Getting There From Here: What Comes Next

We’ve done so much, but we’re still somewhere between the neoliberal failure and whatever might come next. Here’s how we move forward.

By Felicia Wong Matt Hughes

Tagged Economicsneoliberalismpandemic

The Pandemic: An End, But Not (Yet) a Beginning

It is 2024, and somehow we act as though the pandemic changed nothing.

We pretend that 2024 is just a worse version of politics as usual. The same political parties and the same policy fights, but more extreme. The same candidates, but older.

That’s a mistake, and a misunderstanding of this generation-defining moment. Today, we have the opportunity to build on what we did right in crisis, learn from what we did wrong, and make our government and governance better. Alternatively, we could choose to look away: to ignore all the insufficiencies exposed by the pandemic, to forget that we took bold actions that succeeded in fighting COVID and in stabilizing people’s economic lives when they could have been in free fall.

It matters—a lot—that we win this battle of ideas. To do so, we need to make the progressive future real and felt in Americans’ daily lives.

The pandemic taught us what that could look like. The federal government produced and shipped everything from medical masks to COVID tests to miracle vaccines, free to the public. It delivered more fiscal relief—to the suddenly unemployed, to small businesses, to cities and towns, to families with children—than any of us imagined possible even a few years before. In the early days of the Biden Administration, these relief policies were very popular across the political spectrum, with more than 70 percent of Americans expressing support.

During the pandemic, government did big things. As such, COVID definitively shut the door on the “private sector knows best” neoliberal mantra that many had never questioned before. This could have been the beginning of a new Rooseveltian era—one where more Americans felt that, with the support of a responsive government, we could tackle our most frightening and daunting challenges.

But that is not where the pandemic left us politically. Because, wishing away all evidence that didn’t fit his hopes for an Easter 2020 reopening of the country, President Trump began to denounce everything from stay-at-home orders to masking. As a result, the most basic and visible tools of fighting COVID—masks and vaccines—became weapons in a war of sense-making. For many, they were tangible examples of how the federal government would, and could, act to save millions of American lives. But for some, masks and vaccines became freedom-limiting virtue signaling, the objects of rage.

Thus began the interregnum. Almost a century ago, philosopher Antonio Gramsci wrote in his Prison Notebooks of an interregnum as a void, a crisis of authority: not only a world without shared governing ideas but a world without trust in any sources of actual, practical, day-to-day shared meaning—the facts reported by the daily news—that make government possible.

Government in 2020 was a source of hope. Government action, mobilized at scale, would help our families, our economy, and our country survive the virus. Government was also a source of chaos and fear. It imposed limits, was sometimes wrong, was led by a President who was selfish and vindictive. But a bipartisan Congress did pass, and Trump did sign, the CARES Act, which sent money to workers, businesses large and small, hospitals, schools, and local governments—ensuring that when the economy did reopen, families had money to spend, and that a cratering in demand did not destroy peoples’ lives.

Nevertheless, we still find ourselves in a transition period between the world that neoliberalism failed and whatever might come next. Life in the interregnum is often terrifying. All that was standing has melted. Everything remains an open question, including the possibility of an authoritarianism that would be unprecedented in America.

From Questions to Answers

If the interregnum is to end in a world that is better, growing in ways that are both fair and equitable, we must move from questions to answers.

  • The answer to economic anxiety is economic security.
  • The answer to economic and social inequality is a rebalancing of power.
  • And the answer to economic shocks, from pandemics to climate disasters, is a government equipped to act, and to do so quickly and democratically.

The work to get us there is already in motion. In the last three years, we’ve seen steady and sometimes unexpected improvements in policy thinking—a sea change. Having internalized the lessons of a slow, painful, and famously “jobless” recovery from the Great Recession, policymakers made economic security central to the American Rescue Plan. A temporarily expanded child tax credit helped drive child poverty to a record low in 2021. Extended and expanded unemployment insurance strengthened workers’ bargaining power. All of this helped create a labor market in which workers could find a job, or a better job, more easily than in decades past.

The Biden Administration has also taken a more intentional approach to rebalancing power between workers and employers: More robust antitrust enforcement is helping to promote competition and curb corporate power and consolidation. A more aggressive National Labor Relations Board (NLRB) is proving vital to burgeoning unionization efforts, and the Federal Trade Commission’s recent ban on noncompete clauses will set workers free from restrictive contracts, raise their wages, and drive small business creation.

And after decades of stagnating public investment and climate action that ranged from negligible to incremental, we’re finally seeing government reckon with the scale of our crises more seriously. The Inflation Reduction Act (IRA) and the CHIPS and Science Act have already boosted green manufacturing and are showing us that we have the power to shape the economy we need to build things together.

These are big wins. But in today’s political climate, they are fragile. They can seem like a hodgepodge, or perhaps politics as usual. If they are to instead become a solid foundation, the beginnings of our path out of today’s confusion, we need to show how they are linked to what comes next: a government that both prioritizes full employment and ensures that families always have what they need to be secure—better and more affordable and accessible child care, health care, and higher education, all at prices that are stable relative to middle-class families’ purchasing power. A government that empowers workers and unions to improve their lot and rebalances what they can’t individually shift: entrenched inequality in our tax code, market failures, and corporate extraction. And a government that is fully capable of making decisions in the public interest efficiently and equitably.

This is not about government for its own sake. It’s about government doing what only it can do, doing it well, and doing it democratically—in other words, not just a government big enough for the challenges we face, but also good governance, making decisions with public input and for the public good. Our democracy only works if people believe that, as Franklin Roosevelt said almost a century ago, “government is ourselves and not an alien power over us.”

An increasingly bold conservative vision for the future asserts otherwise. A mixture of twentieth-century small-government libertarianism and Trump-era suspicion of a disloyal “deep state,” today’s conservatism advocates for a hollowing out of public revenue with more tax cuts for the wealthy and corporations, and a wholesale dismantling of much of the federal government and civil service.

Over the last three years, we have learned a lot about the importance of governance—who governs and how. Neoliberals imagined governance away. For them, the market would decide. Authoritarians imagined democracy away. The strongman would decide. We reject both of these extremes and bring governing—of the people, by the people, for the people—back into our politics.

Below, we list what must come next: Public options, which can bring economic stability and relief from rising prices on the things Americans need most. Rebalancing power between workers and concentrated capital, which can make sure markets work for the middle class and that we raise enough public revenue to pay for essential, pro-productivity public goods. And finally, governance itself: the democratic state we need and deserve.

What Comes Next

1. Public Options: Some Things Must Be Publicly Paid for and Publicly Governed

Equality of opportunity can’t be achieved by simply leaving people alone…. In an age of rising inequality, public options are a way to ensure that every American has access to some of the basic preconditions that are essential for having a meaningful opportunity to succeed.

– Ganesh Sitaraman and Anne Alstott

The sheer amount of money that the federal government has authorized since 2020 has been staggering. Including the CARES Act and the American Rescue Plan (ARP), federal money to support rebuilding the economy totals more than $6 trillion. But beyond scale, we should pay more attention to the design of programs that spend that money. The vast majority have fallen into two categories: 1) fiscal support, essentially income subsidies during a crisis (this constitutes most of CARES and ARP); and 2) tax credits, essentially indirect incentives for businesses and consumers to change their investment and spending patterns (the IRA).

If we want to ensure economic security for all, we’ll also need to think more structurally and reembrace the lost art of public options.

Public options should be just that: public services, like education or health care, that are publicly provided and administered; and options, in that they are a choice that Americans can make. As Ganesh Sitaraman, longtime policy adviser to Senator Elizabeth Warren, and legal scholar Anne Alstott note, not every service or good should be publicly provided. But public options are an excellent policy choice where access is important to our democracy and our economy, where markets often fail to provide universally or equally, and where government can, in fact, be held accountable for price, quality, and access.

Public options have a long and proud history in America. Many critical services in Americans’ day-to-day lives are provided by public sources, paid for by tax dollars, and governed by publicly accountable officials. Social Security, established by Franklin Roosevelt in 1935, is a public option to support people in their retirement. Medicare and Medicaid, signed into law by Lyndon Johnson in 1965, are public options to help elderly and impoverished Americans afford health care. The history of public elementary and high school education as a norm extends even further back, to the 1870s; today, the vast majority of children under the age of 18 attend public school, as do those who go to college, with 81.1 percent of the nation’s 17.3 million college students attending public college in 2022.

But as neoliberalism denigrated public solutions and valorized the private beginning in the 1980s, our collective ability to establish, support, and fund public options has weakened. Many once-great public options—like flagship university systems that, 50 years ago, educated large majorities of graduates in our biggest states—have languished, struggling with costs, quality, and overcrowding. Other public goods and spaces, which might bring diverse Americans together, have been deliberately shuttered, as in Heather McGhee’s oft-cited example of cities across the country draining their public swimming pools rather than integrating them. And some, like our patchwork public health insurance offerings, simply are not working for enough people.

Now is the time to improve and expand our existing programs. Now is also the time to create brand-new public options.

Public options can help fill the gaps in modern family life. Who cares for our children, for our elderly parents, for those who are ill? Women of childbearing age, who historically were caregivers, began to move into the workforce in record numbers in the late 1970s, just as the neoliberal age began, but neoliberalism had no answer to the care question. Instead, we expected women, mostly, to do more, and we provided limited financial support that subsidized broken, inefficient, and privatized child care systems. During neoliberalism’s heyday, modest and conditional government funds would, at best, top off private market services—and, perversely, family-oriented safety net programs required that parents work to receive benefits.

The Federal Reserve’s latest report on economic well-being shows that around 40 percent of parents of younger children—in both two-income households and single-working-parent households—used paid child care in 2023. The aging of our population means that an increasing number of elderly Americans will need care, as will nearly 30 percent of Americans with a disability. More direct public provision of care, which is common in many other OECD countries, provides an answer. Universal pre-K is one important step toward the option of fully public child care. Universal care insurance could help stitch together and strengthen our patchwork of incomplete programs, public and private.

Higher education is another sector that is critical to both our economy and our collective civic health. Colleges and universities face a range of financing problems: less state funding, especially for public universities; rising costs overall, from salaries to deferred maintenance; a greater dependence on tuition; and fluctuating enrollment numbers, which were trending downward and made even more challenging by the disruption of the pandemic. The stratification of American higher education is also an enormous problem. Elite schools actually enroll fewer than 5 percent of all students. Financially, elite schools with enormous endowments are pulling away from the vast majority of colleges and universities. At the same time, state and federal funding for higher education is dropping, tuition is rising, and more students do not see college as a wise investment. The economic and academic crises across the sector are deepening, increasing the calls for free community college and other kinds of tuition-free options.

Public options can, in some ways, be better than private ones. They remove the profit motive, which, especially in poorly structured markets, leads to extractive behavior on the part of firms. The private equity takeovers of medicine, with disastrous consequences for providers as well as for patients and families, provide a cautionary tale. More and better public options can also discourage the kind of elite hoarding behavior that happens when a few elite private schools are the only good choice for students. Certainly, in the mid-twentieth century, when California’s higher education system was best funded, it was a catalyst for more equitable economic opportunity throughout the state. And finally, strong public options that are clearly public, rather than problematically invisible and submerged, can help build political support, with positive feedback, for policies that are equity-enhancing and can lead to more economic growth as well as more social cohesion.

Of course, public options alone are not a panacea. We know that unless we pay close attention to race and other drivers of stratification, public systems—like schools and housing—can replicate and worsen racial segregation. Whether and how we design public options and public goods so that they create more of what McGhee calls the “solidarity dividend” is not easy.

But we are now in the aftermath of one of the biggest, most successful experiments in fiscal expansion in U.S. history—the overall COVID relief effort, and the CARES Act and the ARP in particular. We know that social support for American families can yield tangible benefits, keeping workers in their jobs and people in their homes, reducing poverty and hunger. Now is the time to make such provision more visionary, public, and permanent: to show that we can be an America that is more equal, such that, in this time of enormous national wealth, we can provide more economic guarantees for all our people.

2. Power: We Must Shape Better Markets, Raise More Revenue, and Rebalance Our Economy

Consumers, workers, and entrepreneurs can all benefit from a system where large incumbent firms are subject to more sustained competition and consistent pressure to either improve their products or lose ground to competitors. 

                                    – Bharat Ramamurti

Building countervailing power has long been a part of the progressive playbook. Teddy Roosevelt understood the political and economic importance of trust-busting. Franklin Roosevelt spoke directly to the “speculators” and “monopolists” of his day, saying, “Government by organized money is just as dangerous as government by organized mob.” Government’s tools for rebalancing include building labor’s power to contest for higher wages and elevate worker voices, using antimonopoly authorities to curb corporate dominance and extraction, and using its unique power to collect the revenues it is owed and that it needs.

Rebalancing power is just as critical today. This won’t just undo decades of inequality: It can proactively shape a fairer and more innovative economy, and the revenue it creates—both through the tax code and through higher productivity—can fund the kinds of smart public investments we need.

To balance capital’s overwhelming power, government can and must be both a countervailing force and an enabler of other forces. Here, we name three: the power of labor, the power to shape markets, and the power to tax. We have already made progress, but much remains to be done.

Since 2021, labor power has grown in important ways, with the new economic policy approach throwing a one-two punch to strengthen workers’ hand. The first is a full-employment economy, thanks in large part to the American Rescue Plan. The second is more support for striking workers, from better rule-making at the NLRB to the President himself walking a picket line. But notwithstanding the uptick in labor organizing and the popularity of unions in the last several years, union density remains at a historic low. In 2023, private-sector unionization remained at just under 7 percent, while public-sector unionization decreased slightly to 36 percent.

Continuing to strengthen labor power requires reforming labor law, making it easier for workers to form a union and to strike and harder for employers to punish union members. This is central to the worker-forward vision of what is next. Union density would increase, and more workers could be part of the economic and social solidarity that unions provide. Worker demand for unionization is certainly there. Survey data suggests that approximately 60 million workers—or about half of all nonunion, nonmanagerial workers—would vote to unionize if they could.

Stronger government efforts to combat capital’s dominance by promoting more market competition are also key. Market concentration is at historic highs, harming both consumers and workers. According to data from 2017, over the last 25 years, more than three-quarters of U.S. industries grew more consolidated. Research has shown that markups—the difference between the cost of producing a product and what it sells for—have tripled in the age of neoliberalism, from 21 percent above marginal cost to over 60 percent. U.S. government data, as well as academic research, suggests that this may be decreasing workers’ wages by as much as 20 percent.

As Bharat Ramamurti—deputy director of the National Economic Council from 2021 to 2023—notes, the executive branch in the last three years has already made great strides toward a stronger stance on monopolies. A 2021 Biden executive order established a whole-of-government competition policy that fundamentally reoriented many federal agencies, and the Federal Trade Commission has led an intellectual shift to shaping markets so they are less concentrated, more innovative, and more fair. What’s next, Ramamurti argues, is to continue to strengthen enforcement across the government and especially in the federal judiciary, and to focus on governing the fast-moving and potentially transformational new fields of artificial intelligence and information technology—where a handful of big, well-capitalized firms currently dominate.

And finally, an important part of rebalancing power—perhaps the spine—is taxation. Over the last half-decade, American neoliberalism has not only starved or privatized services from education to health care; it has also driven U.S. public revenues to extreme and irresponsible lows. The United States is one of the lowest-tax nations in the OECD, with tax rates yielding federal revenues of approximately 17 percent of our GDP. In the long run, experts, from senior tax and budget adviser at the Office of Management and Budget Michael Linden to Nobel laureate Joseph Stiglitz, agree that we probably need to raise that percentage to 21 or 22 percent of GDP. An increase of four points of GDP would yield approximately $13 trillion over the next decade.

Getting there is entirely possible, at least as a matter of economics. President Biden has proposed tax increases that would raise nearly $5 trillion over the next decade by raising taxes for the wealthy and corporations. While these are ambitious, they are not exhaustive. Biden has proposed raising the corporate tax rate to 28 percent, though as recently as 2017, it was 35 percent, and between 1950 and 1987, it was at least 40 percent. Biden has proposed a sort-of wealth tax that would tax the wealth of individuals worth more than $100 million by requiring that they pay at least 25 percent of their income, including unrealized capital gains, raising about $500 billion over a decade. Other existing wealth tax proposals would raise between six and nine times that. The top individual income tax rate is just 37 percent, while economists Peter Diamond and Emmanuel Saez have argued that an optimal top rate would be 73 percent. Several proposals to raise the top rates would raise between $164 billion and $800 billion over a decade.

How far we can get and over what time period is much more a matter of politics. We’d prioritize revenues to pay for new investments because these would enhance the productivity of American workers and be good for the economy. But we understand that the future debate across the center-left will be about how to prioritize other categories of potential need, including revenues to pay for reducing the deficit (a deficit driven in large part by decades of neoliberal tax cuts) and also revenue to pay for continued lower taxes for Americans who make less than $400,000 annually.

But this is the right argument to be having: Let’s imagine what our economy and our society could look like if we had $12 trillion more in revenue over ten years, and if we spent it on public goods that strengthened people’s economic security, and their belief that government was working for them. That is what rebalancing power will look like in real, everyday life.

3. From Government to Governance: Making Good Decisions in the Post-Neoliberal Era

State capacity has always been central to progressive governance. And when we talk about government as progressives, it can’t just be a story about all the ways in which government is good. I think it has to be a story about the ways in which we need a different government to serve the values that we all ought to believe in.

– K. Sabeel Rahman

Our vision for the American future is different than the neoliberal past. It must build on the progress we have made. In the murkiness of our interregnum, the certainty of the past seems alluring, but turning back is not an option.

In the future we see, the American people would be able to choose publicly provided, affordable options for things that are currently expensive, like child care or higher education, or impossible for many working people, like access to capital or homeownership. Economic power—especially the power to control and shape markets—would be more balanced, with less capital going to already powerful firms in concentrated sectors and more going to labor, smaller business owners, and innovators.

Whether we can have this future will depend on our ability to govern ourselves well and democratically. It is worth separating out the two elements.

  1. We need government: strong, coordinated institutions with sufficient capacity to implement policies, problem-solve, and adjust to changing circumstances.
  2. We also need democratic governance. Our government institutions must be run by public servants who will work together to achieve big things, can take public input—and ultimately can decide and make things happen on reasonable timelines.

In short, we need state capacity. Investing in this will not be easy.

The federal role in supporting what and how we build has been at the center of the political conversation since the beginning of the Biden Administration. Notably, some liberal-progressive observers worry about whether we can build quickly, smartly, effectively, and publicly. Conservatives will have none of this, asserting that the “administrative state” is America’s biggest enemy, by definition captured and dangerously unaccountable.

As K. Sabeel Rahman—head of the Office of Information and Regulatory Affairs from 2021 to 2023—has noted, the fight all parties are waging over whether we have the state capacity to build quickly and well, and who gets to be part of that decision-making process, is not just about individual policies. This is the deeper push and pull—in some ways the deepest—of the new economic paradigm. After elected officials make a decision to do something (“policy”), can it actually be done? “Capacity,” notes Rahman, “does not automatically result from the mere articulating of a policy goal. It must be constructed and built.”

We know that strengthening government is possible. In the last several years, against all odds, we have seen the Biden Administration construct and build remarkable capacities quickly. To distribute the COVID vaccine. To provide direct economic support to millions of American children and families through the child tax credit. To build an entirely new system to negotiate and distribute almost $40 billion in semiconductor money. To begin to rebuild—against huge partisan opposition—the IRS, with more employees and new technology that drastically cut wait times, cleared backlogs, and served hundreds of thousands more taxpayers in person.

Our historical successes offer vital lessons for today. Roosevelt’s New Deal wasn’t just about a particular policy or even a particular suite of policies. It also wasn’t just about reimagining the idea of government in people’s lives. It was about building, staffing, and running government institutions that got things done.

The Civilian Conservation Corps employed three million people, mostly young men, over almost a decade, planting hundreds of millions of trees, preserving forestry, and developing environmental tools. The Works Progress Administration employed millions more Americans to build roads and bridges, waterworks, and other infrastructure, and to write, paint, and create music and theater. FDR’s state capacity was certainly not perfect, reflecting and, in some ways, enforcing existing discrimination and racism. But the Roosevelt Administration built state capacity out of nothing, and even today, the post offices we send our mail from or the reservoirs that hold our drinking water are part of the American landscape.

Our new paradigm is about government as a set of institutions, because new thinking will not be realized, at scale, without institutions to help shape and structure people’s new normal. We have seen big successes intellectually about the role of the state in providing funding when and where the market cannot; balancing power between capital and workers; and promoting multiracial democratic inclusion as an antidote to centuries of anti-Black exclusion.

As Rahman has noted,

The task of building new and different state capacities requires more than just rethinking some excess procedures or outdated systems. It will also require building whole new capacities that do not currently exist—for example, in service delivery, national planning, or in the ability to address other structural demands for equity and inclusion.

Certainly, some progressive critiques of the state are absolutely valid. Some parts of state power, including mass incarceration, should be dismantled. And some federal processes must be streamlined, updated, and made technologically relevant for the twenty-first century. But arguing that the federal executive should not exist except in the barest form or hoping that an objectively small number of legislators, each of whom runs her or his own office without truly deep coordinative structures, can deal with the complex problems of our century: All of this is so untenable that it verges on unserious.

The American fight over federal power has deep roots and goes back to the nation’s founding. The anti-administrative state sentiment has very deep roots. But look at the size and scope of the problems we face as an American public: privatized AI moving faster than even its inventors understand, climate change making whole parts of the country less and less habitable, and a politics that seeks to destroy rather than to build.

Our belief is that a better-resourced government with greater capacity and our nation’s best talent is essential to making headway on some of these problems. True, it is difficult when the core political argument we are having is about the validity of government and governing itself. But almost by definition, state, local, and private actors alone cannot solve the large, common-good problems we face as a nation.

Escaping the Interregnum

One of the many open questions of this interregnum is whether the positive changes in thinking that we saw in 2020 and 2021 will be durable. Elected officials from both parties moved money directly to families, workers, and small businesses in our nation’s hour of greatest need. The Biden Administration designed and passed some of the most ambitious laws in the history of our country, using public funds to combat climate change, to rebuild our physical infrastructure as well as our science and technology infrastructure, and to onshore the supply chains for some of the most complex manufacturing on the planet. The goal, not always fully realized but still admirable, was always to pay attention to equitable distribution.

For 40 years, this approach was unthinkable.

These ideas were made possible by scholars who argued for a new, worker-forward macroeconomics, embraced public agencies for national planning, and showed that full employment and industrial policy are possible. The ideas were also made possible by movements that imagined and championed a higher minimum wage and a Green New Deal, and that declared that Black Lives Matter, bringing together a multiracial coalition to demand action.

The great hope of this moment is that these changes in thinking are bigger than any one person or presidential term. And the great fear is that these changes will evaporate until even those who pay close attention to politics and policy forget their impact.

As the transition from New Deal liberalism to Reagan-era neoliberalism showed us, backsliding can ripple for generations. The costs are many: impoverished and more fragile conditions for children and families; trillions lost in economic growth; and perhaps most importantly, the erosion of the notion that we can act collectively and democratically to tackle big things together.

We’ve learned a lot about ourselves as a nation since 2020. We have a deeper understanding of what government can do, of what it should do, and of what it has yet to do. We also have a deeper understanding of what happens when we abdicate all responsibility for reasonable governance.

To get to the other side of the interregnum, we must continue the hard work of building government and improving governance. They are essential for the functioning of our economy and democracy—our society—in equal measure. The year 2020 and its aftermath taught us that the economics, as it turns out, are the easy part. The question is less whether we can “afford” things than whether we can shape our politics and our society such that our ideas for building the new economy can become fully real.

Can Americans come closer to a common vision for how to make decisions and where to put our collective chips? We believe we can, and that this will take us out of the interregnum and back into a perhaps contested but nonetheless shared reality.

Read more about Economicsneoliberalismpandemic

Felicia Wong is President and CEO of Roosevelt Forward.

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