Interview with Heather Boushey (Member of the Council of Economic Advisers, and Chief Economist of the Invest in America Cabinet under President Biden)
Heather Boushey served on the Council of Economic Advisers from 2021-2025 under President Biden. She was previously the President & CEO and co-founder of the Washington Center for Equitable Growth. She previously worked at the Center for American Progress, the Joint Economic Committee of the U.S. Congress, the Center for Economic and Policy Research, and the Economic Policy Institute.
Interview conducted 12th February, 2025
Q: How would you characterise Bidenomics? What were its objectives and how do you think it performed over the four years?
In my role as the chief economist for the Invest in America Cabinet for the past year, all I did was give speeches on this topic! The core idea was that what we make – and how we make it – in America matters. It matters for the strength and the vitality of America’s middle class. It matters for economic security broadly. It matters for national security. Government can’t be agnostic about what the domestic economy produces or how that production happens.
To start with contrast, for a long-time policymakers have assumed markets are perfect and that we didn’t need to worry about what we made, because we could trade. We needed to allow that process to work its way out. People believed that markets were optimal and so the outcomes that they were delivering were the best ones.
That’s why policymakers changed their approach to enforcing our antitrust laws. It’s why people didn’t really attend to the demise of unions. From a policy perspective, there was the belief that markets would work on their own and we could just tinker around the edges. The idea was that we could make small adjustments—redistribute a little if necessary. That approach was assumed to be sufficient.
Our perspective started with the understanding that this wasn’t working. It wasn’t working because we weren’t focusing on what we make and how we make it.
On what we make, we recognised the need to invest in industries vital to American competitiveness and important for building infrastructure that supports the entire economy. We made productivity-enhancing, game-changing investments to crowd in private industry and then made substantive, structural investments in infrastructure across the economy. The proposals also included investments in the care sector through the American Rescue Plan, though these were not followed up on in the final legislation. The argument was made strongly that elder care, childcare, and early care are part of the nation’s infrastructure and those business models require government support.
On how we make it, the government needs to act as a good referee, ensuring markets are not too concentrated and countering economic power imbalances. For decades, antitrust enforcement was neglected based on economic theories suggesting it wasn’t necessary. The result was an ever-greater concentration in the US economy.
Looking at the US economy right now, it’s clear that it trends oligopolistic, with consequences for innovation, small and medium-sixed firms, productivity, and workers and communities. When markets become highly concentrated, workers have fewer employment options. For example, if a nurse works at a hospital in a community where five hospitals exist but are all owned by the same firm, if you leave a job over a dispute with management your personnel record may follow you. It’s an extreme example, but it also means if you don’t think that your hospital has good standards or you don’t like working there, you don’t really have other options. Market structure matters, especially in an era of high concentration.
Given this reality, we need to be thinking about empowering and educating workers. That principle is central to Bidenomics, or what we call middle-out economics—building stronger, more vibrant, and more stable communities and a stronger middle class. One of the key inputs is empowering workers, supporting communities, and strategically investing where needed most.
You asked about success. The early signs of our approach showed signs of success. One of the first indicators is infrastructure going up, which is happening across the country—though not as quickly as the political cycle would like it to. We have an infrastructure system in the US where infrastructure goes through the federal government, which then flows to communities because communities are closer to the ground. That takes more time, especially since communities were not given advance notice that they would receive hundreds of billions of dollars. Infrastructure had been a long-standing promise—Trump declared “Infrastructure Week” repeatedly without delivering. The idea that communities weren’t immediately prepared to act as fast as we would have wanted is quite reasonable.
Nonetheless, infrastructure is going out with significant progress there. The crowding in of private capital was phenomenal. I’m glad you mentioned that Larry Summers himself noted that in his interview. We have not seen the scale of investment in the construction of new manufacturing facilities in my lifetime. Investment levels not only doubled but were sustained at that level for two years before only recently beginning to slow down.
Over the last year, I travelled to 19 states, often visiting factories without the roofs on yet. This investment is disproportionately happening in lower-income communities and places that did not vote for President Biden in 2020 or 2024. Historically, it takes about two years for infrastructure investment to translate into capital equipment orders and jobs. So we’d expect to be reaching that point about now. I’m not reading anything into this, but last Friday, the jobs report showed a 3,500-job increase in manufacturing employment. That’s a drop in the bucket. We saw a very sharp recovery in manufacturing post-pandemic.
We experienced the strongest macroeconomic recovery in my lifetime. The American Rescue Plan made that happen, followed swiftly by BIL, CHIPS, and IRA. Economists will continue debating whether there was a fiscal overshoot, but the evidence increasingly shows that the global supply chain crisis was a real supply side challenge that drove the price increase and then on top of that you had the unprovoked war in Ukraine. Some of the data points that support that hypothesis: Inflation rose around the world, the U.S. did not outpace its economic competitors despite its larger fiscal bump, and our inflation came down faster than others.
It also fails to see the incredible work across the administration to unclog supply chains. While the Federal Reserve deserves credit for its role in containing inflation, there’s a real failure to recognise what the administration did as good governance, I toured the port authority of LA and asked folks there about their experience during the crisis, with long queues of trucks getting in and out of the port. They told me they were on the phone with my colleagues at the National Economic Council multiple times a day. That was a 24/7 job to make sure those industries and communities that needed support as the supply chains were all snarled were getting all the help that they could from the Biden administration. There’s a thousand dissertations to come from what this administration did but the work on the supply chains is a story I hope people pursue.
Looking ahead, my instinct is that supply-side crises will be more common. Understanding what went right there and how effective governance will likely grow in importance so we should study this now.
Q: You’ve argued that Bidenomics was transformational, but critics point out that the areas of the economy that your reforms affected – such as the manufacturing sector – are relatively small parts of the US growth story over the last few years. How do you reconcile what you’ve said with the US’ growth story coming out of the pandemic?
One reason we’re outperforming is the robustness of our response to the pandemic. At that moment, many countries were experimenting. I remember during the campaign being really frustrated and advising the vice president that the way our unemployment insurance system was structured—then adding the Payroll Protection Plan separately—lacked any connective tissue between people being laid off, getting UI benefits, and the PPP. Other countries were pairing those in a much deeper way. I was concerned that the loss of talent would stymie the recovery.
That turned out to benefit the economy, which surprised me. In the U.S., people used benefits as a launchpad. Every year in the Biden administration was a record year for new business start-ups and high levels of job switching. There are productivity gains across the economy emerging from when, in a moment of economic disarray, we gave people enough time to find a better fit. That time meant people didn’t have to jump into whatever is available but could find a better match for their skills and talents, rather than taking the first thing because they are desperate.
That’s one key piece about the recovery—how we came out of the pandemic. Some of it was intentional. I’m sure Cecilia [Rouse] talked about this in her interview. We wanted to make sure the package was big enough to account for unexpected events. There was so much chaos that we needed enough resources. That was a major lesson from the Great Recession, where we didn’t go big enough the first time. You don’t get another bite at the apple. You get one chance to do it right.
One mistake from the Great Recession was failing to support state and local governments, forcing them to cut back. States cut higher education funding, leading to more student debt, which amplified into the student loan crisis we’re still dealing with at a national level. This time, we gave much more to state and local governments. There has been some grumbling about that, but it allowed communities to deal with their most pressing issues and recover the way we helped families and households recover.
For example, I visited a Rust Belt community where the city councillor and mayor told me they had long struggled with abandoned homes. One abandoned house in a neighbourhood drags down property values, creates safety concerns, and becomes a blight, but they didn’t have the resources to address it. Through American Rescue Plan funds, they were able to buy and repurpose homes—about 60, not millions, but significant. They are turning them into small community parks and playgrounds, connecting blocks with green spaces. That’s a huge investment in that community’s economic future. The disconnect is in the details—it was all in the ARP.
An important factor in long-term productivity gains will be the transition from fossil fuels to clean energy. If we are unable to win that future and be leaders in those new technologies, we’ll be at a competitive disadvantage for decades to come.
Beyond that, the enormous costs of going over 1.5°C and ongoing climate damage will dwarf other costs that economies are facing. Modelers can’t fully capture the scale of these costs, but we know we’ll be spending more on rebuilding homes, replacing things that we already have due to a failure to plan to cut carbon emissions. The health and well-being of the economy depend on cutting-edge investment in these crucial technologies.
Clean energy may be a small part of the economy in numbers, but in terms of technological change and productivity gains, it is absolutely critical.
Q: Did the definition or focus on Bidenomics shift over time – perhaps from macroeconomy, to manufacturing growth, to national security?
I would characterise that evolution differently. The very first meeting I had in the Oval Office; we were talking about semiconductors as a national security issue. It wasn’t the topic, but it was part of the after discussion. It was already part of the conversation.
During the 2024 campaign, we talked a lot about Project 2025 and how ready the Republicans were. The set of policies that became BIL, CHIPS, and IRA were also largely ready before we went into office. You can see that by how quickly the first drafts came together.
Key among them, I would say two things. Going back to the framing we used—what we make and how we make it matters. What we make is about national and economic security. Clean energy sits at the centre of that Venn diagram. It is core to economic security because we are an oil exporter—that’s about jobs and investments in communities. It’s also about national security. If you can’t produce energy or don’t have access to it, your economy is vulnerable. Most recent wars have been, in some part, about energy and access to oil. This will be different because solar panels aren’t the same as pulling oil out of the ground, but the technologies and minerals still make this a very important national security issue.
I think a big lesson this administration and economic leadership took from the Great Recession and previous years is that we need a worker-centred approach. We have to put workers, their families, and their communities at the core of economic policy. That is the outcome we are driving for. We’re not just aiming for more GDP—obviously, that’s important—but the President talked about making sure this was growing and building America’s middle class. That was his North Star.
We had to fight the pandemic, and even in early 2020, the question was: do we have one package or many packages to address the structural changes needed? As it turned out, there were many packages, but the early discussion was about that choice.
The second phase was getting the package across the finish line and recognising the importance of political economy outcomes. I use that word specifically because there’s been a sense—certainly, I’ve fallen victim to this—that if you just create jobs, political outcomes will follow. That’s a very economist way of thinking about politics, but it’s not how the world works. I would argue that it’s a necessary but not sufficient condition. If you aren’t creating good jobs, it’s hard to get across the finish line. If you are, you still need to figure out everything else.
With clean energy, front-loading good jobs across the country—rather than starting with a carbon tax approach that would frontload the costs without necessarily leading to industrial development in the U.S.—was core to that strategy. That was in place from day one. The goal was always to build and support the middle class. That’s what the ARP was about. That’s what the industrial strategy was about. That’s how we implemented policy.
I see that as a through line. The periodisation is: first, dealing with the urgent crisis of the pandemic; then, dealing with long-term economic challenges and structural changes—getting BIL, CHIPS and IRA across the finish line; and, in the last two years, focusing entirely on implementation. That’s what everybody was doing.
Where we failed was the storytelling. I have lots of thoughts on that.
Q: You mention the productivity-enhancing job switching that happened during and after the pandemic. Was that something you were aiming for? Or did it happen for other reasons?
From where I sat – in 2020, before the administration, people were talking about CARES and Families First in the legislation from the pandemic – I think people were more concerned about people separating and not being able to get their jobs back than we were about opening up productivity. That wasn’t the conversation I was having, but I’m sure some people were seeing it as an opportunity. Still, it wasn’t top of mind.
It was such a moment of fear. Everybody was at home. We didn’t know where the pandemic would go or what would come next. I don’t think that was purposeful. Given the way our social welfare systems are structured, the challenges with the unemployment insurance system and the need to move quickly, there wasn’t time to come up with another option. It wasn’t politically viable. There wasn’t a big debate like, “We should do it this way or that way.” It was about, “What can we do? How can we get people money?”
We just wanted to make sure that we could keep families and communities whole while we got through this horrible time in global history. We wanted to make sure people could still pay their rent. We did a lot around eviction, increased food stamps, and made all those things easier. Extra money for childcare. The main goal was to ensure that we didn’t exacerbate the social crisis just because people couldn’t get to work.
Q: Could you comment on the targeting of support, such as the use of direct-to-households stimulus checks, rather than going through the banking system. What was the thinking there?
There were logistical challenges. I’ve done a lot of work on the unemployment insurance system, so I’ll start there. One of the things we saw during the Great Recession was that the unemployment insurance system was in trouble. We don’t have one unemployment insurance system; we have 50. They’re paid by taxes on employers. If you’re an employee and apply for unemployment insurance, the taxes on that employer go up. It’s experience-rated, so employers have huge disincentives to let laid-off employees access the system. Also, because it’s poorly funded by employers, they don’t want the benefits to be too big, unlike paid family leave programs, which are funded by employees. Workers have every incentive to support that, which is what we’ve seen in ballot initiatives across the country.
The system was in crisis after the Great Recession. Many systems had no money, benefits were pared back, and computer systems were outdated. Then, the global pandemic hit. The system already didn’t serve most unemployed workers, and we needed to get money to people fast. What could we do? One thing we wanted was to give people bigger benefits because they would be unemployed for a longer period. Ideally, we’d calibrate that to earnings or need, but that turned out to be impossible for the system to do. Everyone got a bump up—$600. Some people complained that many people were making more on unemployment than in their low-wage jobs. But the reality is that as taxpayers, we’ve underinvested in the system for decades. You can’t just turn the dial today and make it sensible; it doesn’t work. The alternative is to do nothing, which would be economically damaging. That was one set of conversations. There was money for UI modernisation. They made a lot of progress, but there’s still a lot of work to do.
On the checks: Donald Trump campaigned on giving people checks, and when President Biden won, we had that special election at the end of December for two Senate seats in Georgia. That became a very important political issue. There was no way to go back on the promise to the American people made during that campaign. That was politics 101. So, we had a bit more money flowing through the system, but where we got it wrong was not understanding that this was in fact a supply-side crisis. For example, we saw that the semiconductor shortage accounted for about a third of the price of the increase in automobiles. That was supply side, real-side inflation.
Q: You are clear that you were aiming to build up political support through the design of your policies, but the Republicans, not the Democrats, won in 2024. What went wrong?
Biden becoming the candidate in 2020 wasn’t something people were forecasting in 2018-2019. The fact that he brought in people from the Sanders campaigning world and the Warren world wasn’t on people’s bingo cards either. The fact that he governed as the most pro-union president in American history and saw climate change as an opportunity to create good jobs wasn’t something anyone saw coming.
What did that mean on day one? The battle for the presidency hadn’t been about the ideas we were then undertaking. It was about recovery. Biden said during the campaign, “We don’t just want to build back; we want to build back better.” We had this urgent crisis in front of us, with long-standing issues—racial inequality, climate change, failure to invest in infrastructure, and supply chain problems. He talked about all that. We got some nice letters from Nobel Prize winners on what became the Jobs and Families Plan, which eventually turned into the IRA and BIL, but it wasn’t front and centre.
As we started doing things, I kept being wowed by how few people in the economics community actually understood what we were doing. A big part of my job was giving speeches and talking to economic thought-leaders. So many times, people told me that our conversation was the first time they’d heard the theory of the case articulated. I was like, “But the president literally gave three speeches on this last month.” Then I realised that people weren’t reading those speeches. It wasn’t breaking through. I found this very befuddling.
I looked at the media coverage and thought, “None of this reflects what we’re doing.” From day one, the coverage was all about how it would be “bad” for the macroeconomy. Well, we created more jobs than any previous economic recovery, and unemployment dropped below 4%. Yes, there was inflation, but we also brought it down. The narrative was not consistent with the data. We were relitigating policies for two years without talking about the economic benefits.
Second, the passage of the IRA was a surprise. We passed the Bipartisan Infrastructure Law in the first year. We were supposed to get the rest of it done by the end of 2021, and it didn’t happen. The deal fell apart, spectacularly, that December. It was: will Senator Manchin or won’t he? When it passed, it was a shock. I knew that my colleagues were working on it but by that time many of us had become very cynical.
That meant, though, that people weren’t prepared for when it actually happened and so after the fact, we had to explain the policies. I travelled abroad a lot that fall and into the winter and I would have to explain to international audiences what we did—they didn’t know.
It was so big, people just weren’t prepared. You’re running on a big set of ideas, but that’s not what people were really thinking about at the time— they were focused on the pandemic. You start governing and dealing with the pandemic, and then you get into this macroeconomic debate, which is all about inflation, but it fails to see the supply-side issues that we were actually dealing with.
I’ve been doing TV for almost 30 years, and I’ve never experienced a year like that before, where you have historically low unemployment and people are still saying, “But the recession is coming, right?”
And, of course, we didn’t have a recession. We had solid—at time pretty fast—growth. We outpaced our economic competitors— double the growth relative to everyone else coming out of the pandemic. Yet, every day, we were being asked, “When is the recession going to happen?”
Q: What lessons would you offer from your experience for the UK?
The UK has a hub versus regional problem, right? How do you create investment opportunities outside of London? Above and beyond changing your transportation network— which always seems to be the first thing you should do, making it possible for communities to get to each other— I think the way we did the taxes, not choosing the winners but choosing the industries, is crucial.
You don’t want to put your finger on the scale of any one industry. By the time you get to a one-firm industry, like Intel or Boeing, you have a problem. The key is to not let that happen in the first place. You really have to pair industrial policy with antitrust to make sure you’re not left with just one national champion.
How do you think about market structure? I will say one of the things I’m very proud of is that we did the first regulatory recommendations for agencies on how, in their implementation, they can think about competition issues. That’s so important.
So one lesson is: How are you making sure that you’re supporting vibrant industries, not picking winners and losers? I think our tax system and the tax programs from the IRA can help with that.
Then, I think it’s about thinking strategically about where along the clean energy supply chain it makes the most sense for you to invest and what is that Venn diagram of national security and economic security.
But we don’t have a lot of time. The planet doesn’t have a lot of time, and I think the competition to win those industries is going to continue to be ever more intense. So, I think not dithering would be my recommendation.
ENDS