Facing another round of skyrocketing inflation, empty store shelves, and falling poll numbers, the future of President Joe Biden’s domestic agenda looks increasingly imperiled. Much fanfare has been made about the death of his signature legislation, the so-called “Build Back Better” (BBB) Act – a sweeping, multitrillion dollar partisan social welfare bill that failed because it could not win support from all members of the president’s own party in the Senate. But lest we forget, even without BBB, Democrats did pass a sweeping, multitrillion dollar partisan spending bill in 2021 – the American Rescue Plan (ARP) Act, which passed with no Republican votes and was signed into law in March.
At the time, the White House and House Speaker Nancy Pelosi (D-Calif.) claimed the nearly $2 trillion legislation would create 4 million new jobs – a significant boost for an economy attempting to recover from government-imposed shutdowns during the coronavirus pandemic. So, as we enter 2022 10 months after ARP became effective, what do Biden, Pelosi, and the rest of their party in Congress have to show for the eye-popping price tag? Not much, based on federal jobs data for 2021.
The American Rescue Plan Act, Democrats’ only successful partisan legislation of 2021, was hardly a blip on the radar, likely contributing zero additional jobs last year.
As AEI Senior Fellow Matt Weidinger explains, “the nonpartisan Congressional Budget Office projected on February 1, 2021, that monthly job growth in 2021 … would average 521,000 – without the enactment of the American Rescue Plan,” meaning a gain of more than 6.25 million jobs for the year. Biden and Pelosi promised ARP would add another 4 million, resulting in more than 10.2 million new jobs in 2021.
Federal employment data for December was released this month and showed that 6.4 million jobs were created in 2021 – just 150,000 more than were projected when President Biden took office, before the enactment of the $2 trillion partisan “Rescue Plan.” And there is no indication that ARP itself deserves credit for the minimal difference.
This jobs data is another stinging indictment of the president’s entire economic agenda. Not only was the jobs impact of his party’s signature economic achievement at best minimal, but it helps demonstrate how fortunate the country is that their second attempt of the year at a multitrillion-dollar partisan spending bill, the Build Back Better Act, failed. The country would have been sold more promises of economic recovery and job growth at the cost of trillions more taxpayer dollars, only to receive less growth and more inflation.
Thus far, Biden’s approach to the economy has been to attempt a more extreme version of the same stale, government command-and-control playbook we have seen too many times before, defined by government overspending, expanding the welfare state, and giveaways to politically connected special interests like labor unions. The result, as usual, is rampant inflation swallowing up wage gains – real wages are down 2.4% from a year ago. Additionally, the labor shortage has left businesses struggling and has exacerbated supply chain issues, resulting in empty shelves in stores across the country.
We can only hope that Biden will choose to change course from this failed partisan approach in 2022. Unfortunately, if the past two weeks are any indication, he is more committed than ever to simply ramming his unpopular partisan agenda through a narrowly divided Congress – even willing to throw out longstanding Senate rules to do so – rather than try to bring together an ideologically diverse coalition to address the real, once-in-a-generation economic challenges the country is facing.
Based on the state of the economy and his collapsing approval ratings, this go-it-alone partisan approach is both a policy and political mistake.
Ultimately, history has proven – and Biden’s American Rescue Plan again demonstrated – that reckless federal spending only crowds out badly needed private investment in the economy. Private investment, not government spending, is the real driver of job and wage growth. All the lofty promises of politicians who insist they should be empowered to micromanage the economy with the money and power we give them will never change this basic fact.
