Harris ran from the Biden policies that were actually popular with voters | Daniela Gabor

The post-mortems of Kamala Harris’s loss to Donald Trump all agree on one thing: that Harris stuck too close to Biden. It was deliberate, pundits charge, pointing to the now infamous October appearance on ABC’s The View, where Harris said “There is not a thing that comes close to mind” that she would have done differently. But the pundits are wrong.

Harris did distance herself from Biden where it hurt her most. She dumped his Rooseveltian transformative ambitions to bring back big government. Instead, she returned to the Obama-Clinton of a small or neoliberal state that highly influential Democrats like Jake Sullivan had already known was an electoral dead end during the first Trump administration.

Freshly bruised from his experience as senior adviser to Hillary Clinton’s failed presidential campaign, Sullivan set out a new vision for the Democratic party in his 2018 essay The New Old Democrats. The nutshell: “It’s not the 1990s anymore. People want the government to help solve big problems.”

The problem for Democrats, he warned, was not that the party had been hijacked by progressive forces (a familiar lament, now framed in the conservative language of “woke”) but the opposite. The political centre of gravity had shifted, leaving the Democrats behind an American public clamoring for more energised government. To stave off the long-run threat of Trumpism, Democrats had to abandon centrist politics and embrace a new policy playbook, a return of the state guided by Roosevelt’s principles of “bold, persistent experimentation”. The main task was to “embrace the fact that transforming our economy will require substantial public investments”, paid for through progressive taxation of wealth and concentrated corporate power – big government, beating back big business.

As Biden hung a portrait of Roosevelt above the Oval Office fireplace after winning the election, his team, with Jake Sullivan as national security adviser, set to work on the return of big, transformative government. Even with congressional politics in the way, the several legislative initiatives together – Chips, IRA, the Infrastructure and Jobs Act – amounted to a $2tn push to reshape the American economy. The conflation of transformative ambitions and China hawkishness, once remarkably absent from Sullivan’s vision, worried some, but most took it as either imperative or the price to pay for bipartisan support.

By late 2023, even ideological enemies approved of Bidenomics. The free market evangelists at the Economist applauded Biden’s as the most “energetic American government in nearly half a century”. It helped revive beleaguered unions, and “produced an industrial policy that aims to reshape the American economy”, with immediate results: investment in manufacturing facilities more than doubled, soaring to its highest on recent historical record. Similarly, Lina Khan, chair of the US Federal Trade Commission, was taming concentrated corporate power without destroying corporate profitability or slowing the record number of new businesses created during Biden’s first years.

If the Economist expected four more years of Biden to mean even bigger government, Harris backtracked. Where Sullivan called for a Democrat-led economic revolution for America, her “opportunity economy” read like a sad list of bullet points on a crammed slide headed “Smallish Government”: boost child tax credits, increase deductions for new small businesses, help for first-time homebuyers, incentives for new developments.

This was not the transformative vision that Biden had championed. Her plans to oppose price gouging framed corporate power as an occasional, rather than structural, threat against American consumers, and said nothing about American workers. Alongside speculation that she would bow to billionaire pressure to oust Khan, Harris dropped union leaders and her early position as a scourge of Big Business to instead court favor with Wall Street, Mark Cuban and the minuscule Liz Cheney fanbase.

Under Harris, the Democratic party returned the mantle of change to the Trump campaign, and to a JD Vance prepared to denounce corporate power and voter economic misery often more trenchantly than Harris.

What if Harris shifted to the right of Biden because she had no choice? The most energetic government in decades had failed to make it through to voters, who heard inflation when Democrats shouted Bidenomics. But here Sullivan, by now tainted by his unwavering support for Israel’s destruction of Gaza, had already given the answer, or, rather, asked the important question in his 2018 essay: The New Old Democrats, he had insisted, should not ask whether transformative government, but how? How can transformative government both check corporate power and support workers and families?

The hard truth about Biden’s transformative project is that it failed its ambitions to roll back the power of capital. There was a brief moment in 2021 when big finance spoke and nobody listened, when investors lamented being excluded from Biden’s old-style “government spending on infrastructure”. But then the “politics of the possible” in Congress curtailed that momentum, in no small part due to conservative Democrats like Joe Manchin and Kyrsten Sinema, private equity’s best friend.

Bidenomics might not have started, but it certainly ended, as a capital-first, trickle-down-to-workers project. Its transformative ambitions morphed into generous subsidies (tax incentives) for private investors. These investors got to opt out of worker-friendly tax credits. Where Roosevelt would have decried the new generation of subsidy-chaser capitalists as class and democracy enemies, Biden invited the biggest of them all – Larry Fink, CEO of the asset manager BlackRock – to join him at the G7 meeting in Rome in June 2024. There, Fink delivered a long sermon on why the privatisation of social and climate infrastructure, with state subsidies for investors, is the only way forward.

Biden officials might have waved a copy of Wendy Brown’s Undoing the Demos: Neoliberalism’s Stealth Revolution on their way to the White House, but distributional politics hasn’t changed that much since the glory days of neoliberalism. The richest 20% by income account for 40% of spending, twice as much as the poorest 40%. This is the widest gap on record, according to Oxford Economics.

Rich millennials got virtually all the $51tn gains to US wealth this decade. Having tried and failed to extend the Covid-19 social safety net, the Biden administration instead continued to hand big finance – in its private equity guise – chunks of the state’s social contract with citizens, from housing to healthcare, dentistry, prisons, retirement homes. Voters heard inflation because nowhere does the paycheck rule as it does in a deeply unequal United States.

If Sullivan was right this time too, and there is little reason to believe otherwise, the winning strategy for Harris was to revive and even amplify Biden’s Rooseveltian dream of big government. Democrats now choosing to interpret her defeat as “progressive hijacking” would do well to heed Sullivan’s warning against a return to centrist politics, the most accurate prediction of his entire career.

• Daniela Gabor is professor of economics and macrofinance at SOAS, University of London. She is working on The Wall Street Consensus, a book on the return of the transformative state