Donald Trump’s victory has prompted significant soul-searching among Democrats about the future of the party’s economic policy. The right and healthy response at a moment like this is humility, evidence-based exploration, and an openness to questioning assumptions—not reflexively using a crushing loss to further pad the case for one preexisting policy camp.

This is particularly true for the debate around so-called “post-neoliberalism”—a paradigm that argues for new approaches to fiscal policy and industrial and antitrust policies that are less deferential to traditional market economics. Jason Furman—one of the most brilliant and accomplished economists of this generation—clearly believes that “post-neoliberals” have been guilty of cheerleading their new paradigm at the expense of rigorous conventional economics. While I am far more positive than Furman on post-neoliberal policies like the strategic industrial ones that President Biden implemented, I would have had no problem with Furman simply pressing for greater rigor in analyzing the effectiveness of new economic approaches.

Unfortunately, this was neither the outcome nor the apparent intent of Furman’s recent Foreign Affairs essay “The Post-Neoliberal Delusion: And the Tragedy of Bidenomics.” Indeed, the overwhelming response I heard from those who read his essay was puzzlement over why Furman had written what appeared to them to be a visceral and seemingly personal attack on Biden’s economic team. Perhaps Furman felt some post-neoliberal thinkers were going too far in seeing several of President Biden’s economic policies as transformative, such that he had to focus only on critique as opposed to neutrally assessing the costs and benefits of policy roads taken and not taken. What is clear, in any case, is that his Foreign Affairs essay reads like a legal brief composed by an expert lawyer retained to marshal, cherry-pick, and advantageously frame every fact or contention to support a client or cause.

Why Furman, writing as an ostensibly objective economist, has consistently and furiously taken an anti-Biden advocacy approach is not something I can explain. Yet, as I discuss below, he has for three years been strikingly aggressive and one-sided, blaming Biden’s fiscal policy for post-COVID U.S. inflation with stunningly little recognition of that policy’s clear positive effects or the risks and trade-offs of taking a smaller approach such as that taken during the Great Recession. Other top economists—many of whom Furman has long admired, like Peter Orszag, the former director of the Congressional Budget Office and the Office of Management and Budget—have made convincing cases that inflation was global; that it was chiefly caused by pandemic-related supply issues, not Biden’s American Rescue Plan (ARP); and that the recent fall in inflation—while growth and employment have stayed strong—is nearly impossible to reconcile with a demand-only explanation. To all such arguments or new data, Furman responds only as an anti-Biden advocate. Even when projections he had endorsed that unemployment would need to rise dramatically for inflation to recede proved to be inaccurate, he took pains to credit anyone other than Biden for what was widely recognized as the world’s strongest recovery. And in his Foreign Affairs piece, Furman takes his anti-Biden brief further. While in the past he has simply ignored the positive outcomes of Biden’s economic policies when prosecuting his case, here he cleverly selects and contorts his facts to deny that those outcomes even exist.

Suffice it to say, this is not an article that I thought I would ever write or wanted to write. Jason is a longtime close friend and truly one of the most remarkable minds I have encountered in my life. But his obsession with attacking Biden’s economic policies requires a thorough response, for three reasons.

First, there is a steady willingness on the part of not only Trump economic partisans but journalists to overweight these critiques on the assumption that Furman is being reluctantly brave and independent for criticizing a Democratic Administration. Over the entire course of Biden’s term, Furman was the most consistently cited expert criticizing or taking issue with Biden’s economic policy—more than any single Republican economist or commentator. I certainly understand that as a former senior adviser to President Biden, I will face extra scrutiny when making arguments supportive of his policies. Fair enough. Yet, it is even more crucial for those reading Furman’s critiques of Biden to realize the degree of his anti-Biden advocacy and take an appropriately skeptical and questioning approach.

Two, let’s be honest: When someone as brilliant as Furman decides to concentrate the majority of his energy and talents on a never-ending, never-bending advocacy goal, he is formidable. In the economics world, many people I have spoken to resist taking on Furman publicly not because they think he is right or fair or balanced on Biden economic policy, but because they simply don’t have the time or energy to take on the torrent of selective data they are sure to receive. Nonetheless, it is important to set the record straight, or at least to show the facts that Furman has downplayed, ignored, or mischaracterized in his puzzling obsession with diminishing Biden’s economic policy record and taking down anyone who wants to champion the former President’s economic approaches. I do not expect most readers to wade through my statistics and the blizzard of numbers Furman is sure to respond with and to decipher a clear winner on many issues. But I do expect that many who read this response will see the lengths Furman has gone to—particularly in this Foreign Affairs essay—to downplay, shape, and marshal facts only to support an anti-Biden view.

Third—and most important—the pandemic will not be our last economic crisis. It is important that all of us in the economic policymaking world do our best to learn lessons both positive and negative—regardless of how well-intentioned past policy or policymakers were. As someone who was involved in economic crisis response in both the Obama and Biden Administrations, I have to work as hard as anyone else to be open, honest, and reflective about what could have been done better. It is so important. There were, no doubt, vital lessons learned from the response to the Great Recession that prevented immense suffering and scarring following the pandemic. And, though I believe the data strongly confirms that the American Rescue Plan was not the major cause of high inflation and consumer unhappiness, all of us still need to be open to analysis of how things could have been better—including whether any of the increase in inflation could have been moderated without taking away the many positive impacts of the United States’s fiscal response. One-sided advocacy—for or against—is never going to be the best roadmap to a better path forward.

Furman’s Selective Evidence

The most curious part of Furman’s article is the lengths he goes to not just to blame Biden for inflation, but to downplay and deny the clear positive aspects of Biden’s economic performance.

Growth

Let’s start with economic growth. Furman distinguishes himself as perhaps the only serious economist on the planet who suggests U.S. growth under Biden was only so-so. Furman argues that “Most countries experienced quick recoveries after the initial shock of COVID, regardless of whether they passed large stimulus packages,” and that “compared with other developed countries that are part of the Organization for Economic Cooperation and Development, the United States saw a post-pandemic recovery that was about average in terms of real GDP growth versus pre-pandemic forecasts.”

Really?

The Federal Reserve published an entire research note in 2024 entitled “Why is the U.S. GDP recovering faster than other advanced economies?” The superb U.S. growth Furman argues did not happen the Fed takes as a given, not even requiring argument. That is the level of consensus on this point among economists. These Federal Reserve economists concluded that “the outperformance of the U.S. is largely due to strong final consumption and strong domestic investment.” They further explain: “Canada, the U.K., and the euro area have not returned to their projected pre-pandemic levels, and so far, their current trends appear somewhat flatter—implying that real GDP is growing at a slower pace than before the pandemic. In these countries, real GDP may be on track to be permanently below their projected pre-pandemic trends and, so far, their total output losses have only increased over time.”

Likewise, the International Monetary Fund (IMF) reported that “The US is the only G-20 economy whose GDP level now exceeds its pre-pandemic trend.” The managing director of the IMF herself reported last June:

The performance of the U.S. economy…has been remarkably strong. Activity and employment have exceeded expectations, and the disinflation process has proven less costly than most feared…. This is good for the U.S., and it is good for the global economy…. The Fed’s efforts were aided by important gains in labor supply including of women and strong productivity gains. This is what makes U.S. economy [sic] so remarkable vis-a-vis its peers.

The Economist, not exactly a post-neoliberal magazine, wrote a special report in October 2024 titled “The American economy has left other rich countries in the dust.” The authors note: “Since the start of 2020, just before the covid-19 pandemic, America’s real growth has been 10%, three times the average for the rest of the G7 countries. Among the G20 group, which includes large emerging markets, America is the only one whose output and employment are above pre-pandemic expectations.” While The Economist shares the view that the entire U.S. fiscal response “overdid it,” the report notes that “it is impossible to explain America’s mighty economic engine without acknowledging the government’s willingness to step on the accelerator pedal when it has sputtered.”

No other country comes close. China and especially European economies have seen growth fall well short of pre-pandemic trends. Even smaller and emerging economies have only recently seen real GDP consistent with their pre-pandemic growth rates.

Furman mentions none of this. Instead, he cleverly finds a single OECD chart that compares U.S. growth to what it was projected to be before the pandemic hit and uses this alone to assert that U.S. growth was only average. This is Hall of Fame cherry-picking. Ignoring all the overwhelming evidence of very strong U.S. growth in favor of one study that compared that growth to a single pre-pandemic projection is a stretch Rose Mary Woods would be proud of.

Unemployment

Furman’s approach to unemployment is even more curious. His essay deploys this supposed dagger: Even with aggressive fiscal policy, unemployment was worse under Biden in 2024 than it was in 2019. To quote John McEnroe, “He cannot be serious.”

To start, judging Biden’s record on unemployment by comparing a moment in time in 2019 and one in 2024 makes little sense. This is because 2019 was the tenth year of a jobs recovery that had improved gradually over many years. The year 2024 followed an unprecedented pandemic.

But even if one decided 2019 was a legitimate point of comparison, why ignore the fact that the Biden unemployment record is stunningly and historically strong? In 2019 the average unemployment rate was 3.7 percent. Each of the two years after the passage of the ARP in 2021, the unemployment rate was lower than in 2019—an average of 3.6 percent. To be clear: This was the lowest unemployment in over 50 years. In other words, immediately after an extremely painful pandemic, the United States experienced its two lowest years of unemployment since 1969! This is remarkable and was hardly preordained. Right before passage of the ARP, the Congressional Budget Office (CBO) forecasted that without the package, unemployment would not reach under 4 percent until we were approaching 2026. Instead, it averaged 3.6 percent for all of 2022 and stayed under 4 percent for 27 months in a row—the longest such streak in over 50 years. Black unemployment—instead of staying historically high for years, as it did after the Great Recession—was at its lowest rates on record in 2023 and 2024. We can debate many things, but any critique of the Biden unemployment record cannot be seen as serious or objective.

Debt

In his strained effort to criticize as much of the Biden record as possible, Furman even complains in his opening that under Biden, government debt was “higher in 2024” than it was in 2019.

Gee, did anything happen between 2019 and 2024? Perhaps the first pandemic to shut down the entire world economy in modern human history?

Furman and virtually all fiscal experts know that government debt had already skyrocketed by the time Joe Biden set foot in the Oval Office due to Trump’s pandemic response. Biden would have had to engage in Great Depression-inducing fiscal austerity to bring debt below 2019 levels. Even putting aside the pandemic, there has not been a single year since 1957 when total government debt has decreased, including during Clinton’s years of balanced budgets and surpluses. Why would someone claiming to be objective make such a point as a critique of Biden economic policy?

As Brian Deese recently wrote, this type of mischaracterization on debt does real harm in the current political environment. With the Trump Administration now seeking to increase deficits through major tax cuts for the well-off that it isn’t even pretending to pay for, economists like Furman should be stressing the degree to which Biden—like Barack Obama—sought to pay for his major non-recovery initiatives. The Inflation Reduction Act broadened the corporate revenue base and lowered Medicare spending through prescription drug reform while enacting historic reforms to the Internal Revenue Service. The bipartisan infrastructure bill and the CHIPS Act were only not paid for due to Republican resistance, not because Biden refused to put forward offsets. As is so often the case, Furman continually makes his anti-Biden points in ways that seem almost designed to be weaponized by Republicans—even when those points will predictably be used to justify economic policies that Furman himself opposes.

Infrastructure

Furman breaks new ground—so to speak—with the startling claim that despite Biden’s major bipartisan infrastructure bill, his “putative building boom was in reality a building bust.” If this seems not credible, that’s because it isn’t. Furman uses a selective point of reference, a selective definition of infrastructure, and one very selective, cherry-picked deflation indicator that together allow him to arrive at this dubious claim.

First, he decides that he will judge the benefits of Biden’s infrastructure record by comparing only spending on highways and bridges in 2019 versus early 2024. Then he completely ignores the official deflation measure used in determining real infrastructure spending and zeroes in on one relatively obscure infrastructure deflator to support his soundbite claim that federal infrastructure investment has gone down in inflation-adjusted terms.

Ernie Tedeschi—a widely respected economist and former chief economist on Biden’s Council of Economic Advisers (CEA)—and former Assistant Treasury Secretary for Economic Policy Eric Van Nostrand note that using “the official price index that the Bureau of Economic Analysis (BEA) uses to deflate these data, real highway spending has risen 11 percent since 2019.” They write that Furman uses an “outlier relative to other measures of highway spending costs” to make his claim, ignoring official construction and infrastructure price indexes that reveal an infrastructure investment boom in real terms. They conclude that “at both the Federal level and across all levels of government…real public nondefense investment has risen significantly since the pandemic.”

Beyond the use of this selective indicator, there is a larger question: Why would Furman ignore the full multi-year impact of the infrastructure bill—as well as non-highway commitments such as the record expansion of productivity-increasing investments like universal broadband? Why focus only on highway and bridge spending by early 2024? After all, the CBO finds that “Physical infrastructure funding [is] spent more slowly after being authorized (with 75 percent being spent after five years…).” Further, the vast majority of federal highway funding spends out two or more years after obligation. Did Furman decide to criticize Biden’s infrastructure bill because traditional highway funding did not spend out unusually fast in 2022 and 2023? How would that make sense when Furman’s fundamental critique is that there was too much spending in 2021-23? Is it possible that this definition, time period, and indicator were only used to score points against another Biden accomplishment?

Following the tough critique from Tedeschi and Van Nostrand, Furman has furiously sought to defend his deflator—an effort Tedeschi and Van Nostrand have effectively countered. But for the sake of argument, let’s say it is a respectable deflator to use. Why would someone like Jason Furman make such an argument without even mentioning that the official deflator used to determine real highway spending for GDP accounting showed that real spending increased? Why mention only one exceptionally elevated deflator? Why not mention that the official GDP deflator increased at about one-quarter the rate of the only deflator he used? Why not mention that the Producer Price Index for highway engineering costs increased by close to one-eighth the rate of the deflator he was using? Why not mention that the deflator he used rose close to twice as fast as any other available deflator?

And why not look at highway employment in terms of new workers or hours? (They both went up.) Why not look at highway and bridge contracts in 2022, 2023, or 2024? (They were elevated every year.) Why not investigate whether this major infrastructure bill increased productivity and capacity long-term—or consider what would have happened if Biden had not skillfully passed this bipartisan bill? Why lash out at the Administration for not focusing on the problem of “crowding out” and ignore that the Biden agenda led to historic “crowding in” of private investment to the tune of nearly $1 trillion in private sector commitments and investment?

Perhaps all of the careful selection of what to highlight and what to ignore was just the best way to land the misleading but catchy claim of a building “bust.”

Wages

While the issue of real wages during global post-pandemic inflation is certainly a complex one, Furman’s entire frame is designed only to offer another one-sided argument against the Biden economy. He does this in three ways. First, he builds up a straw man of what those who support full employment believe. Second, he judges post-pandemic performance as if the pandemic had never happened. And third, he fails to even engage with the analysis by top economists that shows momentum on reducing wage inequality during this period.

First: Furman seems to justify the one-sidedness of his arguments by suggesting on X that he is doing a public service by making clear that the post-pandemic period offers a “cautionary tale about the dogma that a hot economy raises real wages—and a very hot economy raises them a lot.” The implication is that there are people who believe both that Biden’s fiscal policy—not supply constraints or the invasion of Ukraine—was the dominant cause of skyrocketing inflation and that this would be good for real wages since labor markets were “hot.” Of course, there is no such army of progressive economists. Instead, there are many serious people who believe that Biden’s robust fiscal response had a moderate impact on inflation, but that this needs to be weighed against the benefits it created in terms of lower unemployment, workers’ increased power to switch to better jobs, less scarring, and better real wages than if there had been a more tepid response.

Second, and most fundamental to his critique, Furman tries to judge the United States not by how real wages performed in light of a global pandemic, but by what the trend was in the best years of the post-Great Recession recovery. This is, as former CEA Chair Jared Bernstein recently wrote, “comparing macro apples to oranges.”

Considering the extraordinary circumstances in 2022—the stress of the pandemic, Russia’s invasion of Ukraine, and historic global inflation—one would not expect real wages to perform well at all during the post-pandemic period. But when you look at the wages of nonsupervisory workers—a group that includes 80 percent of workers and excludes executives—you see that real wages for these workers not only increased but even returned to their pre-pandemic trend during Biden’s term. While Furman is correct that several data series are less positive on real wages than the official nonsupervisory workers series of the Bureau of Labor Statistics (BLS), there is broad data supporting both that real wages were up after 2022 and that lower-income workers benefited most. As Bernstein argues, a fairer view might be to find it significant that we achieved real wage growth during this period of global inflation and to think about what real wage growth would have been against a counterfactual of a weaker fiscal response.

In fact, if one looks at U.S. real wage growth in the post-pandemic world, as the Treasury Department did in January, one can see that the United States was a strong performer on real wages among the Group of Seven (G7) nations—indeed, second only to the United Kingdom. As Treasury economists found:

Real hourly wages in the United States are 4.3 percent higher than in 2019; apart from the United Kingdom and Canada, no other G7 country experienced positive real wage growth of a substantial magnitude over this period. In fact, except for the United Kingdom and Canada, workers in other G7 countries are now earning lower or essentially unchanged real wages on average compared to what they earned in 2019.

And on manufacturing jobs—a key focus of the Biden economic agenda—the United States was first in the G7 in real wage growth since the beginning of the pandemic, while our top manufacturing competitors, Germany and Japan, saw real wages decline by 4.1 percent and 3.1 percent, respectively.

Nor does Furman engage with or recognize the other work and findings—including from Fed Vice Chair Philip Jefferson and MIT economist David Autor—that show that lower-income workers have done surprisingly well since the pandemic and that it was a period when wage growth narrowed historic inequality. Vice Chair Jefferson said this month, “Wage growth for low-wage workers…was strong enough…to drive a meaningful compression in the aggregate wage distribution.” Similarly, Autor and his co-authors Arin Dube and Annie McGrew found that in the recovery from COVID, “Rapid relative wage growth at the bottom of the distribution reduced the college wage premium and counteracted around one-third of the four-decade increase in aggregate 90/10 log wage inequality.” That’s right: One-third of the wage inequality that had grown over the last four decades—gone. As Dube put it, “We haven’t seen a reduction in wage inequality like this since the 1940s.”

Interestingly, some economists, like Adam Posen, believe that the surge in job switching in the recovery from COVID (dubbed the “Great Resignation”) contributed significantly to the recent surge in productivity growth. According to Posen, “The enormous labor market churn of COVID in 2020-21 had the unintended benefit of moving millions of lower-income workers to better jobs, more income security, and/or running their own businesses.”

Considering Trade-Offs and Counterfactuals

The evidence above reveals the positive aspects of the economy that Furman seeks to distort in his Foreign Affairs essay. Yet there’s another, equally problematic aspect of Furman’s ongoing brief against Biden’s economic policies: His failure to even consider the many positive outcomes that might not have taken place in the context of a more tepid response. In one of the most gratuitous attacks in his Foreign Affairs piece, Furman assails many of the colleagues he has worked with for years for not just making wrong choices but discarding “conventional economic considerations of budget constraints, tradeoffs, and cost-benefit analysis.” Yet it is, ironically, Furman’s essay that fails to engage in any serious analysis of the benefits of a more robust package and what the risks would have been to the economy and workers if the government had done too little.

Furman increasingly avoids engaging in this analysis by relying on the assumption that by January 2021, it should have been clear that all things were on the mend. This premise would come as somewhat of a surprise to the working families who were then backed up for miles in their cars waiting for a free meal, the tens of thousands of small businesses and child-care centers that were at risk of closing their doors, the countless cities and counties that were on the brink of painful layoffs, the millions at risk of evictions, the private sector economists who were warning that there remained a real risk of a double-dip recession—and most of all, to so many of us who had previously seen the huge human costs of failing to mount a fiscal response of the right size and to attain fiscal insurance against unforeseen obstacles to recovery.

Below are some of the critical trade-offs and risks that were considered in designing the American Rescue Plan, and some of the specific benefits to millions of Americans that might not have taken place with a modest fiscal response.

Consider the following:

Preserving Labor Force Participation

Furman has long been rightfully concerned about prime-age labor force participation, including as CEA chair. With a pandemic that caused millions to drop out of the workforce, child-care centers to shutter, and many working women to be overwhelmed with care responsibilities, there was a serious risk of a further and more harmful drop in labor force participation post-pandemic. But thanks to the American Rescue Plan, tight labor markets, and a first-ever child-care stabilization program that benefited 80 percent of child-care centers and prevented one-third from permanently closing, things turned out differently.

The result was that in 2024, we had the highest prime-age labor force participation rate since 2001. The prime-age female labor force participation rate in 2024 was the highest ever recorded. And thanks to the historically strong labor market, the prime-age employment to population rates were also the strongest we have seen in decades. The years 2023 and 2024 saw the highest share of prime-age Americans with jobs since 2000. And the share of working-age women with jobs has also reached the highest levels on record. Would all of that have happened without the ARP?

Guarding Against Scarring

Furman asserts that “the recovery was much faster than the long and difficult return from the 2008 financial crisis—a difference mostly attributable to the fact that financial crises tend to have persistent negative effects on output, whereas the pandemic produced only a temporary shutdown of the economy with fewer lasting effects.”

This is a deeply strange sentence, one that bakes its conclusions into its premises. For one thing, it is an odd comparative statement, as there has never in modern history been a pandemic that shut down the global economy. (Because of World War I, even the 1918 Spanish Flu didn’t shutter the economy.) And more importantly, it ignores an obvious possibility: What if the United States did not experience long-term scarring of millions of Americans because of the nature of the response engineered by Joe Biden? (“Scarring” refers to the way that deep downturns and slow recoveries can inflict lasting harm on workers and families, due to economic barriers like long-term unemployment and weak labor markets that cause serious setbacks for those entering the labor market for the first time.)

Indeed, the Federal Reserve found that “Economic performance since the onset of the COVID-19 pandemic has been very heterogenous across countries. While real GDP in the U.S. has already returned to its pre-pandemic trend, advanced foreign economies…experienced a much weaker recovery, both relative to the U.S. and to their own pre-pandemic trend.” The Fed goes on to conclude, “In some countries, the gap between real GDP and its pre-pandemic trend has kept widening, suggesting continued scarring from the crisis as well as some new headwinds.” [emphasis added] Simply put: Federal Reserve economists find that countries with weaker recoveries are at risk of “continued scarring from the crisis.”

Furman’s ongoing refusal to recognize the lack of scarring in the United States as a success of the American Rescue Plan is all the odder given the devastating scarring for long-term unemployed and younger workers seen after the weaker fiscal response to the Great Recession. 

Consider the difference. Long-term unemployment peaked well after the end of the Great Recession (in April 2010) and then averaged six million in 2011, 5.1 million in 2012, and 4.3 million in 2013—by far the highest levels of long-term unemployment recorded since data collection began in 1948. Before the ARP passed, unemployment was at a pandemic high of 4.2 million workers and still on the rise, and we faced a significant risk of an extended period of elevated long-term unemployment. The CBO’s pre-ARP unemployment forecasts suggest that the decline in long-term unemployment would have been significantly slower without the ARP. Instead of the elevated levels of long-term unemployment that persisted for several years after the global financial crisis (GFC), the very year after the ARP passed saw the fastest 12-month drop in long-term unemployed workers on record—a decline of two-thirds to typical pre-crisis levels.

All economists should know by now how critical avoiding long-term unemployment and scarring is to people’s well-being and economic dignity. Evidence has long shown that long-term unemployment leads to more depression, divorce, and lifetime lost earnings. Across entire communities with high rates of long-term unemployment, suicide rates go up, according to an NIH analysis. A review of 99 studies on work found that sustained unemployment over time has a similar or worse impact on an adult’s emotional health than the death of a spouse or divorce and has serious negative impacts for young people.

We’ve also learned over the last decade about the serious scarring that high youth unemployment causes. Berkeley’s Jesse Rothstein and Lisa B. Kahn found that the persistence of elevated youth unemployment as a result of the Great Recession caused long-term damage to the careers of new entrants looking for their first jobs. Rothstein and Kahn found that, for those workers who “graduated” into a persistently weak economy, the recession’s long-term, cumulative effect on their employment was twice as large as the immediate effect. The numbers are staggering. Unemployment for young workers (ages 16 to 24) reached historic highs in the recovery from the GFC, averaging 17.3 percent in 2011, 16.2 percent in 2012, and 15.5 percent in 2013.

In the post-COVID recovery, the strong labor market that the ARP supported has brought youth unemployment down to its lowest levels in 70 years in 2022 and 2023! It averaged around half as high as its post-GFC rates. Federal Reserve Vice Chair Jefferson recently noted that “the number of Americans seeking first-time unemployment benefits has trended at historically low levels for the past three years.”

Furman also ignores the Biden policy initiatives that prevented the immediate pain and long-term scarring of the predicted “tsunami” of home evictions. Biden prioritized an all-out effort to implement the first-ever funded eviction prevention program in the United States. While the end of the moratorium led experts to predict an unprecedented period of mass evictions—which have been shown to inflict multigenerational harm—the novel program actually led to 20 percent fewer evictions over Biden’s first three years than in typical pre-crisis years. The sociologist and Pulitzer Prize-winning author Matthew Desmond called this “the most important eviction prevention policy in American history.”

Too bad neither the word “scarring” nor any of these facts appear in Furman’s broadside.

Providing Fiscal and Macroeconomic Insurance

We learned from the Great Recession that you need enough fiscal support to deal with the unexpected bumps in the road. After the GFC, events such as the unforeseen Fukushima nuclear reactor meltdown, European fiscal crises, higher gas prices from the Arab Spring, and the debt ceiling scare that shook consumer and business confidence all slowed down the recovery—especially with congressional Republicans blocking President Obama’s proposed second stimulus and jobs package. We learned painfully that if there is not adequate fiscal insurance to deal with such hurdles, unemployment can get stuck as it did then—and as we discussed, unemployment and long-term unemployment can stagnate at high levels.

The Biden team, with careful consideration of costs and benefits, chose to make sure there was a fiscal buffer and that fiscal support would be spread out over a few years. And indeed, as with the period following the Great Recession, unexpected and exogenous negative events did take place after the passage of the American Rescue Plan. The United States, and the world, ended up facing two serious new COVID variants and the first invasion of a major European nation since World War II. How sure are we that the economy would have survived these known and unknown unknowns without the length and strength of Biden’s fiscal response? As Goldman Sachs vice chairman and former Dallas Fed President Rob Kaplan explains, “One reason we haven’t had a recession is the substantial amount of fiscal spending that flowed through the system after 2020.”

This insurance helped the U.S. economy avoid the slog that many of our European peers faced. The German economy has been contracting since 2023—with back-to-back years of negative GDP growth—while other European countries barely avoided recessions. While the United States is back above pre-COVID trends, Germany is “8.7 percent lower than trend,” as the Treasury Department found in January. As Germany’s Bundesbank reported in December, “An economic recovery is yet to materialise.”

Thanks in large part to our fiscal insurance, the United States did not face a similar fate.

In 2022, former Fed Chair and then-Treasury Secretary Janet Yellen articulated the consideration of costs and benefits that went into the design of the ARP, noting that when the package passed:

There was still a sense of unease about the future. While we had made progress—millions more were vaccinated—we didn’t know what was to come, and it felt entirely possible that March 2022 would look a lot like March 2021…. It’s easy to think of this as inevitable, that we were assured to have a strong labor market and a stable recovery. But there is a very real counterfactual where any of the numerous challenges we have faced could have stalled our economy. Delta could have sent more kids home from school. We could’ve had a sky-high unemployment rate that Omicron sent higher. Foreclosures and evictions could have been widespread…. In some ways, the ARP acted like a vaccine for the American economy, ensuring that we were inoculated from the possibility of new variants or unforeseen circumstances. When we passed the ARP, we did not know which challenges would come, but we did know that new challenges would come.

Another notable economist, who thought the ARP was too large and yet still apparently felt that it had more benefits than risks, wrote on X in 2021: “I strongly supported passage of the American Rescue Plan & believe it will help make the US recovery among the best in the world. I also think it erred on the side of too much $/month and ephemeral items & not enough months and lasting items…. But saying that isn’t a particularly strong condemnation of the bill—and in fact it may have been great overall.” That economist was Jason Furman.

Preventing State and Local Government Economic Drag

Many economists have expressed the reasonable view that the $350 billion that went to state and local governments under the ARP was larger than it needed to be—even if it was spread out over four years and likely not ever a significant cause of inflation. Yet, this critique is often taken too far by those who do not fully consider the added fiscal demands on cities and states arising from the pandemic, the fact that countless cities and counties had received very little if any support from the end of the financial crisis through the first year of the pandemic, and the need to insure against state and local fiscal contraction becoming an impediment to a strong recovery.

Furman knows all too well that the federal government’s failure to provide adequate state and local support was a major barrier to a strong recovery after the Great Recession. Indeed, it took about ten years for state and local governments to recover to their pre-crisis employment levels. Ten years. In those first key years, we learned that overly constrained spending by state and local governments could significantly slow an economic recovery. The Hutchins Center at Brookings estimates that state and local drag took an average of 0.4 points off GDP growth from 2009 to 2012, with state and local governments losing more than 250,000 jobs in both 2010 and 2011.

Despite this, Furman dismisses the serious cost-benefit analysis that would lead to robust state and local relief. To start, he takes an overly rosy view of the condition of state and local finances because state and local revenues at one point reached around pre-pandemic levels at the end of 2020. This assessment ignores the fact that the United States was down more than one million state and local government jobs in March 2021, and was facing the prospect of a long, slow recovery in state and local employment. It also ignores the fact that, according to the National Association of State Budget Officers Spring 2021 Fiscal Survey of States, half of states were planning or had enacted furloughs, hiring freezes, or cuts of vacant positions due to fiscal constraints. And 70 percent of mayors were facing near-term cuts to important services, according to the Menino Survey of sitting mayors. In administering the American Rescue Plan, I heard directly from innumerable local leaders about the brutal cuts the ARP prevented—ranging from the mayor of Mount Vernon, New York showing me how she was going to be forced to cut ambulances to the mayor of Philadelphia and governor of Hawaii both telling me they were in tears over their planned cuts until it was clear the ARP would pass. This type of fiscal stress was common knowledge to those on the ground.

Furman also disregards another important reality: In a major crisis, state and local governments not only need to fill the revenue hole created by a massive economic slowdown, but also to deal with the additional costs created by social and economic issues arising out of the crisis. After the Great Recession, it was the remnants of the housing crisis, blight, devastated commercial properties, small suppliers who lost everything, and the long-term unemployed. After the pandemic, it was learning loss, a dramatic increase in mental health issues, homelessness, and an unexpected spike in violent crime (which then went down significantly)—all of which local governments had to have more resources to address.

We also know from the Great Recession that too little fiscal buffer for state and local governments can be harmful, as the downturn’s economic effects can appear later in states and cities than in the rest of the economy (or last longer). For example, as the Tax Policy Center reports, “[I]n inflation-adjusted dollars, state and local general expenditures (including federal transfers) grew 4 percent in fiscal year 2009 but then stagnated without sustained support.” A large share of the pain in state and local government finances happened from 2010 to 2012—well after the recession.

The ARP ensured that didn’t happen this time—that state and local governments could add to growth, not diminish it. Unlike the CARES Act and the GFC response, it recognized the importance of giving funds directly to thousands of smaller cities and counties. After a few quarters of state and local drag in 2021 and 2022, ARP support helped state and local governments add 0.3 percent to quarterly GDP growth on average from the second half of 2022 to the end of 2024. And state and local governments have added 1.6 million jobs since the ARP passed, recovering to pre-crisis levels nearly three times faster than they did after the Great Recession. If someone is going to weight the cost and benefits of robust fiscal relief, these are all benefits that would need to be considered.

Note: While the analysis above shows that the robust American Rescue Plan was far more successful at lowering unemployment, reducing scarring, preventing state and local drag, and helping alleviate the lingering impacts of this latest crisis, this should not be seen as an indictment of President Obama or his National Economic Council team at the time, including Larry Summers and Jason Furman. As one who was there, I can testify that President Obama and the leadership of his National Economic Council wanted a larger fiscal stimulus and were simply limited by the constraints of getting 60 votes in the Senate. Indeed, when I became National Economic Council director in 2011, President Obama called for a second recovery package—the American Jobs Act—and was blocked by the Republican House of Representatives. The fact that President Obama and his team were politically blocked from obtaining the fiscal support the economy needed is not an indictment of anyone’s intentions. But at the same time, there is no excuse for failing to learn about the importance of securing an adequate fiscal response to a major economic crisis when it is politically feasible to do so.

Was the ARP the Dominant Cause of High Inflation?

Finally, there is Furman’s never-ending, never-in-doubt assertion that the American Rescue Plan was the overwhelming and dominant cause of higher price levels and the resulting economic frustration of many American voters. To be clear, unlike many of the points discussed above, the role of the strong pandemic response by Presidents Trump and Biden in causing inflation is hotly debated among economists, who hold a wide range of views. Some see the ARP as having only a marginal or temporary impact on inflation that did not fundamentally change the overall post-pandemic inflation performance; others think it had a more significant impact but also weight the clear benefits of the stronger fiscal response. Many see the surge in inflation as having a mix of causes that were not predictable and are not easily severable. Most see a complex issue.

Furman has kept it simple. Where others have modified their analysis with new information or stressed complexity, he has kept to one note: Biden’s fiscal excess is uniquely to blame. While this could be a sign of unbending conviction, the discussion below will show that it is also extremely consistent with a commitment to never letting complexity or competing facts stand in the way of making an anti-Biden economic brief.

Inflation Was Indisputably Global

It is important not to miss the forest for the trees, and a clear view of the forest suggests that, as researchers at the Dallas Federal Reserve titled one note, “international factors broadly explain post pandemic inflation.” As they wrote, inflation “trends are not unique to the United States. Inflation has been persistently high around the world during the pandemic recovery, causing virtually all central banks to impose restrictive monetary policy.” Various economists have also found little relationship between the size of domestic stimulus packages and the degree of inflation. Austan Goolsbee, now president of the Chicago Fed, told The New Yorker in 2022: “In Europe, they didn’t do the big stimulus that we did, but the inflation is now almost as high as ours. It’s a global phenomenon. It’s not primarily coming from U.S. stimulus.” As Goolsbee said: “This distinction has been lost in the popular political debate, where the fact of high inflation overshadows everything. But it does matter for thinking through how to respond going forward.”

There’s no question that there ended up being a mismatch between demand for goods (particularly products with semiconductor inputs) and supply. But Furman consistently ignores pandemic supply constraints and later developments that have undermined the demand-only case—both which would serve to muddy his assertion that the ARP was the dominant cause of elevated post-pandemic inflation. So, let’s consider that claim in more depth.

Furman’s Overstated Demand Case

The central statistical case for why the ARP was far too large—first deployed by Larry Summers and adopted by Furman in his Foreign Affairs essay—is that the $1.9 trillion in economic stimulus swamped what is called the “output gap.” Many top economists find the “output gap” questionable, but the idea is that fiscal stimulus beyond the output our nation can produce will only cause damaging inflation. Furman uses this broad concept to argue that “With U.S. GDP three percent below pre-pandemic forecasts as of the fourth quarter of 2020, an additional $650 billion in stimulus—about a third as much [as the ARP]—would have been sufficient to fill the hole in the economy.”

Yet, this critique of the American Rescue Plan was on shaky ground from the start for two reasons. First, top private sector economists quickly disputed whether the output gap was correct. Highly respected Goldman Sachs chief economist Jan Hatzius directly critiqued using the estimate that GDP was only 3 percent below potential in late 2020 and noted that Goldman Sachs’s estimate was “twice as large.” Hatzius explained:

Output gaps are admittedly hard to measure, but we think there are strong reasons to believe that the CBO [3 percent] estimate is too small. Their figures show the economy running above potential in the two years before the pandemic, which is hard to square with the fact that inflation was, on average, below the Fed’s target. Also, employment is still down 6% from the pre-pandemic level.… [A]an output gap of just 3% [is] highly implausible.

Hatzius recognized that this stimulus was “unprecedented outside of major wars” and would lead to very strong growth. But he concluded, “[T]he economy is coming out of a deep hole and there’s still a large gap to fill between actual and potential output.”

And as The Wall Street Journal’s Greg Ip reported in 2022, the Swiss bank UBS found that even with the American Rescue Plan, an output gap overheating explanation could account for only a tiny part of the rise in inflation: “Alan Detmeister, an economist at UBS and formerly the Fed, ran a statistical exercise earlier this year that found that the output gap, derived from actual GDP and Congressional Budget Office estimates of potential GDP—both adjusted, and unadjusted, for inflation—can explain at most 0.1 percentage point of the rise in inflation since the middle of last year, and the unemployment rate can’t explain any.” Despite this, Furman goes back and uses a similar analysis—with little discussion—as a key building block for his brief against Biden economic policy.

The second intrinsic flaw in this overheating critique is that the calculation supposedly showing that the American Rescue Plan swamped the output gap was based on faulty premises about how quickly ARP funding was impacting the economy. Summers claimed that the ARP’s “stimulus [would] total in the neighborhood of $150 billion a month,” and Furman appears to have assumed that the full $1.9 trillion in ARP funds would go out fully by September 2021.

These and other critiques were simply incorrect. Beyond the $400 billion in economic impact payments that went out quickly after passage of the ARP, the rest of the $1.5 trillion was thoughtfully spread out over several years as fiscal insurance for dealing with ongoing challenges. All told, about $500 billion beyond the stimulus checks went out in 2021. About $450 billion more went out in 2022, and most of the rest was divided between 2023 and 2024, with much of the later spending invested in expanding capacity—such as in affordable housing. While it is reasonable to dispute the size of the stimulus checks, the rest of the ARP stimulus went out at closer to $50 billion a month than $150 billion a month.

A Disregard for Conflicting Evidence

As discussed above, the heart of Furman’s brief against Biden economic policies is that inflation in the United States was demand-driven, and the main culprit was an excessive ARP. Nearly all of Furman’s critiques fall apart unless one can make the case that it was demand—not supply or unique pandemic factors—that was the dominant cause of higher inflation and price levels.

As time has gone by, it has become all the clearer that the demand-only explanation has not held up. Nothing made that point better than the predictions of those who took the demand-only argument to its logical conclusion and said that curing inflation would require the crushing of labor markets and economic demand. Furman cited this argument in an earlier Wall Street Journal op-ed with the subhead “To bring price increases down to 2%, we may need to tolerate unemployment of 6.5% for two years.” Larry Summers estimated that due to the demand-driven nature of the inflation, “[w]e need five years of unemployment above 5 percent to contain inflation—in other words, we need two years of 7.5 percent unemployment or five years of 6 percent unemployment or one year of 10 percent unemployment.”

Peter Orszag, the former CBO director and Obama-era budget director, agreed that if inflation was fundamentally due to the ARP being too large, then it would indeed have taken a huge blow to demand to tame it. The fact that inflation came down without such a blow to jobs refutes the thesis espoused by those like Furman. As Orszag puts it, “[I]f elevated demand from covid stimulus was the cause of inflation, reducing inflation would have required a big hit to that demand. This is why some economists predicted unemployment would need to rise dramatically to bring inflation down.” He concludes, “Instead, consumer price inflation has fallen from 9 percent in June 2022 to roughly 2.5 percent today while the unemployment rate has risen relatively modestly, from 3.6 percent to 4.1 percent.”

In a comprehensive Brookings Institution research report, Orszag and his co-authors found that “the vast majority of the COVID-19 inflation surge is accounted for by supply-linked factors, especially a rise in company margins that followed severe delivery delays at the height of the pandemic. Demand-linked factors, notably indicators of labor-market overheating, play almost no role. As a result, the argument that policy stimulus was excessive is weak.”

New York Federal Reserve economists similarly found that supply-side shocks caused the bulk of U.S. inflation, writing:

We examine three supply-side shocks: first, supply chain bottlenecks which increased the prices of imported intermediate inputs (input price shock); second, rising labor market tightness due to declining labor supply, for example resulting from early retirements (labor supply shock); and third, supply chain pressures experienced by foreign competitors, which allowed U.S. firms to expand their markups without losing market share (foreign competitor shock). Through the lens of our model, the combination of the three shocks generated a peak inflation surge of around 3 percentage points above the assumed steady state inflation level of 2 percent, about three-quarters of the rise in core [Consumer Price Index] inflation observed during 2021 and 2022. Importantly, the combined shock has an amplified effect in our model: when the shocks hit the economy jointly, inflation increases by 0.7 percentage point more than when they hit separately…

As the shock has dissipated, our model suggests that the same mechanism has worked in reverse and accelerated the decline in inflation. The amplification effect may be one explanation for the faster than expected disinflation over the last two years.

The New York Fed economists do note that demand could have played a role in these price increases as well (and their model does not completely separate out supply and demand), but their analysis supports the argument that inflation was significantly driven by supply chain snags. San Francisco Federal Reserve Vice President and senior economist, respectively, Zheng Liu and Thuy Lan Nguyen estimated that “Supply chain disruptions…accounted for…about 60% of the above-trend run-up of headline inflation in 2021 and 2022.” And Moody’s Analytics chief economist Mark Zandi and co-authors also argued that U.S. and global inflation were mainly driven by supply—not demand. They wrote:

Inflation only became uncomfortably high when the Delta wave of the pandemic hit in late summer [2022]. This inflation was a surprise, but so too was the Delta variant, as it came immediately on the heels of the vaccine rollout and widespread optimism that the pandemic was more-or-less behind us.… Global supply chains were badly scrambled, as this wave of the pandemic was especially hard on Southeast Asia, which was lightly vaccinated at the time, and where most supply chains begin.

As The Wall Street Journal’s Greg Ip argued on X, “Inflation peaked at 9% of which ARP…probably contributed only 0.5- to 2 percentage points. Without ARP we’d still have had bad inflation, and the [Democrats] would have been underdogs like every G7 incumbent [government] to face voters in 2024.” Certainly, what happened in Germany, the third-largest economy in the world, confirms Ip’s view. A more tepid fiscal response was followed by still high inflation. Germany dipped into economic contraction for two years, and the post-pandemic governing party was run out of office.

Does the ARP Explain All U.S.-Europe Differences?

Furman has not adjusted his views based on the economic developments mentioned above. He instead often centers much of his case against the Biden recovery policy on inflation comparisons between the United States and Europe. This is not, at first, intuitive. After all, cumulative harmonized inflation since the start of the pandemic is virtually identical in the Euro area and the United States—a point that would tend to suggest that Biden’s ARP was effective at sparking a strong recovery without inducing higher inflation than that experienced by other nations.

Here, Furman considers the inflationary pressures specific to Europe and concludes they make headline inflation the wrong metric for comparisons. His argument here is totally sound: Furman rightly stresses that the Russian invasion of Ukraine increased energy prices significantly more in Europe than in the United States and thus comparing headline inflation—which includes energy costs—would not paint the most accurate picture. This is a fair point. But what Furman does then is to compare only “core inflation” (which excludes energy and food), which for a time was higher in the United States than in Europe—and then claim that the only explanation for the difference must be ARP spending.

Yet, while Furman rightly adjusts for Europe’s comparatively hard hit from energy prices, he never even considers whether there could be distinctive non-ARP factors affecting inflation in the United States. What role did our large preexisting housing shortage, which has been building since the Great Recession, have on housing and shelter inflation? And given that there are more rent-control policies in Europe and the United States has historically higher rental inflation, to what extent should we be “skeptical that differences in rental inflation straightforwardly reflect differences in fiscal stimulus,” as Employ America has urged? Or is it possible that aspects of U.S. dynamism—our nation’s willingness to shut down jobs, production, and services faster—may have led to more friction and inflation when we were forced to start back up? Consider rental cars. Major rental car companies immediately sold off one-third of the U.S. rental fleet (770,000 cars!) when the pandemic cratered demand for rentals. Rental car prices then soared as these companies worked to rebuild their fleets, contributing to inflation. Was that the ARP, or friction created by distinctive aspects of the U.S. economy? Is the San Francisco Federal Reserve off base in noting that structural and policy differences between the United States and Europe on layoffs versus job maintenance led to a more dramatic labor market reshuffling in America? On energy, there is little question that decisions made in 2020—when oil companies feared a more damaging hit to the economy from the pandemic—negatively affected supply, capacity, and prices. U.S. crude oil production fell by close to one million barrels a day at the start of the pandemic in 2020, and U.S. refining capacity declined by 800,000 barrels a day in 2020 due to closures. These factors may have contributed to energy price increases in 2021 and 2022—with American oil consumption slightly below pre-COVID levels in those years. Were these more U.S.-specific supply issues impactful? Certainly, Furman never seems to examine any U.S.-specific factors that could in combination have impacted inflation—and thus risk weakening his case against the American Rescue Plan.

Where the U.S. and Europe Actually Ended Up

While almost the entire Furman critique assumes that Biden’s decision to sign the $1.9 trillion ARP was the major cause of core inflation, in Furman’s Foreign Affairs piece, he does not use his signature comparison chart, which relies on a BLS calculation of U.S. core inflation that was designed to be apples-to-apples with Euro area core inflation. Why? Perhaps one reason is that the BLS pulled down this measure because of “incorrect 2023 and 2024 data for all items less food and energy” and will not be posting going forward until they “investigate the issue.” Or perhaps it’s because as time has gone on, U.S. core and Euro area core inflation have looked increasingly similar. U.S. core inflation rose earlier but came down quicker. Since the start of the pandemic, Euro area core inflation (Harmonized Index of Consumer Prices less food and energy) and comparable measures of U.S. inflation (e.g., core Consumer Price Index less shelter) have increased at relatively similar rates—with U.S. inflation significantly less than a single percentage point per year higher on average over the post-pandemic period.

A Time for Reflection

I end where I started. This is a time when all of us need to avoid torturing the data to advance preexisting positions on post-neoliberal theories or to reflexively promote or denigrate Biden’s policies. It is a time, instead, to engage in open-minded reflection. As I wrote in my last book, progressives are at our best when we stay true to a progressive end goal—a North Star like economic dignity for all, which was my book’s theme—and are open to using experience and evidence to determine the precise policies that will best achieve that ultimate goal. For me, that goal, economic dignity, has three parts: ensure that workers have the means to support their loved ones and be there during life’s most precious moments; to pursue purpose and potential and have second chances; and finally, to be able to work with dignity and respect—not domination and humiliation.

As I see it, these goals call for constant reflection on new realities, evidence, and experience if we are to find the best roads to reach them. It is clear to me that decades ago, many underestimated the community devastation and harm to workers and worker power that could come with even the most well-intentioned foreign policy goal calling for expanded globalization. Further, fears of picking winners and losers for too long led to resistance to strategic industrial policy, which has become both inevitable and essential in a world where we compete with China. Progressives waited too long to elevate the care economy to a first-tier economic—not just social—issue, and progressive economics has benefited from the push by Elizabeth Warren to put a major focus on protecting consumers against financial abuse.

Likewise, even someone like me, who had a box seat for the remarkable good the American Rescue Plan did across this nation, must be open to reflection and asking hard questions. For example, even if the ARP overall did not cause significant inflation, were three stimulus checks that went to so many people who had not suffered any economic harm too much and responsible for some unnecessary inflation? Should this experience lead us to focus on providing more targeted help to those in economic distress by strengthening the safety net with eviction prevention, mortgage assistance, and automatic stabilizers for health and joblessness? In the absence of a more comprehensive safety net, was the poor targeting of stimulus checks worth the costs because those checks at least provided a buffer for tens of millions who would otherwise have fallen through the cracks, and whose decline in spending might have tanked the economy—or could the final checks have been more targeted? Should more of the state and local funds have gone to cities and counties as opposed to states, or included more requirements to deal with the key supply issue of affordable housing? Did we invest enough in a long-term infrastructure for eviction prevention—even if the aid mostly went out in the first two years? Did we need more funds for local navigators to help people access emergency benefits? What is the precise balance during a crisis of ensuring emergency funds get out the door in time to save lives, support families, and help small businesses while still keeping up adequate guardrails to minimize honest mistakes by citizens and workers as well as outright fraud by criminal syndicates? Which of the mechanisms for encouraging strategic industrial policy were most effective, and which had the least unnecessary subsidies and biggest bang for the buck?

We should not be afraid to delve into these issues for fear of contradicting a previous policy preference. We do not serve the families across the nation who count on us to develop and promote policies that increase economic dignity, opportunity, and security by simply closing our eyes to facts that support either a pro-Biden or anti-Biden brief. I cannot speak for Jason, but I plan on focusing my energies on the threats to the economy, working families, civil rights, the rule of law, and those facing economic disadvantage or disability that are on our doorsteps, and on building a strong pro-economic dignity agenda that both works for and resonates with working families across this nation.