Critical Tests for the Biden Administration’s New Team

If the new chief of staff and National Economic Council Director want to prove that they aren’t diverting the administration back to a neoliberal footing, here are a few options.

This post is a rerun of an article written for The American Prospect, which was posted this morning. Please check it out on the Prospect's website, and consider supporting their excellent work.

President Joe Biden’s State of the Union address this month was a powerful call for Washington to prioritize blue-collar people and blue-collar values. In the face of significant intra-D.C. pressure to get back to neoliberal business as usual, however, the administration appears dangerously ready to accede to some demands.

Biden is reshuffling his leadership team, naming Jeff Zients as his Chief of Staff (about whom I’ve written extensively) and moving Lael Brainard from Vice Chair of the Federal Reserve to Director of the National Economic Council. The Prospect’s Robert Kuttner wrote on Tuesday that these changes represent “the immense residual power of the undertow, which resides not mainly in the individuals in government who embody the outmoded conventional wisdom, but with the potent corporate and financial whose interests they serve.”

Kuttner is right. Biden wonderfully confused Republicans into supporting Social Security and Medicare at the State of the Union, but Zients’ first big assignment in government under Obama was to cut government costs however possible. Sen. Joe Manchin (D-WV) remains obsessed with the federal debt. Factor in the deficit squawks at libertarian think tanks, and a mainstream media still eager to platform them, and it all looks too soon to declare the social safety net protected.

What about Brainard? Biden is widely considered an opponent of corporate globalization, committed to revitalizing American manufacturing. But Brainard made her name in the Clinton administration by implementing NAFTA and negotiating China’s entrance into the World Trade Organization, two of the biggest body-blows to that blue-collar manufacturing base. She tiptoed to a more liberal position on monetary policy at the Federal Reserve, but has no influence at all over monetary policy as NEC Director (leaving no real checks on Jerome Powell’s war on wages in the process.) And Republicans, centrist Democrats, and neoliberal economists have all been chomping at the bit for Biden to resume the free trade policies of the last 30 years.

Judging by its personnel changes, the Biden administration may be executing a classic post-midterm pivot to the center. Democratic presidents under divided government always face immense pressure to meet both parties in the middle, which in practice effectively means giving handouts to the corporations which most skillfully play Washington. Biden was unapologetically ready to pick fights, even partisan fights, at the State of the Union, in a welcome shift in his rhetoric. But Zients and Brainard’s actual policy history within the executive branch has mostly involved handouts to industry, a far cry from the bold, people-first agenda Biden outlined to Congress. So which approach will predominate?

If Zients and Brainard want to prove to their critics that they are ready to fight corporate power on behalf of the little guy, they have ample opportunities to start. In no particular order, here are a few issues where the administration could put its money where its mouth was at the State of the Union.

Spending and Revenue: We’d rather have an administration which recognizes that the federal debt is a fundamentally silly issue. But political reality being what it is, the administration ought to take a multi-pronged approach. First, regarding the debt ceiling, acknowledge that there’s no legal reason for the administration to bend the knee. From the trillion-dollar coin to the 14th amendment to mitigating the “trilemma”, the administration has ample options to simply not play the game Kevin McCarthy is trying to force them into.

Second, if the White House is so desperate to plug the federal deficit (which, again, it has no real need to do), one of the best tools in its arsenal that doesn’t involve more authority from Congress is its enforcement authorities. My colleagues Eleanor Eagan and Hannah Story Brown wrote extensively last year about how cracking down on corporate lawbreaking offers some of the best bang-for-buck in the federal government. The IRS takes in three to six times in revenue what Congress spends on it. In 2019, the Federal Trade Commission brought four dollars into the Treasury for every one dollar appropriated to it.

Focusing administration resources on big fines for corporate scofflaws is a way of raising revenue without having to make cruel concessions to Republicans. It’s also populist policy 101. Biden can expose D.C.’s deficit obsessives for the frauds they are if the government lowers its borrowing by fining their funders when they break laws intended to protect the public from harm. In the long term, Democrats need to free themselves of a completely misguided obsession with cutting deficits for their own sake, but even without doing so, there’s room to do real good.

Labor: The biggest job opening in Washington right now is for Secretary of Labor. The candidates so far are Julie Su, the current Acting Secretary who is an ultra-qualified woman of color beloved by both unions and agency staff, and Sean Patrick Maloney, a former member of Congress with no special interest in labor who lost both his own seat and the whole House of Representatives for Democrats. If this is an even slightly difficult decision, the White House really needs to reassess its strategy.

Actions speak louder than nominees, though. Excellent reporting from The Lever has shown that Pete Buttigieg’s Department of Transportation ignored rail unions’ pleas from the first days of the Biden administration to reimplement upgraded brake requirements which Trump slashed. Then, the administration intervened to quash a potential rail strike last year. Now, the residents of East Palestine, Ohio are suffering from a totally preventable ecological tragedy.

If this administration is as pro-labor as it claims, it ought not just to send angry letters to rail CEOs after the fact, but crack down on their abuses. The brake rules are just a starting point. It is honestly baffling that the Biden administration still hasn’t used executive authority to grant rail workers their much-needed sick leave, as Senator Bernie Sanders and Representative Jamaal Bowman have urged. And we shouldn’t see “the most pro-labor administration in history” ever intervening in a labor dispute on the side of the bosses ever again.

International Economics: At long last, Trumpist climate-denier David Malpass is stepping down from the World Bank. Both the World Bank and the International Monetary Fund could be lending hundreds of billions of dollars more than they are, according to a G20 report, which could go toward green development in the global south, especially if paired with more forgiving lending terms than the historical norm. Meanwhile, the IMF is demanding currency devaluations as a condition for lending, which could prove inflationary for countries without developed manufacturing sectors or those in economic distress like Lebanon.

There’s long been a “gentleman’s agreement” that the World Bank’s president is American and the IMF’s president is European. The White House is currently trial-ballooning Rajiv Shah, a Hillary Clinton ally and former USAID administrator who now runs the Rockefeller Foundation. But the United States treating the World Bank as its plaything is a gross neocolonial policy, unbefitting an administration that claims to care about global justice and equity.

Nadia Daar, the head of Oxfam International’s Washington DC office, said “Malpass’ successor must be hired based on an open, merit-based and transparent selection process rather than the 80-year-old gentleman's agreement which sees the job automatically go to someone from the U.S.” Biden often says his foreign policy is about proving that democracy is stronger than autocracy; here’s a chance to prove it.

Healthcare: In 2022, Congress passed the No Surprises Act, which went part of the way toward banning the practice of surprise billing for out-of-network medical expenses. The law is promising but contains major holes: amazingly, ground ambulances are exempt from the law, and more than a quarter of ambulance trips can still result in a surprise bill.

But even minimal bans are too much for the private equity-owned firms which profit the most from the practice. The No Surprises Act is intended to hold consumers harmless, but health insurers and out-of-network staffing companies still have to work out amongst themselves who actually pays the bills. The initial rules for this used a metric which tended to result in PE moguls getting less money than they were used to. In response, PE-owned staffing firms swarmed the government’s appeals hotline, and a conservative judge’s ruling is forcing the Health and Human Services department to rewrite its practices.

Cracks and dents like these in an already flawed law are often the first step toward outright repeal, or effective nullification, of a consumer protection. Zients and Brainard’s NEC should ensure that HHS’s new rules are as potent as possible, but more importantly, they should name and shame the private equity firms trying to profiteer off emergency room stays. Better yet, why not work to pass a new, stronger law in the first place? The No Surprises Act was a bipartisan bill. Surely no member of Congress wants to be publicly seen on the side of healthcare vultures. If the White House wants to prove its bipartisan bona fides, it should do so by negotiating laws that protect against predatory firms, not laws which give the predators handouts.

These examples show that there are plenty of issues where the Biden administration can use existing authority to show that it actually believes in the populist rhetoric it puts forward. More than anything, the administration needs to name and shame its enemies. By showing us what he is against, the President can prove to Americans what he is for.

If Biden, Brainard, and Zients just want to “get things done” in a bipartisan fashion, they would easily be able to work across the aisle to accomplish horrible goals: shriveled government spending, more trade deals to wrack the working class, and so on. If, instead, they want to actually do what they promised the American people, there are plenty of alternative options available. None are easy, and all require making powerful enemies. But an administration worth having does just that.

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

An Overview Of The History Of American Financial Regulation

Hack Watch: Debtors And Lawyers And Trusts, Oh My!

How Pete Buttigieg and Washington lobbyists are fueling the US airline crisis

Jeff Hauser: We Need to Talk About Larry (Summers)

Buttigieg’s Paralysis After the East Palestine Disaster Is a Gift to the Hard Right

Pete Buttigieg Is Pretending He’s Powerless to Change Railroad Safety Procedures

Biden’s New Chief of Staff Enters as Political Rancor Heats Up

Ohio, Pennsylvania Senators Demand Federal Action Over Toxic Train Derailment