WHAT WOULD JOE BIDEN ACTUALLY DO WITH A SECOND TERM? THE ECONOMIST

The trouble with sequels

What would Joe Biden actually do with a second term?

He has a domestic agenda, but no easy way to bring it about

Most octogenarians opt for the easy life. 

President Joe Biden is embarking on a gruelling, billion-dollar campaign to win the privilege of continuing to work until he is 86. 

To what end exactly? 

In his previous campaign, in 2019, Mr Biden said he wanted to save “the soul of the nation”—by which he meant depriving Donald Trump of the presidency. 

Mr Trump’s revenge candidacy this year has prompted Mr Biden to revive his old pitch. 

Our election model suggests the president has only about a 30% chance of securing re-election, although a debate between the candidates on June 27th could cause the polls to shift. 

A second victory for Mr Biden would properly vanquish his nemesis. 

But it would also leave the president with four more years in the White House. 

What would he do with them?

It is common for presidents to struggle to enact their second-term agendas. 

George W. Bush did not get far with plans to steer federal spending on health care, retirement and education to the private sector, for instance. 

Barack Obama’s second term, of which Mr Biden had a front-row view as vice-president, was an endless sequence of fiscal battles with a Republican Congress, ending in a final humiliation when the Senate refused even to vote on Mr Obama’s nominee for a vacant seat on the Supreme Court.

Perhaps that is why, after pitching wholesale reform of the American economy in 2019, Mr Biden is being unforthcoming about his ambitions for a second term. 

In campaign speeches he likes to lambast Mr Trump and boast about his lavish spending on greenery. 

But he offers fewer specific pledges about the future, bar a promise to restore the right to an abortion, which the Supreme Court yanked away in 2022. 

The Biden campaign’s website lacks a policy or issues page, whereas the website of Mr Trump, a man who could not be accused of wonkery, has several.

Bruce Reed, the president’s deputy chief of staff, says, “Biden got more done in the last three years than most presidents have accomplished in two terms.” 

He casts the president’s plans as building on a legacy of helping the middle class: creating a $10,000 tax credit for first-time homebuyers, extending the capped prices the elderly pay for insulin and some prescription drugs to all Americans, banning “junk fees” that push up the price of services and shielding ordinary Americans from tax rises while making the rich and big business pay more. 

It is all sensible enough, but not exactly a new New Deal.

The Edge of Reason

There could be tactical reasons for reticence. 

With voters so polarised, Mr Biden may be calculating that grand policy ideas simply invite attack and will not win many over. 

Voters are unhappy with an economy that is the envy of the rest of the world. 

They praise him and Mr Trump equally for investing in infrastructure, even though Mr Biden did and Mr Trump did not. 

If actual achievements do not earn him any credit, promises are unlikely to either.

It is nonetheless possible to infer what Mr Biden might do with a second term, based not just on his campaign’s few pronouncements, but also on his past actions and his choice of advisers. 

Much will depend, naturally, on which party controls the Senate and the House of Representatives. 

Mr Biden will also be able to make policy by executive fiat, although that power may soon be curbed by the courts. 

In any case, he does have an agenda, and not an altogether anodyne one.

At the moment, Democrats control the Senate by a single seat, while Republicans control the House of Representatives by five. 

Democrats have high hopes of recapturing the House, given the chaotic infighting among the Republican majority, but retaining the Senate is unlikely. 

A Democratic seat in West Virginia is as good as gone and seven other Democratic seats are vulnerable. 

There are no especially vulnerable Republican seats to compensate. 

If Democrats defend all seven seats, the chamber would be evenly split, 50-50. 

If Mr Biden wins the election, the vice-president, Kamala Harris, would then be able to break ties in their favour.

A near-perfect defence is not impossible. 

Democrats did not lose any seats in the mid-term elections of 2022—and in fact gained a vulnerable Republican one—as a result of the Republicans’ abysmal candidate selection and popular anger over abortion. 

Mr Biden could still get things done with a 50-50 split, as he did during the first two years of his presidency, when he pushed through both a big stimulus and the Inflation Reduction Act, which despite its name was an ambitious law to cut America’s emissions of greenhouse gases.

In fact, a 50-50 Senate under Mr Biden might be even more energetic in 2025, since Democrats would probably weaken the filibuster, a parliamentary rule that in effect requires a supermajority of 60 to pass non-fiscal laws. 

The two biggest opponents of reform on the Democratic side, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, are leaving office. 

Democrats are already talking about scrapping the filibuster to pass a law reinstating a nationwide right to an abortion.

If Democrats controlled Congress and the White House, they would not stop at that. 

Mr Biden’s nostalgia for labour unions, up to this point largely rhetorical, would be channelled into the pro Act, which would overrule states’ “right-to-work” laws, making it easier for unions to organise. 

Congress would probably also empower the National Labour Relations Board, a government agency, to fine employers. 

A pledge to increase the federal minimum wage for the first time since 2009, from $7.25 an hour to $15, is another item on the agenda.

Fury Road

The Democrats also have a long fiscal wish-list. 

“It’s time to restructure the tax code and use the revenues to invest in a stronger country, in child care, health care, housing and fighting the climate crisis,” declares Elizabeth Warren, a Democratic senator from Massachusetts. 

She is a standard-bearer of the progressive wing of the party whose allies hold many big jobs in the administration. 

“The key is more revenue,” she says of the president’s agenda for a second-term. 

“It’s not like we need new ideas for how to do this. 

We need the backbone to tax the wealthy and the giant corporations that have figured out how to make paying taxes optional.” 

That, she hopes, includes taxing wealth directly. 

Mr Biden has proposed increasing the main corporate-tax rate from 21% to 28%, introducing a “billionaire minimum tax” and eliminating various loopholes for the wealthy. 

The revenue could in theory be used to plug America’s gaping fiscal deficits, though in practice Democrats might be tempted to spend much of it on child-care subsidies, universal pre-school and other schemes Mr Biden advocated unsuccessfully in his first term.

More likely, however, is a Republican-led Senate that would ignore Mr Biden’s social policies and force him to rein in his budgetary ambitions. 

The obstreperousness of such a Republican majority is hard to predict: it would be coming to terms not only with Mr Trump’s loss, but also with the end of the long tenure as its leader of Mitch McConnell, who is stepping aside. 

Even so, a new Era of Good Feelings seems unlikely. 

Most policymaking would probably grind to a halt.

But next year big chunks of the tax cuts pushed through by Mr Trump expire. 

That will force Congress, whatever its hue, to legislate. 

Republicans want the cuts extended in full, despite the $3.3trn price-tag; Democrats may trade a more limited extension for pet projects. 

“That’s the train that’s leaving the station,” says Bharat Ramamurti, a former deputy director of Mr Biden’s National Economic Council. 

“If Democrats want to do something on paid family leave, on child-care affordability, on housing supply, that tax package becomes the opportunity to do that.”

Democrats might be able to extract a corporate-tax rise in exchange for preserving lower tax rates for individuals. 

Or they might demand more spending, a scenario which could “quite plausibly” increase the already yawning deficit, says Jason Furman, the former chairman of Mr Obama’s Council of Economic Advisers. 

In addition, it is possible to imagine the odd agreement on other bits of legislation, especially if they tap into bipartisan hostility to China and free trade. 

Further subsidies for domestic semiconductor manufacturing or steelmaking might fit the bill. 

“You could see momentum on Capitol Hill for some type of carbon tariffs on imported products,” particularly if the European Union implements its own carbon border adjustments, says Todd Tucker of the Roosevelt Institute, a progressive think-tank.

Otherwise, Mr Biden’s main resort for domestic policymaking would be the president’s existing regulatory authority. 

He is already a prolific rule-maker. 

According to data from the Regulatory Studies Centre at George Washington University, his administration has issued 273 “economically significant” regulations, almost double Mr Trump’s tally at this point in his tenure and the most in any presidential term in the past 40 years. 

The margin would be even more lopsided had Mr Biden not redefined “significant” to mean affecting $200m of economic activity instead of $100m.

It is in this realm that a second Biden term might have the most impact. 

The president has put ideological allies of Ms Warren at the head of various regulatory agencies. 

They, in turn, have interpreted their authority expansively, to the ire of business. 

New edicts include much stricter limits on carbon emissions from power plants, a broader definition of workers who must receive overtime payments and a requirement for big publicly traded firms to reveal their carbon emissions. 

Although many ceos acknowledge what they politely call the “tail risks” of a second Trump presidency, they are reluctant to back a president who aims to raise their taxes, bolster unions and regulate with zeal.

“We’ve been going back to the original statutes, making sure that we’re fully exercising [their] provisions,” says Lina Khan, the head of the Federal Trade Commission (ftc). 

Her agency, she notes, has the authority to investigate any “unfair or deceptive acts or practices”, not just actions that raise prices or reduce choice for consumers, its recent focus. 

It has banned “non-compete” agreements, which prevent workers defecting to rival firms, and is campaigning against “junk” (meaning hidden) fees. 

It has pursued high-profile cases against Big Tech, including against Meta for its domination of social networks and Amazon for its sway over e-commerce.

Ms Khan and Jonathan Kanter, who heads the antitrust division at the Department of Justice, issued new guidelines on corporate mergers in December. 

These are more exacting than the ones they replaced, requiring many more firms to seek permission in advance to merge and greatly expanding the grounds for refusal. 

Ms Khan says the intention was to ensure “that we weren’t falling into a pattern of enforcers handicapping themselves or undertaking really cramped meanings of what their own authority or the law is”.

A second Biden term might entrench this sweeping approach to competition. 

“We were asleep for 40 years, as markets grew more and more consolidated,” says Elizabeth Wilkins, Ms Khan’s former chief of staff. Antitrust cases take years to prosecute and some of the new policies, such as the ban on non-compete clauses, are being challenged in court. 

“Another four years, and we’ll see development of actual case law enshrining some of our interpretations,” Ms Wilkins argues. 

Ms Warren is a fan. “Kahn, Kanter, and their teams have been terrific,” she says. 

“They have enforced the law as written rather than bowing down to powerful corporations.”

Another probable focus for regulators in a second Biden term is the environment. 

The massive infrastructure and industrial-policy bills approved in his first term will not translate automatically into serious emissions reductions, points out Kate Gordon, an adviser to the secretary of energy. 

Doling out tax credits and subsidised loans will take years, as will the dull but important work of easing permitting rules and modernising the grid.

Administration officials also see scope to trim emissions under the Clean Air Act and the Clean Water Act. 

A rule just finalised by the Environmental Protection Agency (epa) obliges coal-fired power plants either to capture 90% of their carbon emissions by 2039 or shut down. 

Rules requiring emissions cuts for new gas-fired power plants will also be coming into effect. 

Once Mr Biden no longer has to worry about getting re-elected, he might impose further constraints on the use of fossil fuels, such as higher emissions standards for cars and factories. 

Some even argue that the president has the authority under existing laws to implement something very similar to a carbon tax. 

(Mr Trump, for his part, has reportedly been asking oil firms to donate $1bn to his campaign, on the understanding that he would call off this regulatory assault.)

Presidential appointments will have a big impact on this regulatory agenda.

Jake Sullivan, the national security adviser, has centralised control over trade, diplomacy and defence within the White House—somewhat disempowering the secretaries of state, defence and the Treasury. 

Mr Sullivan may leave after the election (his wife is running for Congress in New Hampshire) or step into a grander job himself, which could undo the realignment.

Janet Yellen, the treasury secretary, is not expected to stay after the election. 

Her replacement could be Gina Raimondo, the current commerce secretary, who is one of the few members of the cabinet who receives high marks from business, or Lael Brainard, the current director of the National Economic Council and a former central banker. 

Both might have greater sway over policy than Ms Yellen, whose free-market orientation is out of step with the protectionist impulses of the administration. 

Ms Brainard is also on the shortlist to replace Jerome Powell, the current chairman of the Federal Reserve, whose term expires in 2026. 

Trade policy has been moribund under Katherine Tai, the current United States Trade Representative, and largely a continuation of Mr Trump’s blunderbuss mercantilism.

The Empire Strikes Back

The primary constraint on Mr Biden’s regulatory agenda will not be personnel, however, but the courts. 

The Supreme Court, which has a 6-3 conservative majority, has increasingly circumscribed the power of presidents to set policy without Congress. 

In 2022 the court ruled that the epa (and by extension all administrative agencies) could not promulgate economically significant rules without clear congressional authorisation. 

A pending case is expected to weaken further the deference that courts have typically shown to administrative agencies. 

The courts will also consider whether the ftc has exceeded its authority in trying to regulate employment contracts. 

Those irritated by the Federal Reserve’s regulations on banking and by assorted rules from the Securities and Exchange Commission on diversity, pay and greenhouse-gas emissions are also sure to sue for relief. 

Labour unions have benefited from favourable rulings from the National Labour Relations Board, but these, too, will be challenged. 

Given the composition of the court, all these aggrieved parties are likely to get a favourable hearing. 

Conservative justices sceptical of Mr Biden’s use of executive power could stymie him for years—though their influence might wane if there were vacancies on the court for the president to fill with more sympathetic judges.

In 2020 Mr Biden campaigned as a moderate but, once in power, governed in many respects as a progressive. 

Four years on, the president is again expressing moderation on the campaign trail, focusing on the existential stakes for American democracy rather than sketching out a grand vision for his second term. 

This reticence is deceiving. 

Mr Biden does have big plans to put his stamp on America’s business environment, in particular. 

He will just have a hard time bringing them about.