Ross Douthat
Op-Ed columnist for The New York Times

Populism Has No Cure for Inflation

The flare of inflation reported this week, the unwelcome guest still hanging around when everyone was hoping he’d been shown the door, is a useful reminder of one way to understand the Biden era’s frustrations. The administration’s defenders often argue that it has been more successful at legislating and policymaking than it’s given credit for, and there’s some truth to that contention. The trouble is that the White House has mostly been successful at implementing an economic agenda addressed to the discontents of the mid-2010s — even as the problems of the 2020s, inflation above all, have made those issues less relevant to voters’ immediate concerns.
Think of the 2010s as the era of reasonable disillusionment with neoliberalism. The right’s populism and the left’s socialism were hardly models of rigor and consistency, but behind both Donald Trump’s ascent and Bernie Sanders’s popularity lay an array of concerns about problems the existing elite consensus didn’t seem well equipped to deal with — the downsides of free trade and China-America intertwinement, the painfully slow recovery from the Great Recession, the rising costs of healthcare and education.
Much of the Biden administration’s economic agenda has been designed with this constellation of issues in mind. The full-employment stimulus, the big infrastructure spending deal, the experiments with industrial policy, the attempt at student-loan forgiveness, the push for family-friendly tax policy, the trade brinkmanship with China: As much as or more than Trump’s White House, this has been a post-neoliberal administration.
The Sanders left, of course, would say that President Biden’s agenda hasn’t gone far enough. (Where’s single payer? Where’s free college?) The populist right would say his agenda has been undermined by a disastrous border policy and also tilted too much toward the boutique priorities of the liberal upper middle class.
But politically, the debate about whether Biden has gotten the post-neoliberal mixture just right clearly matters less than the fact that a post-neoliberal agenda has no clear answer to inflation.
Instead, all of the ideas that came out of the mid-2010s reckoning with neoliberalism’s limits assume a certain degree of fiscal capacity. Which, in those years, is exactly what we had: more room than the fiscal scolds and deficit hawks assumed for spending and for tax cuts, more room to run the economy hot, more room to debate whether a Green New Deal or a big beautiful infrastructure bill or a pro-family tax code should be the most important populist priority.
But once you lose that space, once inflation makes a comeback, those priorities may still matter — I certainly still want pro-family economic policy and a government that can build big public projects! — but they are no longer responsive to the biggest problem facing voters: prices that keep climbing or just feel stubbornly high, a cost of living increase that doesn’t just affect positional goods like college but hits you at the grocery store, gas station and everywhere else besides.
That kind of problem raises a very different kind of question from the ones raised by socialists and populists in the middle of the 2010s. It’s no longer “What priority are we overlooking that needs policy attention?” Now it has to be “What priority can we live without, what tax could be raised, or what program could be reasonably cut?”
And here it’s yesterday’s men, the old neoliberal shills with their bipartisan commissions and high-minded deficit reduction plans, who turn out to have something to offer, while the post-neoliberal politics of both the right and the left do not. Or not so far, at least: Instead, the populist way is either to blame predatory companies for everything (see Biden’s peculiar spot, posted on Super Bowl Sunday, attacking “shrinkflation” by snack companies) or to make vague promises to cut waste, fraud and abuse (the current Republican position), all the while relying on Jerome Powell’s Federal Reserve to make the hard choices, stepping in where the elected officials of both parties fear to tread.
The hope, for Biden’s fortunes especially, has been that the Fed really can do it all by itself, that post-neoliberal fiscal policy can avoid hard choices as long as monetary policy comes through.
Things may yet work out that way, but this week’s inflation number is a reminder that they quite possibly may not. Instead we may head into the Biden-Trump clash with inflation still a major policy concern, indeed perhaps the policy concern for the voters who will decide the election.
Is any sort of American populism, be it Bidenomics or Trumpism, capable of offering a responsible program under those kinds of circumstances?
I suppose one should say something constructive here, but the answer is pretty obviously no. Instead, if post-neoliberal policymaking is to continue, in either Biden’s second term or Trump’s, it will do so only because of the careful ministrations of the most credentialed, antidemocratic, antipopulist institution in America.
Only the Federal Reserve can protect post-neoliberalism from its own limitations. Only elites can keep populism alive.

The New York Times