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Tag: private investment

  • Biden’s Hidden Economic Success

    Biden’s Hidden Economic Success

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    President Joe Biden’s economic agenda is achieving one of his principal goals: channeling more private investment into small communities that have been losing ground for years.

    That’s the conclusion of a new study released today, which found that economically strained counties are receiving an elevated share of the private investment in new manufacturing plants tied to three major bills that Biden passed early in his presidency. “After decades of economic divergence, strategic sector investment patterns are including more places that have historically been left out of economic growth,” concludes the new report from Brookings Metro and the Center for Energy and Environmental Policy Research at MIT.

    The large manufacturing investments in economically stressed counties announced under Biden include steel plants in Mason County, West Virginia, and Mississippi County, Arkansas; an expansion of a semiconductor-manufacturing plant in Schuylkill County, Pennsylvania; a plant to process the lithium used in electric vehicle (EV) batteries in Chester County, South Carolina; an electric-vehicle manufacturing plant in Haywood County, Tennessee; and plants to manufacture batteries for EVs in Montgomery County, Tennessee; Vigo County, Indiana; and Fayette County, Ohio.

    These are all some of the 1,071 counties—about a third of the U.S. total—that Brookings defines as economically distressed, based on high levels of unemployment and a relatively low median income. As of 2022, the report notes, these counties held 13 percent of the U.S. population but generated only 8 percent of the nation’s economic output.

    Since 2021, though, these distressed counties have received about $82 billion in private-sector investment from the industries targeted by the three major economic-development bills Biden signed. Those included the bipartisan infrastructure law and bills promoting more domestic manufacturing of semiconductors and clean energy, such as electric vehicles and equipment to generate solar and wind power.

    That $82 billion has been spread over 100 projects across 70 of the distressed counties, Brookings and MIT found. In all, since 2021 the distressed counties have received 16 percent of the total investments into the industrial sectors targeted by the Biden agenda. That’s double their share of national GDP. It’s also double the share of all private-sector investment they received from 2010 to 2020. Funneling more investment and jobs to these economically lagging communities “is really just at the core of what [Biden] is trying to accomplish,” Lael Brainard, the director of Biden’s National Economic Council, told me. “The president talks a lot about communities that have been left behind, and now he is talking a lot about communities that are coming back.”

    Brian Callaci: Biden says goodbye to tweezer economics

    This surge of investment into smaller places is a huge change from previous patterns that have concentrated investment and employment in a handful of “superstar” metropolitan areas, Mark Muro, a senior fellow at Brookings Metro and one of the report’s authors, told me.

    “As the rich places have been getting richer, the social-media/tech economy was something that was happening somewhere else for most people,” Muro said. “Clearly, this is a different-looking recovery that is occurring in different places and has a tilt to distressed communities right now.”

    One of those places is Fayette County, in south-central Ohio, about equidistant from Dayton, Cincinnati, and Columbus. Fayette’s population of roughly 28,000 is predominantly white and rural with few college graduates. Its median income is about one-fourth lower than the national average, and its poverty rate is about one-fourth higher.

    Early in 2023, Honda and its partner LG Energy Solution broke ground on a massive new plant in Fayette to build batteries for Honda and Acura EVs. The Honda project has already generated large numbers of construction jobs, as has a massive Intel semiconductor-fabrication plant under construction about an hour away, outside Columbus, in Licking County. “The trade associations for electrical workers, plumbers, whatever it might be, they are going to have jobs in the state of Ohio for years,” Jeff Hoagland, the CEO of the Dayton Development Coalition, told me. “These are huge facilities. The Honda facility is the size of 78 football fields.”

    Honda is already advertising to fill some engineering jobs, and once the plant is operational in late 2024 or early 2025, it expects to hire some 2,200 people. Most of those jobs will not require college degrees, Hoagland said. Many more jobs, he added, will flow from the plant’s suppliers moving to establish facilities in the area. “There are companies already buying up land,” Hoagland told me.

    Hoagland said he has no doubt that the federal tax incentives in the big Biden bills for domestic production of clean energy and semiconductors were central to these decisions. The federal incentives have been “100 percent critical, and I know that firsthand from Intel and from Honda,” Hoagland said. “Those companies needed those [incentives] to get into the full implementation of their strategy to rebuild that manufacturing, that supply-chain base, in the United States. Now we are seeing all these companies come back to the heartland in Ohio to do manufacturing.” Yet another firm, Joby Aviation, announced in September that, with support from federal clean-energy loan guarantees, it plans to construct a factory near Dayton to build electric air taxis.

    Encouraging manufacturers to locate their facilities in the U.S. rather than abroad has been the central goal of the tax incentives, loan guarantees, and grants in the clean-energy, semiconductor, and infrastructure bills. But the Biden administration has also been using provisions in those bills, as well as other programs, to try to steer more of those domestic investments specifically into distressed communities.

    As the Brookings/MIT report notes, the Inflation Reduction Act’s clean-energy tax credits provide extra bonuses of 10 percent or more to companies that invest in low-income communities. An Energy Department loan-guarantee program favors companies that locate clean-energy investments in communities that lost jobs when fossil-fuel facilities shut down. In a speech last month, Brainard highlighted a $1 billion Transportation Department program that funds infrastructure improvements to “reconnect” neighborhoods that have been isolated from job opportunities by highways or other transportation infrastructure. (Many of those places are heavily minority communities.)

    Similarly, under the semiconductor bill, the administration is awarding substantial funds for “regional innovation engines” through the National Science Foundation, as well as “tech hubs” that require communities to organize businesses, schools, and government to develop coordinated plans for regional growth in high-tech industries. The winners of these grants include projects that are based in places far beyond the existing large metro centers of technological innovation, such as Louisiana, Wyoming, North Dakota, South Carolina, and Oklahoma. “Those [programs] are spreading innovation investment to clusters all around the country rather than being concentrated just in a few huge metros,” Brainard told me.

    Joseph Parilla, the director of applied research at Brookings Metro, told me that the large manufacturing facilities being built in response to the new federal incentives naturally would flow toward the periphery of major metropolitan areas where many of these distressed counties are located. But Parilla believes the tax incentives and other programs that the Biden administration is implementing are also “having a pretty significant impact” in driving so many of these investments to smaller, economically strained places.

    Biden has made clear that he considers steering more investments to the places lagging economically both a political and policy priority. Even in forums as prominent as the State of the Union address, he often talks about the importance of creating jobs that will allow young people to stay in the communities where they were born. Biden has also, as I’ve written, rejected the belief of his two Democratic predecessors, Bill Clinton and Barack Obama, that the most important step for expanding economic opportunity is to help more people obtain postsecondary education; instead, Biden conspicuously emphasizes how many jobs that do not require four-year college degrees are being created in the projects subsidized by his big-three bills. “What you’ll see in this field of dreams” are “Ph.D. engineers and scientists alongside community-college graduates,” he declared at the 2022 Ohio Intel plant ground-breaking.

    But it’s not clear that the economic benefits flowing into distressed communities will produce political gains for Biden. In 2020, despite his small-town, blue-collar “Scranton Joe” persona, Biden heavily depended on the big, well-educated metro areas thriving in the Information Age: Previous Brookings Metro research found that, although Biden won only about one-sixth of all U.S. counties, his counties generated nearly three-fourths of the nation’s total economic output.

    The outcome was very different in the economically distressed counties. Brookings found that in 2020, Trump won 54 of the 70 distressed counties where the new investments have been announced under Biden. Some Democratic operatives are dubious that these new jobs and opportunities will change that pattern much.

    Read: Biden’s economic formula to win in 2024

    Partly that’s because Democrats face so many headwinds in these places on issues relating to race and culture, such as immigration and LGBTQ rights. But it’s also because of the risk that without unions or many local Democratic officials to drive the message, workers simply won’t be aware that their new jobs are linked to programs that Biden created, as Michael Podhorzer, the former AFL-CIO political director, has argued to me.

    Jim Kessler, the executive vice president of Third Way, a centrist Democratic group that has studied the party’s problems in small-town and rural areas, agrees that even big job gains won’t flip small red places toward Biden. But even slightly reducing the GOP margin in those places could matter, he told me. “Some of these swing states have vast red areas, and he needs to do well enough in those areas,” Kessler said. Pointing to new jobs in previously declining places, Kessler said, could also provide Biden a symbol of economic recovery that resonates with voters far beyond those places.

    The Brookings and MIT authors expect that Biden will have many more such examples to cite as further investments in industries including clean energy and semiconductors roll out. “The map is not yet finished,” the report concludes. “There are hundreds of distressed counties with assets similar to those that have attracted investment and have not yet been targeted.” One of the most tangible legacies of Biden’s presidency may be a steady procession of new plants rising through the coming years in communities previously left for scrap. Whether voters in these places give him credit for that will help determine if he’s still in the White House to see it.

    Ronald Brownstein

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  • The price tag of COP28’s renewable energy pledge

    The price tag of COP28’s renewable energy pledge

    COP28 wrapped on Wednesday with officials touting a pledge to triple the world’s renewable energy capacity by 2030. It even came twinned with a vow to double global energy-saving efforts over the same period.

    Predictably, the promise came with some high-flying rhetoric.

    COP28 President Sultan al-Jaber, the oil CEO helming the talks, claimed the goal “aligns more countries and companies around the North Star of keeping 1.5 degrees Celsius within reach than ever before,” referring to the Paris Agreement target for limiting global warming.

    But are the flashy pledges as ambitious as they sound? POLITICO crunched the numbers and here’s what we found: While the renewable energy target is well within reach, progress on energy efficiency has been a lot slower.

    Countries would need to cut their energy intensity — the amount of energy used per unit of GDP — at least twice as fast between 2023 and 2030 as they did in previous years, which calls for major investments and substantial changes in individual behavior.

    To achieve the renewable target, countries will need to bet big on solar and wind. These two technologies are set to account for around 90 percent of new capacity additions, due to their increasing availability and decreasing costs.

    Improving energy efficiency is a more complex challenge. It will require action on multiple fronts, from housing and construction to mobility and consumer behavior.

    Progress has been unequal and largely concentrated in richer countries, which also tend to attract most of the private investment in green technology. Good headway has been made in some areas like the electrification of transport, while building renovation is lagging.

    If world leaders are serious about these pledges, they’ll have to put their money where their mouth is (or convince private investors to do so) and mobilize nearly $30 trillion in green investment between now and 2030, with buildings and the industrial sector taking the lion’s share of these funds.

    Pricey, perhaps, but still probably cheaper than environmental catastrophe.

    Karl Mathiesen contributed reporting.

    Giovanna Coi

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  • Biden’s ‘Big Build’

    Biden’s ‘Big Build’

    When President Joe Biden visits South Carolina to tout a new solar-energy-manufacturing facility today, he will underscore a striking pattern: Some of the biggest winners from his economic agenda have been Republican-leaning places whose political leaders have consistently opposed his initiatives.

    Centered on a trio of bills Biden signed in his first two years, the president’s economic program has triggered what could become the most concentrated burst of public and private investment since the 1960s. The twin bills Biden signed in 2022 to promote more domestic production of clean energy and semiconductors have already helped generate about $500 billion in private investment in new factories and expansion of existing plants, according to the administration’s tally. Simultaneously, the federal government is spending billions more repairing roads, bridges, and other facilities through some 32,000 projects already funded by the bipartisan infrastructure bill approved in 2021. Companies are spending twice as much on constructing new manufacturing facilities as they were as recently as two years ago, a recent Treasury Department analysis found.

    “We had high expectations, and we are meeting or exceeding those expectations, particularly on these investments serving as a catalyst for private-sector investment,” White House Chief of Staff Jeff Zients told me in an interview.

    Read: Biden’s Blue-Collar Bet

    This surge of investment could rumble through the economy for years. The reverberations could include reviving domestic manufacturing, opening new facilities in depressed communities that have suffered plant closings and disinvestment since the 1970s, and potentially increasing the nation’s productivity, a key ingredient of sustained growth.

    “That data suggests we are in the midst of a big build as a country,” says Joseph Parilla, the director of applied research at the Brookings Metro think tank. “We are in a very important economic moment, particularly for a lot of these regions that have been waiting for this type of private investment, and desperately need it.”

    But the political impact of this investment for Biden and other Democrats remains much more uncertain. Polls suggest that for most Americans, the continued pain of inflation, even as it moderates, overshadows the good news of new factory openings. And analyses by Brookings Metro and other groups have found that this private investment is flowing disproportionately into places that didn’t vote for Biden in 2020 and remain highly unlikely to vote for him again in 2024. Many of the communities benefiting most are represented by congressional Republicans who initially voted against the new federal incentives encouraging these investments, and more recently even voted to repeal some of them.

    Biden has presented the red tint of the investment patterns as a point of pride, proof that he’s delivering on his promise, after the polarization of Donald Trump’s presidency, to govern in the interest of all Americans. “I promised to be a president for all Americans, whether or not they voted for me or whether or not they voted for these laws,” Biden said last week when announcing a $42 billion plan under the infrastructure bill to extend high-speed internet to all communities by 2030. “These investments will help all Americans. We’re not going to leave anyone behind.”

    Many Democrats see that as an important economic commitment and a powerful political argument. But portions of the party are grumbling that the administration is not showing enough concern as companies steer so much of the investment triggered by the new federal incentives toward Republican-leaning states and counties.

    That concern is rooted partly in the belief that voters in those places are unlikely to credit Biden for promoting new factories and facilities or to punish Republicans who have opposed the incentives that made them possible. An even larger complication may be the fact that many of these new jobs are moving into states where workers have historically received lower wages and benefits than in the more heavily unionized blue states. “They are sending the money to the states with the lowest worker protections, lower worker standards,” Michael Podhorzer, the former longtime political director of the AFL-CIO, told me. “It’s putting pressure on blue-state employers to lower their standards to be competitive.”

    The magnitude of the Biden boom in investment could be historic. Three bills are contributing to the upsurge. One is the Inflation Reduction Act, which provides sweeping subsidies for the domestic manufacture and deployment of clean-energy products such as electric vehicles. The second is the CHIPS and Science Act, which allocates billions of dollars to encourage the domestic production of semiconductors, now produced mostly abroad. The third is the bipartisan infrastructure bill, which funds not only traditional infrastructure projects such as roads and bridges but also new needs like the broadband program and a nationwide network of electric-vehicle chargers. Biden hopes to turbocharge the effect of these bills with other policies pushing companies to buy American in the materials they use in all of these projects.

    “What seems to be emerging is a clearly American industrial strategy,” says Ellen Hughes-Cromwick, a senior fellow in climate and energy at Third Way, a centrist Democratic group. “This is about moving ahead in markets where we can be super competitive.”

    In a rough calculation, the administration has forecast that these three bills will generate about $3.5 trillion in investment over the next decade. Public spending, either directly on infrastructure projects or through the tax and grant incentives for semiconductors and clean-energy projects, will account for only about two-fifths of that total, with investment from private companies providing the rest. If these bills inspire that much new public and private investment, it would represent a substantial increase—as much as 7 percent annually—in the level of investment the economy now produces (about $5 trillion annually).

    The torrent of spending from companies that these bills are expected to unlock is crucial because it refutes the traditional conservative complaint that public investments simply discourage private investments, Jared Bernstein, the new chair of the Council of Economic Advisers, told me. “The idea that public investment crowds out private investments turns out to be ‘bass-ackwards,’ and that is an important insight of Bidenomics,” Bernstein said.

    There’s no guarantee that the bills will generate as much net new investment as the administration hopes. Jason Furman, who served as chair of the Council of Economic Advisers for President Barack Obama, told me that if the surge of investment contributes to “overheating” the economy, that would prompt the Federal Reserve Board to raise interest rates, which would reduce the level of investment elsewhere. “If you get more in these areas, you are going to get less in other areas, and you can’t just think of these as additive,” said Furman, now an economics professor at Harvard.

    Bernstein doesn’t entirely reject that possibility, but he told me that more investment will just as likely expand the economy’s capacity to produce more output without inflation. “These are investments in the supply side; they are ways to give yourself a little more room to grow,” Bernstein said. “If you are truly standing up a domestic industry that wasn’t there before, that’s new capacity, and, in the long run, that reduces inflationary pressures.”

    Whether or not the Biden agenda generates all the investment the administration now projects, it likely will represent the federal government’s most ambitious effort since the height of the Cold War to upgrade the nation’s physical infrastructure and nurture technologically advanced strategic industries. Economic-development experts such as Parilla say that the closest modern parallel to Biden’s investment agenda may be the intertwined federal initiatives from the mid-1950s to the late ’60s to build the interstate highway system, invigorate higher education and scientific research after the shock of the Soviet Union’s Sputnik-satellite launch, upgrade our nuclear-weapons capabilities, and then win the space race to land on the moon. Those efforts accelerated the development of an array of new technologies, from semiconductors to computers to the internet, that provide the foundation of the 21st-century digital economy.

    Biden has indicated that he’s expecting similar long-term economic benefits from his agenda, whose direct public spending in inflation-adjusted dollars is larger than the funds Washington spent combined on the interstate highway system and the Apollo moon-landing program. Some Democrats see Biden’s interlocking policies to increase public and private investment as the party’s most fully fleshed-out alternative to the GOP’s argument, since the Ronald Reagan era, that lower taxes and less regulation are the keys to growth.

    But the distribution of this new investment has complicated that political calculus. Parilla and a senior research analyst at Brookings Metro, Glencora Haskins, calculated that half the private-sector investments the White House has cataloged have gone to counties that voted for Trump—far more than the 28 percent of the nation’s total economic output that those places generate. Regionally, the biggest winner from the new investment has been the Republican-leaning South, attracting more than two-fifths of the new dollars, considerably more than its share of the total GDP (about a third). The Midwest (about a fifth) and West (about a fourth) have each attracted a share of new investment that roughly matches its portion of the GDP, while the big loser has been the staunchly Democratic Northeast, which is drawing only about an eighth of the new spending.

    Some key swing states are among the biggest beneficiaries. Arizona, Georgia, and Michigan—each of which flipped from Trump in 2016 to Biden in 2020—rank in the top six states receiving the most investments, according to unpublished data provided by Brookings Metro to The Atlantic.

    But nine of the 15 states receiving the most private investment backed Trump in 2020—including Texas, Ohio, Idaho, Kentucky, Tennessee, Indiana, Utah, North Carolina and South Carolina. And of those nine, North Carolina is the only one that Biden realistically can hope to contest in 2024. Meanwhile, several blue-leaning but still competitive states that Biden likely must hold to win next year have attracted much less investment, including Wisconsin (24th), Pennsylvania (26th), Minnesota (34th), and New Hampshire (44th).

    Administration officials are adamant that they are not trying to channel the investment in any way. “The president ran as being president for the American people, for communities all across the country, and that is what he is doing,” Zients told me. “This implementation is not a political exercise.” Instead, Zients said, “the money is flowing into all communities” where there is either, in his words, a “need” to upgrade infrastructure or an “opportunity” to locate manufacturing facilities.

    Hughes-Cromwick correctly notes that if Biden in any way said, “‘This money needs to go to blue states,’ the reaction” from Republicans “would be fierce.” But critics are also correct that the administration’s hands-off approach to the investment flow could threaten its broader economic and political goals.

    Joel Dodge: My Hometown Is Getting a $100 Billion Dose of Bidenomics

    The administration hopes “that in red and purple states, workers will credit Biden and Democrats for the new investment and jobs, which will make Democrats competitive in the region,” Podhorzer, the former AFL-CIO political director, told me. “That is just not going to be the case. History tells us that if any politicians are credited, it’s much more likely they will be local ones.” Georgia’s Republican governor, Brian Kemp, last week demonstrated the problem when he denounced Biden’s program and credited local efforts at the opening of an electric-vehicle-battery plant in the state that has received tax breaks under the Inflation Reduction Act.

    The issue is not just who gets political credit for the new jobs. To achieve its full impact, Biden’s investment agenda will need durable support over time from a congressional majority willing to defend its central provisions. The early evidence suggests that investment in red places is not helping this cause: Even though four-fifths of all the clean-energy investments announced have gone to districts held by Republicans in the House of Representatives, every one of them voted this spring to repeal the Inflation Reduction Act incentives that have encouraged those investments.

    The White House, in a fact sheet for Biden’s visit to South Carolina, pointedly noted that Republican Representative Joe Wilson (who famously yelled “You lie” at Obama during one of the president’s State of the Union speeches) was among those who voted to repeal the incentives, although they helped finance the expansion of solar manufacturing in his district that Biden visited to celebrate today. Zients said that Biden plans to aggressively “call out” Republicans who are not just “showing up at the ribbon cuttings for a bill they didn’t support, [but] are actively trying to take that money away from their communities.”

    The biggest challenge in the red-state-investment tilt may be whether it impedes Biden’s overarching goal of creating more well-paying jobs for workers without a college degree. As Podhorzer pointed out, average wages in many industries, including manufacturing, are much lower in red states than in blue.

    Almost all the projects funded under the infrastructure bill require contractors to pay higher “prevailing wages,” so that legislation has proved immensely popular with unions representing construction workers. But the UAW union has repeatedly complained that the auto companies receiving massive federal subsidies under the Inflation Reduction Act are seeking to reduce wages and benefits by producing EV batteries and other components in new facilities that are not subject to the union’s national contract. “Why is Joe Biden’s administration facilitating this corporate greed with taxpayer money?” UAW President Shawn Fain complained in a statement late last month after the Energy Department approved a $9.2 billion loan to Ford to construct three new EV-battery plants in Kentucky and Tennessee.

    Compounding the union’s concern is that, as the EV share of the overall market grows, the auto companies will inevitably reduce employment at the unionized plants now producing the batteries for internal-combustion vehicles as they gear up production at their EV-battery plants. Given the locations of most of those EV plants, that change will also likely shift jobs from Rust Belt states that Democrats must win, like Michigan, to states such as Kentucky, Tennessee, and South Carolina, where their prospects are dim. “If I am a Democratic Party adviser, why are we giving $9 billion to replace 7,500 Rust Belt jobs with half-the-wage Kentucky and Tennessee jobs?” one UAW source, who asked for anonymity while discussing union strategy, told me. “What’s the political calculus there?”

    Biden lost his most powerful tool to promote unionization in the EV transition when Senator Joe Manchin insisted on the removal of a provision in the inflation-reduction bill that would have given consumers a substantial tax break for purchasing electric vehicles built with union labor.

    But critics in the party believe that the administration should be more aggressive about challenging companies to provide good wages with the tools they still have, such as the conditions they can attach to the sort of loan Ford received. “We definitely don’t want to be stimulating a race-to-the-bottom dynamic that will be undermining our own goals of ensuring decent livelihoods for workers,” Isabel Estevez, the deputy director of industrial policy and trade at the Roosevelt Institute, a liberal think tank, told me.

    Biden has identified with unions more overtly than any Democratic president in decades, so he will likely seek some way to soothe the discontent at the UAW. But he probably won’t veer from his larger course of celebrating how much of the new investment is flowing into red-leaning blue-collar places, even if many of those are communities he is unlikely to win or in states he cannot seriously contest.

    Because Bidenomics aims to revive “investments in places that have long been left behind, then it is inevitable” that some of that funding will benefit distressed communities that have turned away from Democrats and embraced Trump, Bernstein told me. For Biden, aides say, that’s not a bug in his plan, but a benefit. “President Biden often says, ‘Whether you voted for me or not, I will be your president,’” Bernstein said. “Now he can stand at the podium and hold up the graphics that show that it’s true.”

    Ronald Brownstein

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  • Joe Biden Isn’t Popular. That Might Not Matter in 2024.

    Joe Biden Isn’t Popular. That Might Not Matter in 2024.

    By almost any historic yardstick, President Joe Biden is beginning the reelection campaign he formally announced today in a vulnerable position.

    His job-approval rating has consistently come in at 45 percent or less; in several recent high-quality national polls, it has dipped closer to 40 percent. In surveys, three-fourths or more of Americans routinely express dissatisfaction with the economy. And a majority of adults have repeatedly said that they do not want him to seek a second term; that figure rose to 70 percent (including just more than half of Democrats) in a national NBC poll released last weekend.

    Those are the sort of numbers that have spelled doom for many an incumbent president. “Compared to other presidents, Biden’s approval is pretty low [about] a year and a half from Election Day,” says Alan Abramowitz, a political scientist at Emory University, in Atlanta. “It’s not where you want to be, for sure.”

    David A. Graham: Biden’s in

    And yet despite Biden’s persistently subpar public reviews, there’s no sense of panic in the Democratic Party about his prospects. No serious candidate has emerged to challenge him for the party’s 2024 presidential nomination. No elected leaders have called on him to step aside. And though some top Democratic operatives have privately expressed concern about Biden’s weak standing in polls, almost every party strategist I spoke with leading up to his announcement said they consider him the favorite for reelection.

    There are many reasons for this gap between the dominant views about Biden’s immediate position and his eventual prospects in the 2024 race. But the most important reason is encapsulated in the saying from Biden’s father that he often quotes in speeches: “Don’t compare me to the Almighty; compare me to the alternative.” Most Democrats remain cautiously optimistic that whatever concerns Americans might hold about the state of the economy and Biden’s performance or his age, a majority of voters will refuse to entrust the White House to Donald Trump or another Republican nominee in his image, such as Florida Governor Ron DeSantis.

    “I think there’s no question that neither Trump nor Biden are where they want to be, but … if you project forward, it’s just easier to see a path for victory for Biden than for Trump or DeSantis,” says the Democratic strategist Simon Rosenberg, who was one of the few analysts in either party to question the projections of a sweeping red wave last November.

    Rosenberg is quick to caution that in a country as closely split as the U.S. is now, any advantage for Biden is hardly insurmountable. Not many states qualify as true swing states within reach for both sides next year. And those states themselves are so closely balanced that minuscule shifts in preferences or turnout among almost any constituency could determine the outcome.

    The result is that control over the direction for a nation of 330 million people could literally come down to a handful of neighborhoods in a tiny number of states—white-collar suburbs of Detroit, Philadelphia, Phoenix, and Atlanta; faded factory towns in Wisconsin and Pennsylvania; working-class Latino neighborhoods in Las Vegas; and small-town communities across Georgia’s Black Belt. “Never have so few people had such a big impact in deciding the future of American politics,” Doug Sosnik, the chief White House political adviser for Bill Clinton, told me.

    On an evenly matched battlefield, neither side can rest too comfortably about its prospects in the 2024 election. But after Trump’s upset victory in 2016, Republicans have mostly faced disappointing results in the elections of 2018, 2020, and 2022. Across those campaigns, a powerful coalition of voters—particularly young people, college-educated white voters, those who don’t identify with any organized religion, and people of color, mostly located in large metropolitan centers—have poured out in huge numbers to oppose the conservative cultural and social vision animating the Trump-era Republican Party. Many of those voters may be unenthusiastic about Biden, but they have demonstrated that they are passionate about keeping Trump and other Republicans from controlling the White House and potentially imposing their restrictive agenda nationwide. Biden previewed how he will try to stir those passions in his announcement video Tuesday: Far more than most of his speeches, which typically emphasize kitchen-table economics, the video centers on portraying “MAGA extremists” as a threat to democracy and “bedrock freedoms” through restrictions on abortion, book bans, and rollbacks of LGBTQ rights.

    “The fear of MAGA has been the most powerful force in American politics since 2018, and it remains the most powerful force,” Rosenberg told me. “It’s why Democrats did so much better than the fundamentals [of public attitudes about Biden and the economy] in 2022, and that will be the case again this time.”

    After the Democrats’ unexpectedly competitive showing in the midterm election, Biden’s approval rating ticked up. But in national polls it has sagged again. Recent surveys by The Wall Street Journal, NBC, and CNBC each put Biden’s approval rating at 42 percent or less.

    Sosnik said the pivotal period for Biden is coming this fall. Historically, he told me, voter assessments of an incumbent president’s performance have hardened between the fall of their third year in office and the late spring of their fourth. The key, he said, is not a president’s absolute level of approval in that period but its trajectory: Approval ratings for Ronald Reagan, Clinton, and Barack Obama, each of whom won reelection, were all clearly rising by early in their fourth year. By contrast, the approval ratings over that period fell for George H. W. Bush and remained stagnant for Trump. Each lost his reelection bid. Economists and pollsters say voters tend to finalize their views about the economy over roughly the same period and once again tend to put less weight on the absolute level of conditions such as inflation and unemployment than on whether those conditions are improving or deteriorating.

    With that crucial window approaching, Biden will benefit if inflation continues to moderate as it has over the past several months. He also could profit from more time for voters to feel the effects of the massive wave of public and private investment triggered by his trio of major legislative accomplishments: the bipartisan infrastructure and semiconductor bills, and the climate provisions of the Inflation Reduction Act.

    Read: Biden’s blue-collar jobs bet

    But Biden also faces the risk that the economy could tip into recession later this year, which some forecasters, such as Larry Summers, the former Clinton Treasury Secretary who predicted the inflationary surge, still consider likely.

    If a recession does come, the best scenario for Biden is that it’s short and shallow and further tamps down inflation before giving way to an economic recovery early in 2024. But even that relatively benign outcome would make it difficult for him to attract more supporters in the period through next spring when voters traditionally have solidified their verdicts on a president’s performance.

    That means that, to win reelection, Biden likely will need to win an unusually large share of voters who are at least somewhat unhappy over conditions in the country and ambivalent or worse about giving him another term. Historically that hasn’t been easy for presidents.

    For those who think Biden can break that pattern, last November’s midterm election offers the proof of concept. Exit polls at the time showed that a solid 55 percent majority of voters nationwide disapproved of Biden’s job performance and that three-fourths of voters considered the economy in only fair or poor shape. Traditionally such attitudes have meant disaster for the party holding the White House. And yet, Democrats minimized the GOP gains in the House, maintained control of the Senate, and won governorships in most of the key swing states on the ballot.

    In 2022, the exit polls showed that Democrats, as the party holding the White House, were routed among voters with intensely negative views about conditions. That was typical for midterm elections. But Democrats defused the expected “red wave” by winning a large number of voters who were more mildly disappointed in Biden’s performance and/or the economy.

    For instance, with Trump in the White House during the 2018 midterms, Republicans won only about one in six voters in House elections who described the economy as “not so good,” according to exit polls; in 2020, Trump, as the incumbent president, carried only a little more than one-fifth of them. But in 2022, Democrats won more than three-fifths of voters who expressed that mildly negative view of the economy.

    Similarly, in the 2010 midterm elections, according to exit polls, two-thirds of voters who “somewhat disapproved” of Obama’s performance as president voted against Democrats running for the House; almost two-thirds of the voters who “somewhat disapproved” of Trump likewise voted against Republicans in 2018. But in 2022, the exit polls found that Democrats surprisingly carried almost half of the voters who “somewhat disapproved” of Biden.

    The same pattern persisted across many of the key swing states likely to decide the 2024 presidential race: Democrats won the governors’ contests in Arizona, Michigan, Pennsylvania, and Wisconsin, and Senate races in Arizona, Pennsylvania, and Georgia, even though the exit polls found a majority of voters in each state said they disapproved of Biden’s performance. Winning Democratic gubernatorial candidates such as Gretchen Whitmer in Michigan, Josh Shapiro in Pennsylvania, and Katie Hobbs in Arizona each carried at least 70 percent of voters who described the economy as “not so good.”

    Why did Democrats so exceed the usual performance among voters dissatisfied with the country’s direction? The answer is that many of those voters rejected the Republican Party that Trump has reshaped in his image. The exit polls found that Trump was viewed even more unfavorably than Biden in several of the swing states, including Arizona, Pennsylvania, and Wisconsin. And nationally, more than two-fifths of voters who expressed negative views about the economy also said they considered the GOP “too extreme.” Particularly on social issues such as abortion rights and gun control, the 2022 results demonstrated that “Trump and these other Republicans have painted themselves into a corner in order to appeal to their base,” Abramowitz told me.

    Biden may expand his support by next year, especially in the battleground states, if economic conditions improve or simply because he may soon start spending heavily on television advertising touting his achievements, such as new plant openings. But more important than changing minds may be his ability to replicate the Democrats’ success in 2022 at winning voters who aren’t wild about him but dislike Trump and the GOP even more. “While there are not an overwhelming number of people who are tremendously favorable to Biden, I just don’t think there is an overwhelming number of persuadable people who hate him,” says Tad Devine, a long-time Democratic strategist. “They hate the other guy.” A new NPR/PBS NewsHour/Marist poll released today offered one concrete measure of that dynamic: In an echo of the 2022 pattern, three-fourths of the adults who said they mildly disapproved of Biden’s performance in office nonetheless said they did not want a second term for Trump.

    Lynn Vavreck, a political scientist at UCLA, told me that dynamic would likely prove powerful for many voters. Even Democratic-leaning voters who say they don’t want Biden to run again, she predicted, are highly likely to line up behind him once the alternative is a Republican nominee whose values clash with their own. “The bottom line is that on Election Day, that Democratic nominee, even the one they didn’t want to run again, is going to be closer to most people’s vision of the world they want to live in than the Republican alternative,” she said.

    In both parties, many analysts agree that in a Biden-Trump rematch, the election would probably revolve less around assessments of Biden’s performance than the stark question of whether voters are willing to return Trump to power after the January 6 insurrection and his efforts to overturn the 2020 election. “President Biden by every conventional standard is a remarkably weak candidate for reelection,” the longtime Republican pollster Bill McInturff told me in an email. But “Biden’s greatest strength,” McInturff continued, may be the chance to run again against Trump, who “is so terrific at sucking up all the political oxygen, he becomes the issue on which the election gets framed, not the terrible economy or the level of Americans’ dissatisfaction with the direction of the country.”

    On both sides, there’s greater uncertainty about whether DeSantis could more effectively exploit voters’ hesitation about Biden. Many Democrats and even some Republicans believe that DeSantis has leaned so hard into emulating, and even exceeding, Trump’s culture-war agenda that the Florida governor has left himself little chance of recapturing the white-collar suburban voters who have keyed the Democratic recovery since 2018. But others believe that DeSantis could get a second look from those voters if he wins the nomination, because he would be introduced to them largely by beating Trump. Although Devine told me, “I do not see a path to the presidency in the general election for Donald Trump,” he said that “if DeSantis were to be able to get rid of Trump and get the credit for getting rid of Trump…I think it’s fundamentally different.”

    One thing unlikely to change, whomever Republicans nominate, is how few states, or voters, will effectively decide the outcome. Twenty-five states voted for Trump in both 2016 and 2020, and the strategists planning the Biden campaign see a realistic chance to contest only North Carolina among them. Republicans hope to contest more of the 25 states that voted for Biden, but after the decisive Democratic victories in Michigan and Pennsylvania in 2022, it’s unclear whether either is within reach for the GOP next year. The states entirely up for grabs might be limited to just four that Biden carried last time: Arizona, Georgia, Nevada, and Wisconsin. And as the decisive liberal win in the recent state-supreme-court election in Wisconsin showed, winning even that state, like Michigan and Pennsylvania, may be an uphill battle for any Republican presidential nominee viewed as a threat to abortion rights.

    Read: The first electoral test of Trump’s indictment

    In their recent book, The Bitter End, Vavreck and her co-authors, John Sides and Chris Tausanovitch, describe hardening loyalties and a shrinking battlefield as a form of electoral “calcification.” That process has left the country divided almost in half between two durable but divergent coalitions with antithetical visions of America’s future. “We are fighting at the margins again,” Vavreck told me. “The 2020 election was nearly a replica of 2016, and I think that largely this 2024 election is going to be a repeat of 2020 and 2016.” Whatever judgment voters ultimately reach about Biden’s effectiveness, or his capacity to handle the job in his 80s, this sorting process virtually guarantees another polarized and precarious election next year that turns on a small number of voters in a small number of states.

    Ronald Brownstein

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