others used the confusion to hike prices without risking their own market share. All at once, everyone could see what the progressives had been saying all those years. When policymakers needed answers, progressive solutions were the only ones on the shelf, because the progressive movement had spent a decade taking these problems seriously.
In fact, the economic vulnerabilities that would prove so devastating during the pandemic can almost all be traced back to the disastrously slow recovery from the 2008 financial crisis. The fiscal response to the Great Recession had been catastrophically inadequate creating a vicious cycle that would define the entire decade. Insufficient demand led to persistently low employment, which discouraged business investment. This in turn produced slow growth and worsening inequality. Workers could not find good jobs, businesses could not find customers with money to spend, and the whole system got stuck in a low-growth trap. What the establishment celebrated as a “recovery” was actually economic stagnation that left millions of workers worse off than before the crash. Meanwhile the US economy became more fragile and less resilient.
Throughout the 2010s, progressive intellectuals and policymakers developed detailed policy proposals to break this cycle — massive public investment, direct job creation, and robust social programs. The party establishment was not interested. Figures like Larry Summers insisted that the Obama approach was the best anyone should be allowed to hope for. They embraced “secular stagnation” as the new normal, arguing that sluggish growth was simply what advanced economies should expect. Progressive calls for bolder action to increase public investment were dismissed as economically naive and politically unrealistic, even when they came from Nobel Prize winners.
Meanwhile, the symptoms that had motivated these proposals continued to worsen. Housing costs consumed ever-larger shares of family budgets, while the housing crash bankrupted homebuilders. Without them, we stopped building enough homes for our growing population. Decades of offshoring and cost-cutting had not just moved jobs overseas: it had eliminated our ability to produce many basic goods by optimizing around fragile webs of interrelated supply chains. Care workers were paid poverty wages despite the fact that their work was required for society to keep running. Outside of tech and finance, the vaunted “recovery” had mostly centered on precarious gig work and low-wage service jobs.
When the pandemic crashed into this already fragile system, all these long-simmering problems exploded. Suddenly we desperately needed masks and ventilators but discovered we could not make enough of them. Nursing homes which had been understaffed for years became death traps. Supply chains collapsed because they had been optimized for efficiency rather than resilience.
The establishment had no answers because they had spent a decade insisting there were no real problems to solve. Those aligned with the progressive movement had spent those same years developing concrete solutions to exactly these crises in partnership with the social movements and progressive mobilizations that have arisen in the past decade. When the moment came and the government needed a response that matched the scale of the emergency, progressive policy was the only serious option.
Faced with potential economic collapse and the fresh memory of the Great Recession, the Biden administration did something that would have been unthinkable just a few years earlier: they turned to progressive economics. First, they went bigger than Obama on fiscal stimulus to restart the labor market. Then they made the first serious moves towards a real “supply side” economic strategy, evident in their embrace of industrial policy.
Yet there was never a master plan called “Bidenomics”. The term was coined years later, as a catch-all to link together the various economic policy responses to a complex and evolving pandemic crisis. What policymakers faced was straightforward in one sense — the pandemic had produced a sudden collapse in spending of the type that usually produces a big recession — but the situation required policymakers to navigate multiple overlapping emergencies. Their response emerged in two distinct stages. First was Big Fiscal — massive government spending to deal with the demand — side problems of the sudden stop of money flowing through the system, both consumer spending and consumer income. Then came industrial policy to address supply-side problems that had been revealed by pandemic supply chain disruption. This kind of bold action to make full use of the economic capabilities of the state is the minimum progressives should demand when disaster strikes.
Priority one at the beginning of the Biden Administration in 2021 was simple but urgent: policymakers needed to prevent total economic collapse.
The strategy was easy too: flood the zone with money. People needed money to pay rent, buy food and keep the lights on while parts of the economy had to temporarily shut down. Businesses, especially small ones with limited access to capital markets, needed support to avoid the kind of mass bankruptcies that would make recovery impossible. State and local governments, facing cratering tax revenues, needed help to avoid laying off teachers, firefighters and other essential workers when they were most needed.
Progressive policymakers, thinkers and economists had spent years in the wilderness arguing that the stimulus response to the 2008 crisis was catastrophically too small and too focused on banks over people. This time, policymakers had learned their lessons. This time, everyone actually was a “Keynesian in a foxhole”.
The pandemic response began with a series of massive fiscal interventions — the CARES Act in 2020 and the American Rescue Plan in 2021 — that would have been unimaginable in previous recessions:
I have called this approach “Big Fiscal” — the fiscal strategy of spending enough to actually accomplish economic policy goals. The “Big Fiscal” approach here was used to provide fiscal stimulus and support sufficient to restart the economy when faced with a sudden downturn.
This is the opposite of austerity, which is why it was successful. Austerity is a political program to cut spending during downturns which creates a vicious cycle of reduced spending, reduced employment, reduced investment, reduced growth and reduced capacity. What made Big Fiscal so important in the aftermath of the pandemic was that it was not just a response to the immediate economic problems of the pandemic, but an opportunity to finally fix some of the long-term problems caused by the 2008 crash and durably shift fiscal strategy towards full employment and a high-pressure economy, which structurally benefits workers compared to high unemployment and low investment economy.
When that began to happen, the old guard mainstream Democratic Party economists — Larry Summers, Jason Furman, the whole crew of Clinton and Obama advisors screamed bloody murder. This would cause runaway inflation! It would destroy work incentives! It would create an unsustainable federal debt load! These were, of course, the same strategists who plotted out the weak recovery of the 2010s and told us that secular stagnation was something we would just have to live with.
They were spectacularly wrong. The result was the fastest job market recovery since World War II, with employment bouncing back to pre-crisis levels in two years instead of ten. Poverty actually decreased during the pandemic — a world-historical achievement that should have redefined our baseline ideas of the power of federal economic statecraft. Child poverty was cut drastically, if temporarily,by the combination of direct payments and expanded child tax credits. Families paid down debt and built savings for the first time in years. The economy didn’t just recover, it roared back to life with a vigor that surprised even optimists, at least by the end of 2022.
Once the labor market crisis had been resolved and the economy stabilized, the Biden Administration’s attention turned to a harder and more complex question: how to fix the underlying problems which made the pandemic disruption so bad in the first place.
The crisis had revealed multiple vulnerabilities at once. There was the unmanaged massive shift in the composition of supply and demand as people stopped buying services and started buying goods, overwhelming supply chains that had been optimized for efficiency rather than resilience. There was “greedflation”— corporations using the cover of supply chain chaos to jack up prices far beyond what their actual costs justified, padding profit margins while families struggled with rising costs. There was the basic problem that we could not make essential goods when we needed them most nor provide adequate care for our people when their lives depended on it. If a pandemic could nearly collapse our economy and drive generational inflation through this combination of fragile supply chains, corporate price-gouging and hollowed-out productive capacity, what did that say about the economy and capital stock that American capitalism had built?
At this point, the pandemic policy response becomes more complex and more shaped by the contingent strength of different factions to influence Congress. Every group with a stake in economic policy — climate advocates who saw a chance to build clean energy infrastructure, unions who wanted manufacturing jobs to return, national security hawks boosting military and economic competition with China — claimed their own turf within the negotiations that eventually produced a trio of massive spending bills:
These bills represented the first real attempt by the US government in decades at what economists call industrial policy: the use of government investment and incentives to deliberately shape the capital stock — the physical plant and equipment used in the economy — and capital stack — the financial structures used to fund changes to the capital stock — of the economy toward specific goals, outcomes, or capabilities. Between them, the capital stock and the capital stack of the economy largely define what jobs there are, and the kinds of goods and services that can be made and how.
Together, these bills pointed towards a recognition that the neoliberal approach of letting the market decide failed to deliver either prosperity or security for most Americans. Yet despite this acknowledgement, some troubling ambiguities from a progressive perspective in the policy response remained.
The ambiguity of Bidenomics is simple: it was fundamentally a crisis response program that never developed a real identity or master plan. This has made it challenging to evaluate as an integrated economic program, even though it contained some of the most successful progressive policy actions in decades.
This was particularly apparent in the journey from “Build Back Better” to the Inflation Reduction Act. What began as an enormous collection of progressive economic priorities — expanded child tax credits, massive care work investments, climate spending, manufacturing subsidies — was systematically whittled down through a series of negotiations into a much less progressive finished product. The scale of what was lost was staggering: from Bernie Sanders’ original $6 trillion vision to a $3.5 trillion official Democratic plan then reduced to Biden’s $1.75 trillion framework, and finally whittled down to what actually passed — a pale echo of the original progressive vision, with virtually all social spending eliminated.
The crisis context and divided government created chokepoints throughout the process of negotiation. With Joe Manchin and Kirstin Sinema holding effective veto power in a 50-50 Senate, every piece of the agenda had to survive not just Republican opposition but also the preferences of the most idiosyncratic Democrats. Climate provisions were split across multiple bills, everything had to be structured in particular ways to pass through reconciliation, and funding for the care economy — $800 billion for childcare, universal pre-K, and home healthcare — was completely eliminated.
Members of the Biden administration also stepped into this negotiation process to push for their own vision, a new Cold War approach that centered great power competition with China. This became clear in the added emphasis on national security and economic competitiveness. Led by figures like Jake Sullivan, this faction justified reviving the vision of public investment that had energized the American project in the postwar years on the grounds that it would boost US economic competitiveness with China. The goal was to pull together a coalition for generalized growth that could accommodate green capital, finance capital and manufacturing workers. Their hope was that these disjoint coalition members could all be unified around the goal of green state developmentalism and green growth under the aegis of geoeconomic competition.
This side had a number of significant victories. As Bidenomics lost some of its early progressive structure through the negotiation process, it gained more of a geopolitical focus. Some of the programs brought in this way proved successful. Manufacturing construction investment exploded to levels not seen in decades. Companies started building semiconductor plants in Arizona and Ohio. Clean energy investments soared past optimistic projections, but increasingly within a framework of technological competition with China rather than climate justice or democratic decarbonization.
However, the strange mishmash of goals that Bidenomics represented an answer to — produced by constraint, negotiation and competing visions — proved challenging to message. Different parts of the agenda appealed to different constituencies but did not add up to a clear whole that could be easily communicated. Different wings of the progressive movement were proud of specific wins — the child tax credit! manufacturing jobs! climate investments! — but could not explain how they fit together, let alone their connection to a deeper strategic pivot toward great power competition. Cherished policies were getting lost within this larger, more confusing morass.
The most successful parts of Bidenomics came from the progressive policymakers, advocates and economists. Big Fiscal showed we know how to reverse a recession and get people back to work. The expanded child tax credit proved we can cut child poverty in half when we choose to. Enhanced unemployment benefits demonstrated that direct support does not create dependency or keep people out of jobs — it creates security and growth.
By contrast, aspects of the Sullivan approach to industrial and innovation policy proved less effective. Their focus on private-sector partnerships and competition with China meant that benefits flowed mainly to private companies rather than building lasting public capacity, and the inevitable splitting of policies across multiple bills to serve different constituencies created coordination problems that persist in everything from electrical interconnection queues to stalled efforts at supply chain resilience by moving key nodes to allied nations, or “friendshoring”.
The final ambiguity of Bidenomics may be the most important. What had begun as ambitious progressive policy and been whittled down to a complex structure blending climate and national security is now being burnt down by the Trump administration. Yet despite this, the seeds of the next progressive economic program will be found in the ashes of what remains of “Bidenomics”. Their attacks on the policies and the administrative state cannot erase the data showing where the progressive approaches which powered key aspects of Bidenomics were most successful. Large-scale fiscal transfers work. Investment programs work. Progressive economics depends on these approaches, and now we have proof that progressive economics works in practice, not just theory.
Although the seeds of the next progressive program will be found in the ashes of Bidenomics, Trump is now clearly determined to burn down what is left — even the strong economy that Bidenomics helped produce. Whatever its contradictions and limitations, the Biden era delivered the fastest job recovery since World War II, the lowest sustained unemployment in decades, and the beginnings of a domestic manufacturing revival. Trump’s response is to systematically destroy these gains.
The economic agenda of the Trump administration is simple: move fast to break things. As is usually the case with GOP economic policy, their hope is that a worse economy will force Americans to deal with crappier jobs and less pay while the rentiers who already own most of the wealth in this country receive even lower tax bills.
This is not an exaggeration. The GOP’s theory, to the extent they have one, is that America became “weak” because we stopped doing low-value manufacturing and started doing things like scientific research and education. They want to force us back to the glory days of the 1950s through a combination of policies that they seem to believe will bring Americans endless shifts screwing components in at the iPhone factory:
Massive tariffs on everything: The Trump administration seems to claim this will force companies to manufacture in America, bringing back jobs. Instead, it will make everything more expensive while introducing even more friction into the complex supply chains that modern manufacturing depends on. That car you want to buy? Add thousands of dollars in steel and parts tariffs. US Federal Reserve sentiment surveys already show manufacturers freaking out, canceling investments, preparing for layoffs as they try to figure out how to survive the chaos.
Mass deportations: regardless of the economic impacts, the Trump approach to deportation is violent and unacceptable full stop. But from an economic perspective, they want to remove millions of workers from the economy overnight. Who do they think builds houses, picks food, and cares for the elderly? Construction costs will soar, food will rot in fields, and nursing homes will collapse as members of their workforce are hunted by masked and armed federal agents.
Attacking successful industries: for decades, the US has led the world in higher education and scientific and medical research, sectors that generate massive export revenues and innovation spillovers. Foreign students alone bring in $40 billion annually while training the next generation of innovators. The GOP response? Make it impossible for them to get visas, subject them to harassment by ICE and create an atmosphere so hostile that they will go to Canada or Europe instead.
Gutting government capacity: Project 2025 — the published plan that they spent years developing — calls for eliminating many of the federal agencies that make modern life possible. The Bureau of Labor Statistics that measures unemployment? Defund it. The FDA that ensures food safety? Gut it. The new DOGE initiative, led by Elon Musk, wants to fire federal workers en masse and replace them with AI, because that worked so well for him at Twitter.
Killing the energy transition: while the rest of the world races ahead on clean energy — with China installing more solar in a year than we have in total — the GOP has essentially repealed the IRA to lock in fossil fuel dependence. This is not just bad for the climate, it guarantees higher energy prices for American households and businesses while other countries lock in low cost solar and battery systems.
The human cost will be staggering. Young people already cannot afford homes — now add tariffs on homebuilding supplies and a shortage of construction workers. Families struggling with childcare costs that exceed college tuition will face even fewer options as care workers — including many here legally — are forced out. Rural hospitals hanging on by a thread will close as federal support is cut, leaving entire regions without healthcare. This is not speculation, it is in their stated goals.
The coming chaos means we will need to undertake a massive program of economic and state reconstruction no matter what happens next. The question is not whether we will need to rebuild the state and economy — the question is what kind of economy we will want to build from the ruins.
The first step is to be honest about what we learned from the last four years of experimentation:
The fact that Big Fiscal worked so well means that approach, not only the incrementalism of over-targeted tax credits and means-tested benefits, should be our starting point for the future.
Right now, the GOP is destroying the old system, tearing down institutions and shredding norms. Why waste time trying to restore a status quo that was not working for most people? Why not plan to build something we actually want instead?
Look at what is already happening at the local level, where progressive candidates are offering real alternatives. Zohran Mamdani’s campaign for New York mayor shows what can become possible when progressive economic policy is paired with a clear transformative vision. He’s not talking about an abstract “opportunity economy” — he is saying “public housing, free transit, free childcare and we will tax the rich to pay for it”. The enthusiasm from DSA chapters to climate groups to housing advocates shows people are hungry for simple statements and bold solutions.
This points towards some bigger possibilities to organize around:
At Common Wealth US, we are doing the detailed work to make this vision real and actionable:
The next few years are going to be rough. The GOP is determined to break things and they have the power to do enormous damage. People are going to suffer unnecessarily. The economy is going to get worse before it gets better.
But crisis creates opportunity and the same conditions that led to the New Deal are forming. People are realizing that the old system does not work for them and never really did. They are ready for something different — not a return to normal, actual transformation. The question is whether the progressive movement will be ready with answers that match the scale of the crisis.
Bidenomics, for all its flaws and compromises, proved that progressive economic policy can work in the real world. We reduced poverty when others said it was impossible. We created jobs while being told we would only create inflation. We started building things in America again after decades of decline. We showed that government can act decisively to help people when it chooses to.
Now we need to go bigger. Much bigger. The GOP wants Americans screwing tiny screws into iPhones for minimum wage? We want an economy that works for everyone — good jobs that can support a family, affordable homes in thriving communities, clean air and a livable planet and real security that does not just depend on staying in your boss’s good graces.
The future of the economy will be determined not by those who retreat from public purpose but by those who embrace it fully, and we see a growing coalition ready to do exactly that.
We have now seen that progressive policy is possible. Our task is to make it inevitable.
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