‘How we avoid Biden’s mistakes and win in 2029’

James Carville was wrong. It’s not “the economy, stupid.” It’s living standards that actually matter.

The Democrats lost because, while Biden got the economy growing, living standards fell. People were angry and frustrated because they could not afford the basics, but instead, Biden waxed lyrical about American democracy.

We, in Labour, can be different. By acting to get living standards rising, we will avoid Biden’s mistakes and win in 2029. 

What Biden got wrong

Biden’s economic program involved spending hundreds of billions on physical capital investments a.k.a. building stuff like roads, rail, and bridges. The problem for Biden was that capital investments do not quickly result in wage growth or higher living standards. For every dollar spent on building a bridge, for example, around 80 cents goes on physical stuff like concrete and steel. Only 20 cents goes on wages, and so into people’s pockets.  By 2024, all of that investment meant the US economy had grown by 12%, but living standards were still lower than in 2019. “That’s your bloody GDP, not ours,” was the response Americans gave at the ballot box.

Physical capital investments, like building bridges and roads, do get living standards rising, but it takes time. A bridge that allows people and goods to move around more quickly means more sales, higher productivity, and higher incomes, but bridges aren’t built overnight. As Biden found out, you can lose an election before people start to feel the benefits of a bridge. 

Biden did recognise this danger. He tried to pass a budget that would quickly lead to rising living standards by investing in human infrastructure, like childcare, and putting cash directly in people’s pockets. But those proposals were blocked by the Senate.

The reason investing in human infrastructure like childcare gets living standards rising more quickly, is because most of that money goes directly to wages i.e. directly into people’s pockets. For every dollar spent on human infrastructure – like healthcare and childcare – 80 cents go on human labour i.e. wages. Only 20 cents goes on physical materials.

The quickest and most effective way to get living standards rising is to get more cash into people’s pockets either directly (such as the temporary Child Tax Credit Biden passed, which expired in 2022) or indirectly (by lowering people’s bills). In November 2024, neither were in place. This cost the Democrats the election.

READ MORE: ‘Why the downfall of Bidenomics should have Labour worried’

What we can get right

The lessons from Biden’s defeat are clear. First, living standards need to be rising for an incumbent government to win. This is why getting living standards rising is literally the first point of our Plan for Change. 

Second, investments in transfers and labour-intensive human infrastructure are the best way to get living standards rising quickly. Our Warm Homes Discount is a direct transfer that gets energy bills down. Our expansion of free childcare in labour-intensive human infrastructure that gets money into the pockets of nursery workers (as well as lowering bills directly).

Third, growth alone does not automatically lead to higher living standards. Biden’s problem was that economic growth went to those who owned stuff (or, capital) rather than people who worked. But even when economic growth leads to rising wages, those on low incomes often do not benefit much. For those on the lowest incomes, only around half of their income comes from wages because they also depend on (in-work) social security payments like universal credit. Economic growth alone will not help them, which is why we target government intervention to them by raising the minimum wage and getting bills down.

READ MORE: ‘How Reeves can lead from the failures of Bidenomics – and make levelling up work’

Our political vision

Biden and Harris’s final failure was a political vision that did not start with living standards. Their ideas about politics did not start with where people are – angry and frustrated that life was unaffordable. Instead, they both focused on nebulous ideas about freedom and democracy. Vague statements don’t cut it when the public do not see the benefits of freedom and democracy in their daily lives.

We are meeting people where they are. We get that they are angry, frustrated, worried, and stressed out because they can’t afford a decent life and cannot see how their kids will either. Our vision sets out the country we are building based on a set of universal Labour values. 

They are this: that everyone across society should be able to live a decent life. At this time of chaos, we stand for collective strength. That we do better as a nation when each of us does well, when we look out for one another, and have connection with one another. We are stronger standing together than we are standing apart. Our opponents – on the radical right and left – both want to blame someone else for our country’s problems, painting immigrants and businesses as the source of all our problems. But for everyone to be able to afford a decent life we must work together, as one British people. 

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Biden and the Democrats failed because they did not get living standards rising. We’ll avoid Biden’s mistakes by getting living standards rising and setting out our vision that answers that fear and fury people currently feel. By learning from Biden’s mistakes, we will win in 2029.

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