President Biden’s bid to retool the U.S. economy has me thinking about the parallels with earlier transformational presidents: FDR and Reagan. One of the most interesting aspects of these previous administrations was that the big changes they implemented actually began under their predecessors of the opposite party. Just as Ronald Reagan expanded on Jimmy Carter’s accomplishments, and Franklin D. Roosevelt got a running start from Herbert Hoover, Biden is benefiting from a change in momentum that began under Donald Trump.
Reagan’s economic program consisted of three main pillars: tax cuts, deregulation and tight money. But the latter two were actually hallmarks of the Carter administration.
It’s very normal throughout history for economic policy revolutions to start under presidents from the opposite party of the one who eventually gets the credit. A similar progression looks likely to play out with Trump and Biden.
Trump’s economic policies were, generally speaking, shambolic and unfocused. He didn’t appear to be following any intellectual paradigm or school of thought; instead, he lashed out at whoever annoyed him in the moment, be it China, U.S. allies or American companies that shipped factories overseas. But by doing that, he broke with the most important and powerful consensus in elite policy circles: free trade.
This consensus, which was shared by almost all economists, was so strong that perhaps only a maverick like Trump could smash through it. Below the level of elite opinion, dissatisfaction with free trade had been boiling for years. Though worries over competition from Japan and Europe in the 1980s turned out to be overblown, China had proved to be the real thing. In the 2000s, substantial numbers of American workers lost their careers to Chinese competition and never recovered. Meanwhile, the U.S. industrial commons eroded, calling the entire nation’s competitiveness into question:
Though Biden is suspending tariffs on U.S. allies, he’s keeping the ones on China. In fact, Biden’s entire China policy essentially continues in the direction that Trump laid out. Biden’s economic program, though it doesn’t involve the president yelling at companies to put jobs in America, revolves around industrial policy and the reshoring of supply chains; in this sense it shares a basic goal with Trump.
Trump’s break with orthodoxy wasn’t complete, of course. In many ways he governed as a typical Republican, cutting taxes and regulation and increasing work requirements for welfare programs. But on trade and industrial policy, he blazed a trail by neutering his own party’s opposition to change. On these topics, a fair number of conservative think tanks and politicians are joining the bandwagon.
Perhaps that’s how big policy changes ultimately happen. Carter won’t go down in history as the great champion of deregulation. And if Biden ultimately succeeds in reorienting American economic policy away from free trade in a systematic and effective manner, he’ll likely be the one who gets associated with that shift by future generations. But it was Trump’s erratic approach that paved the way.
Noah Smith is a syndicated columnist.