Since the election, Jared Bernstein, the chair of the White House Council of Economic Advisers, has often found himself in a down mood — dealing, he says, with “confusion, guilt” and “cognitive dissonance.”
President-elect Donald J. Trump’s sweeping victory was fueled in part by lousy consumer sentiment and working-class Americans’ frustration with the underlying state of the economy. That is a big blow to the idea of “Bidenomics,” of which Mr. Bernstein was a leading evangelist and architect.
The U.S. economy recovered from the pandemic with greater strength than any of its peers. Unemployment stayed below 4 percent for the longest stretch since the 1960s, and remains low. A widely predicted, long-feared recession never materialized. And data show there is continuing a boomlet in manufacturing construction and business productivity.
But price increases also spiked on President Biden’s watch. Several prominent economists, peers of Mr. Bernstein’s, argue that the administration’s robust fiscal response caused the inflation. And other issues of affordability — especially housing — have sapped the optimism of many households in the last couple of years.
Calling in from Paris on Friday after serving as chair of an economic meeting of the Organization for European Economic Cooperation at the Château de la Muette, Mr. Bernstein, a longtime Biden confidant, spoke with The New York Times about how he is making sense of the moment.
You told me three years ago that one goal of the American Rescue Plan was to intentionally “run the economy with a little bit more heat.” We’ve seen benefits of that, but in light of ensuing inflation, do you regret the size and the scope of the American Rescue Plan?
Twenty-twenty hindsight is an analytical luxury — certainly one we didn’t have in January of 2021. Back then, we had millions of unemployed people. We had Covid deaths peaking. The economy was improving, but it was far from reopened. And vaccinations hadn’t been anywhere near adequately distributed. So the extent of uncertainty regarding the impact of Covid on the economy warranted a very strong rescue plan. And I don’t regret the plan. We certainly got more heat than I envisioned at the time, no question, but we also got a lot more growth, less child poverty, fewer evictions, more business survivals, and a much quicker return to full employment and very little economic scarring.
At times, Democrats’ economic messaging seemed uncertain or torn: bragging about data, but also apologizing for inflation, blaming corporations for higher prices or sometimes Vladimir Putin or supply chains. Doesn’t it make sense, then, that Americans were uncertain about your stewardship, too?
That is not really the way I see it, I guess. I think there are definitely ways in which we talked about the economy that didn’t resonate with what people were going through. But I used to say, back then, “The risk of doing too little was greater than the risk of doing too much.”
And do you stand by that?
Yeah, I stand by that.
The inflation that ensued was largely caused by supply side snarls, but it was exacerbated by strong demand, no question. So I’m not giving fiscal policy a pass. But it’s really important not to overly connect the rescue plan to the inflation odyssey we’ve been through.
Do you think this White House was too antagonistic toward business?
Remember, the corporate sector has been highly profitable over this period. So if we call them out for keeping and not passing savings along to consumers — or if this president finally won a decades-long fight with Big Pharma — that is a source of immense pride. No shame in our game there at all.
Donald Trump convinced enough working-class Americans, across all demographics, that he’s in their corner. How did that happen to your party, which says it still sees itself as a party for workers?
The short answer is I don’t know. I’m still an economist, not a political pundit. I’ve been intensely upset about that development. You may have heard us say, “We get up every day and try to realize the president’s vision of helping the working class.” That sounds like a typical political talking point, but it was basically our agenda for four years.
And the idea that that went so unrecognized, perhaps because the price level ended up being so high when the election came along, is an intensely dissonant set of issues for me.
You could argue that economists and economics reporters should have seen this frustration with the price level — rather than just inflation — coming from a mile away, but you all spent a lot of time touting falling inflation. Was that a mistake?
I understand that disinflation is less satisfying to people when they want their old prices back. I get that, and I’m going to have to deal with that, but at the same time, I do not regret talking about the sharp disinflation, or the strong G.D.P. growth or the historically low unemployment rate. And, you know, the Trump administration is inheriting them in such a way that you’ll probably start hearing about what a great economy this is in a matter of weeks.
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