President Biden’s State of the Union address comes at a turning point for the economy. Although fiscal stimulus was right for the economy in the depths of a pandemic recession, continuing to pursue legislation and executive actions that increase rather than reduce deficits undermines the Federal Reserve’s progress in controlling inflation. After a midterm in which a plurality of voters in exit polls ranked inflation as their number one concern and gave Democrats poor marks for their handling of it, Biden should use his speech to show that he will do the hard work to regain credibility on the issues of responsible fiscal management and inflation control. One way he could do this is by announcing a commission to review the recovery response and how policymakers can better address recessions and inflation in the future, which is an idea first proposed by PPI and endorsed in the New Democrat Coalition’s Inflation Action Plan last year.
The president also needs to lay a clear marker for the upcoming fight over the federal debt limit. He is right not to reward Republican hostage-taking with the full faith and credit of the United States. But with annual interest payments on the national debt set to eclipse defense spending by 2030 and Social Security by 2050, Biden should outline a process for better budget negotiations, such as the Responsible Budgeting Act and the TRUST Act, that he is willing to engage in good faith after Republicans take the threat of default off the table. Getting our fiscal house in order would help control inflation today and boost economic growth over the long term.
Finally, Biden should offer a real plan for making access to higher education affordable for all Americans. With the Supreme Court likely putting his attempt to enact roughly half a trillion dollars of mass student debt cancellation by executive action on ice, it’s not enough to simply blame “partisan lawsuits” for his inability to reduce costs and expand access in a responsible and sustainable way. He should challenge Congress to strike a “grand bargain” on higher education and workforce development that controls costs and expands opportunity for workers across the income distribution. This includes both forcing colleges to get more cost-effective and finding new pathways to good jobs for non-college educated workers.
This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here.
