Joe Biden is framing his antitrust agenda as a linchpin to long-term economic growth. That’s notable, because Democrats haven’t in modern memory developed a consensus strategy to achieve such growth.
“Fair competition is why capitalism has been the world’s greatest force for prosperity and growth,” Biden said July 9. Franklin Roosevelt’s antitrust enforcement, he said, “help[ed] set the course for sustained economic growth after World War Two.” After Ronald Reagan took office in 1981, Biden said, antitrust enforcement weakened, corporations accumulated “more and more power,” and we “lost the fundamental American idea that true capitalism depends on fair and open competition. The result was “less growth, weakened investment, fewer small businesses.”
We haven’t heard this sort of political rhetoric, at the highest levels, for some time. When you look back at Democratic presidential nomination acceptance speeches over the past 30 years—including Biden’s—you’ll find that discussions of economic growth never talked up antitrust enforcement. Indeed, the speeches didn’t articulate any consistent approach to economic growth.
In 1992, Bill Clinton suggested government needed to get out of the private sector’s way. He called for “a government that is leaner, not meaner, a government that expands opportunity, not bureaucracy, a government that understands that jobs must come from growth in a vibrant and vital system of free enterprise.”
The Democrats’ party platform that year—always seen by far fewer people—said an “expanding, entrepreneurial economy of high-skill, high-wage jobs is the most important family policy, urban policy, labor policy, minority policy and foreign policy America can have.”
More affirmatively, the platform said that “a national economic strategy to invest in people” was needed to encourage growth. Such a strategy, it said, would include government investment in research and development and a “national public works investment and infrastructure program.” But the platform also called for government restraint in the form of deficit reduction, because “[r]ising interest on that debt now swallows one tax dollar in seven.”
In 1996, after muscling through a controversial tax increase that cut the deficit and freed up the Federal Reserve to cut interest rates, Clinton hugged the balanced budget argument tighter, linking it to growth. (This was, you may recall, the same year Clinton announced in his State of the Union speech that “the era of big government is over.”)
At the 1996 party convention, Clinton didn’t emphasize the tax increases, preferring instead to propose a “targeted” and “responsible” tax cut. He warned that a bigger Republican tax cut would lead to bigger deficits and higher interest rates. After detailing all the ways higher rates harm individual consumers, he asked, “Do we really want to make that same mistake all over again? Do we really want to stop economic growth again? Do we really want to start piling up another mountain of debt?”
In 2008, Barack Obama, similar to Clinton, said that “the market should reward drive and innovation and generate growth” but then added a healthy dollop of liberalism: “businesses should live up to their responsibilities to create American jobs, look out for American workers, and play by the rules of the road.” Obama offered a similar pairing in 2012. “Our free enterprise system [is] the greatest engine of growth and prosperity that the world’s ever known,” he said. “But we also believe in something called citizenship … the idea that this country only works when we accept certain obligations to one another and to future generations.” In other words: The private sector generates growth, but government is needed to make sure the rewards of that growth are shared widely.
In Biden’s 2020 acceptance speech, he went a step further and argued that public infrastructure investment is a critical ingredient to growth. “We’ll build back better,” he said, “with modern roads, bridges, highways, broadband, ports and airports, as a new foundation for economic growth.”
Biden’s legislative agenda reflects that view. But in his antitrust remarks, Biden stressed that for “long-term” economic growth, we can’t depend simply on the market. The government must fix the market.
By elevating the importance of antitrust policies, Biden was returning the Democratic Party to its roots planted in the Progressive Era of the early 20th century. His antitrust speech lauded Teddy Roosevelt for battling the trusts and giving “the little guy a fighting chance.” But Biden’s rhetoric had more in common with Roosevelt’s 1912 rival for the progressive mantle, Woodrow Wilson.
In 1911 President William Howard Taft accused his former ally Roosevelt of getting snookered by the steel trust in approving the purchase of a competitor. Roosevelt’s answer was that “size in itself does not signify wrong-doing.” Only when a “huge corporation … has gained its position by unfair methods” should it be broken up and further regulated. In a 1912 campaign audio recording, Wilson laid into Roosevelt—running against both Taft and Wilson on the Bull Moose ticket—for saying that:
Mr. Roosevelt puts forth an admirable platform of what he would like to do for the people. But how is he going to do it? He proposes in his platform not to abolish monopoly, but to take it under the legal protection of the government and to regulate it. In other words, to take the very men into partnership who have been making it impossible to carry out these great programs by which all of us wish to help the people …
There are two programs. The Democratic program is this: to see to it that competition is so regulated that the big fellow cannot put the little fellow out of business, for he has been putting the little fellow out of business for the last half generation.
The program of the third party is to take these big fellows that have been putting the little fellow out of business, and regulate them, saying, “That is all right. You have put the other fellows out of business. But we are not going to put the little fellows back where you destroyed them. We’re going to adopt you and say, ‘run the business of the country, but run it in the way we tell you to run it.’”
As president, Wilson signed into law the Clayton Antitrust Act, which banned anti-competitive mergers and pricing, while also taking care that its provisions didn’t bar workers from unionizing and striking. He also created the Federal Trade Commission to enforce the Clayton Act, as it continues to do today.
In the run-up to the 1914 midterm elections, Wilson drew a clear contrast between the two parties: “while our opponents were ready to … merely regulate it … it is our purpose to destroy monopoly and maintain competition as the only efficient instrument of business liberty.” The Democrats lost House seats that year, but they gained three Senate seats and kept control of both chambers.
After that, Democratic Party platforms supported antitrust policies in every presidential election year until 1992 with Bill Clinton. But as Biden seeks to return to the Democratic past, he should be mindful that past Democratic presidents—even Wilson—were often pulled in the two opposite directions Wilson described, and struggled to tame corporate power.
Wilson biographer John Milton Cooper noted Wilson’s initial appointments to the FTC “hobbled its effectiveness,” and that the “need for cooperation between government and business during World War I would dampen the Wilson administration’s anti-trust ardor.”
Franklin Roosevelt began his presidency with a suspension of the Democrats’ prized antitrust law as part of the National Industrial Recovery Act, accepting the U.S. Chamber of Commerce’s argument that corporations needed the power of price fixing in order the end the Great Depression. Roosevelt envisioned a grand partnership between government and big business. Populists and many Progressives were horrified. An apoplectic Senator Huey Longdecreed that “The Democratic Party dies tonight … We wrote the platform in which we said we would not emasculate the antitrust laws. … We are now guaranteeing that the antitrust law can be emasculated, that the clothing men can get together, and that the shoe men can get together, and raise the prices of the commodities of industry without anything whatever to take care of the population on the farms.”
Roosevelt’s record on antitrust was actually more mixed than that. Biden’s speech noted that FDR “ramped up antitrust enforcement eightfold in just two years, saving families billions in today’s dollars and helping to set the course for sustained economic growth after World War Two.” Perhaps Biden picked that up from a New York Times op-ed by former Democratic Senator Mark Pryor, published in March, that lauded one of FDR’s Justice Department antitrust division leaders, Robert Jackson (later chief prosecutor at the Nuremberg Trials and a Supreme Court justice). “Jackson’s 14-month stint as head of the antitrust division in 1937 and ’38,” Pryor wrote, “was the most consequential in the agency’s history.”
As with Wilson, though, when war broke out, Roosevelt rekindled his relationship with big business, and many antitrust cases were suspended. A strategy that deemphasized antitrust and instead pursued government partnership with and regulation of corporate giants prevailed through the 1960s in what John Kenneth Galbraith described approvingly as “the new industrial state.”
John F. Kennedy’s and Lyndon Johnson’s presidencies did have some notable antitrust successes. The Kennedy administration won one Supreme Court case establishing that the Clayton Act applied to banks, and the Johnson administration won another preventing the combination of two local banks. But there was often less to these presidents’ determination to check business power than met the eye.
In 1962 Kennedy famously threatened a price-fixing investigation into U.S. Steel after it surprised him with an inflationary price increase. Kennedy was furious because he’d just got done persuading the Steelworkers to moderate their wage demands. “My father always told me that all businessmen were sons of bitches,” he said privately, “but I never believed it until now.” After Kennedy’s saber-rattling, U.S. Steel backed down and cancelled the increase.
But that victory didn’t last long. Steel prices soon went back up anyway, just more quietly and gradually. Kennedy and Johnson largely remained passive during a wave of corporate mergers that began in the previous decade.
Reagan and Bush curbed antitrust enforcement much more sharply (and without compensatory regulation on the “new industrial state” model). Democrats railed against a wave of mergers, but were circumspect about ways to stop it.
The Clinton and Obama presidencies continued the postwar Democratic tradition of a mixed approach to antitrust enforcement, though with differing approaches to finance and technology. The Clinton administration repealed FDR’s Glass-Steagall law, which had long separated commercial banking from investment banking, while Obama stepped up bank regulation with the Dodd-Frank law. But when it came to the rising power of the corporate Internet, it was Clinton’s Justice Department that swung hard, suing Microsoft for wielding monopoly power illegally to control web browsing. Antitrust advocates cringe that Obama’s FTC took a pass on Google despite evidence of monopolistic behavior. Still, the rise of Big Tech is a major reason why Democrats have brought antitrust policy back to center stage, starting with the Hillary Clinton campaign in 2016, which put antitrust policy back in the party platform for the first time since her husband’s campaign took it out.
Now Biden has returned antitrust to the prominence it held in Democratic Party politics a century ago. In his remarks, Biden cannily plucked examples where stronger antitrust enforcement could deliver real world benefits without the hassle of navigating Congress. For example, in pledging that the Federal Trade Commission would “ban or limit” non-compete clauses in employment contracts, Biden noted the rank absurdity of imposing them on workers “running the machines that lay down asphalt. If, in fact, you get offered a job and … you’re in Arkansas doing it … you can’t take a job in west Texas to do it. What in the hell does that have to do with anything?” This was Biden at his best, framing his appeal in the common sense ticked-off language of the average, normal person.
Biden’s revival of antitrust isn’t just good policy; it’s also good politics. That’s because it can bridge ideological tensions between the party’s younger left flank and its older centrists. Antitrust has appeal to both factions. Talk of restoring competition may upset a handful of giant corporations, but not the wider swath of smaller businesses and entrepreneurs. Socialists may not love capitalism but it’s hard to see them getting too mad at moderate Democrats who draw real corporate blood in the name of repairing capitalism.
Yet intra-party tensions remain. During a recent Congressional Progressive Caucus conference call, a heated dispute broke out as Congresswoman Zoe Lofgren criticized the authors of aggressive antitrust legislation for hasty work, and Congressman David Cicilline accused Lofgren of shilling for Silicon Valley. If Biden is to succeed where his predecessors fell short, he will need to be mindful of his party’s history.