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Opinion: Biden’s infrastructure plan must look to the future, not wrap itself in a nostalgic view of past American greatness


CAMBRIDGE, Mass. (Project Syndicate)—President Joe Biden’s $2 trillion infrastructure plan is likely to be a watershed moment for the American economy, clearly signaling that the neoliberal era, with its belief that markets work best and are best left alone, is behind us. But while neoliberalism may be dead, it is less clear what will replace it.

The challenges that the United States and other advanced economies face today are fundamentally different from those they faced in the early decades of the 20th century. Those earlier challenges gave rise to the New Deal and the welfare state. Today’s problems—climate change, the disruption of labor markets due to new technologies, and hyper-globalization—require new solutions.

Capitol Report: Biden says he’s ‘prepared to negotiate’ on infrastructure as he meets bipartisan group of lawmakers

We need a new economic vision, not nostalgia for a mythicized age of widely shared prosperity at home and global supremacy abroad.

On climate change, Biden’s plan falls short of the Green New Deal advocated by progressive Democrats such as Rep. Alexandria Ocasio-Cortez. But it contains significant investments in a green economy, such as supporting markets for electric vehicles and other programs to cut carbon-dioxide emissions, making it the largest federal effort ever to curb greenhouse-gases.


Economics is different from an arms race. A strong U.S. economy should not be a threat to China, just as Chinese economic growth need not threaten America.

On jobs, the plan aims to expand employment offering good pay and benefits, focusing, in addition to infrastructure, on manufacturing and the growing and essential care economy.

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The role of government

New ways of thinking about the role of government are as important as new priorities. Many commentators have framed Biden’s infrastructure plan as a return to big government. But the package is spread over eight years, will raise public spending by only 1 percentage point of gross domestic product, and is projected to pay for itself eventually.

A boost in public investment in infrastructure, the green transition, and job creation is long overdue. Even if the plan were nothing more than a big public investment push financed by taxes on large corporations, it would do a lot of good for the U.S. economy.


We need a new economic vision, not nostalgia for a mythicized age of widely shared prosperity at home and global supremacy abroad.

But Biden’s plan can be much more. It could fundamentally reshape the government’s role in the economy and how that role is perceived.

Traditional skepticism about government’s economic role is rooted in the belief that private markets, driven by the profit motive, are efficient, while governments are wasteful. But the excesses of private markets in recent decades—the rise of monopolies, the follies of private finance, extreme concentration of income, and rising economic insecurity—have taken the shine off the private sector.

At the same time, it is better understood today that in a complex economy characterized by so much uncertainty, top-down regulation is unlikely to work. Regardless of the specific domain—promoting green technologies, developing new institutional arrangements for home-care workers, deepening domestic supply chains for high-tech manufacturing, or building on successful workforce development programs—government collaboration with nongovernmental actors will be essential.


If it succeeds, the example it sets of markets and governments acting as complements, not substitutes—demonstrating that each works better when the other pulls its weight—could be its most important and enduring legacy.

In all these areas, the government will have to work with markets and private businesses, as well as other stakeholders such as unions and community groups. New models of governance will be required to ensure public objectives are pursued with the full participation of those actors who have the knowledge and capacity to achieve them. The government will have to become a trusted partner; and it will have to trust other social actors in turn.

In the past, each excessive swing in the state-market balance has eventually prompted an excessive swing in the opposite direction. The Biden plan can break this cycle. If it succeeds, the example it sets of markets and governments acting as complements, not substitutes—demonstrating that each works better when the other pulls its weight—could be its most important and enduring legacy.

Biden’s unhelpful framing

In this regard, it is unhelpful to view the Biden plan as a way to restore America’s competitive position in the world, especially vis-à-vis China. Unfortunately, Biden himself is guilty of this framing. The package will “put us in a position to win the global competition with China in the coming years,” he recently argued.

Peter Morici: Biden doesn’t understand how dangerous China is

It may be politically tempting to market the infrastructure plan in this fashion. In an earlier era, the prevailing fear that the U.S. was losing its edge to the Soviet Union in ballistic missiles and in the space race helped catalyze a national technological mobilization.

But there is much less reason for fearmongering today. It is unlikely to buy much Republican support for the plan, given the intensity of partisan polarization. And it diverts attention from the real action: if the plan increases incomes and opportunities for ordinary Americans, as it should, it will have been worth doing, regardless of the effects on America’s geopolitical status.

Moreover, economics is different from an arms race. A strong U.S. economy should not be a threat to China, just as Chinese economic growth need not threaten America. Biden’s framing is damaging insofar as it turns good economics at home into an instrument of aggressive, zero-sum policies abroad. Can we blame China if it tightens restrictions on U.S. corporations as a defensive measure against the Biden plan?

The plan could transform the U.S. and set an important example for other developed countries to follow. But to achieve its potential, it must avoid misleading state-versus-market dichotomies and outdated Cold War tropes. Only by leaving behind the models of the past can it chart a new vision for the future.

This commentary was published with permission of Project SyndicateBiden Must Fix the Future, Not the Past.

Dani Rodrik, professor of international political economy at Harvard University’s John F. Kennedy School of Government, is the author of “Straight Talk on Trade: Ideas for a Sane World Economy.”

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Gadgets

Republican attorneys general seek assistance from courts in thwarting Biden’s agenda


WASHINGTON (AP) — These are busy days for Republican state attorneys general, filing repeated lawsuits that claim President Joe Biden and his administration are overstepping their authority on immigration, climate change, the environment and taxes.

The strategy harks back to what Democrats did during Trump’s presidency, heading to court in New York, California, Maryland and other states where they were likely to receive a friendly reception. Even before that, Republicans were frequent filers during Barack Obama’s White House years.

“This is something the Republicans have taken from the Democratic playbook, just as the Democrats had taken a lot of things from the Republican playbook during Trump’s tenure,” said New York University law professor Sally Katzen, who served in the Clinton White House.

The legal action reflects GOP opposition to Biden initiatives, but it also is providing the attorneys general, many with higher political ambitions, to showcase their willingness to stand up to Biden and unabashedly side with Trump.

Missouri Attorney General Eric Schmitt, seeking the Republican nomination for U.S. Senate in 2022, brags in a TV ad that he is “on the conservative front line suing to stop the Biden administration’s worst abuses.”

The main target of lawsuits filed so far have been executive orders issued by Biden.

But several states also have sued over a provision of the $1.9 trillion COVID-19 rescue plan that prohibits states from using their share of federal money to reduce taxes.

Chris Carr, the Georgia attorney general and new chairman of the Republican Attorneys General Association, said he and his colleagues have been cast in this role because Democrats control both houses of Congress and the White House.

“We’ve got a situation where President Biden says, ‘Look, I want to be more bipartisan in nature.’ But then he turns around and has issued more executive orders in the beginning of a term than any president in modern history, I’m told,” Carr said.

“Our job is to ensure the rule of law is upheld. It’s a natural tension we’ve seen throughout American history. How does the federal government stay in its lane?” he said.

It took only two days after Biden’s inauguration for the first legal fight to erupt.

Following the president’s announcement of a 100-day pause in deportations, Texas Attorney General Ken Paxton — who famously appealed to the U.S. Supreme Court to overturn Trump’s loss to Biden in a crucial set of swing states, drawing the support of 17 fellow state attorneys general and 106 Republican members of Congress — went to court and won a court order against the halt.

Several other states have since followed with similar claims.

Just since the middle of March:
• Texas, Montana and 19 other states filed suit in Texas to overturn Biden’s cancellation of the contentious Keystone XL oil pipeline from Canada.
• Louisiana Attorney General Jeff Landry led 13 states in suing the administration to end a suspension of new oil and gas leases on federal land and water and to reschedule canceled sales of leases in the Gulf of Mexico, Alaska waters and western states.
• Missouri sued over the restriction on state tax cuts as a condition of receiving money from the huge COVID-19 bill.

See: Atty. Gen. Ken Paxton battles Texas news media over records related to Capitol siege on Jan. 6

Also: Twitter sues Texas attorney general, claiming retaliation for its Trump ban

Earlier in March, Schmitt led 12 states in a suit that claims the administration lacks the authority to take account of the social costs of climate change. The president said on Jan. 20 that federal agencies must account for damages caused by increased greenhouse gas emissions, including changes in farm productivity, human health and property damage from increased flood risk.

In at least two instances, Republicans are trying to get the Supreme Court involved to keep in place Trump policies that Biden is reviewing or has indicated he will reverse.

Paxton is leading a push to get the justices to reimpose the Trump-era immigration rule denying green cards to immigrants who use public benefits like food stamps. A federal court has blocked the policy nationwide and the Biden administration dropped the defense of it.

Ohio Attorney General Dave Yost is leading a 19-state effort to keep the court from dismissing a case over the Trump policy that bans family planning programs that receive federal funds from referring women for abortions.

The administration and medical groups that had challenged the policy agreed to dismiss the case because the Health and Human Services Department shortly will propose a new rule rescinding the ban on abortion referrals.

Paxton’s predecessor was Greg Abbott, now the Texas governor. Abbott burnished his conservative credentials by frequently going to court over Obama initiatives. “I go into the office, I sue the federal government, and I go home,” he said in 2013, boasting then of having sued the administration 25 times.

By the middle of 2016, the Wall Street Journal counted at least 44 times that Texas went to court against the Obama administration.

The one thing that has changed since the last Democratic administration is that Trump was able to move appeals courts across the country to the right, adding six judges each to appeals courts that hear cases from Ohio and Texas and four to the court that includes Missouri. All three already leaned conservative.

Even the famously liberal 9th U.S. Circuit Court of Appeals in San Francisco, which hears appeals from Montana, became more evenly balanced in the past four years, with the addition of 10 Trump appointees.

“Republican attorneys general might take extra comfort from the fact that there were a significant number of conservative judges confirmed during the Trump administration, and there are a number of courts of appeals where the balance was tipped. So, it’s an even better shot than before,” Katzen said.

MarketWatch contributed.



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