The stench of defeat has clung to the Democrats’ failure to get either of their major infrastructure bills passed by Congress during the last week of September. Speaker of the House Nancy Pelosi had committed herself to 27 September as the date by which she would bring to a vote the smaller, bipartisan bill infrastructure package already passed by the Senate. This was going to happen, she said, even if no progress had been made on meeting the progressive Democrats’ key demand: passing the larger reconciliation infrastructure bill at the same time. But Pelosi held no vote that day or even that week, even as she vowed with increasing frequency (and seeming desperation) that one was imminent. The week ended not with a dramatic roll call but with plenty of Democratic handwringing and gleeful Republican predictions that the collapse of Democratic rule and, with it, of Biden’s presidency, was at hand.

Treating that fateful week as the moment when the promise of the Biden presidency vanished may be too hasty a conclusion, however. The difficult challenge facing Pelosi was to unite Democrats behind a second infrastructure bill much larger and more ambitious than the first. It was never going to be easy to pass that second bill, and not just because the Democrats were holding a slim majority in the House and the thinnest of majorities in the Senate. It is also the case that a bill of this size and scope has no clear precedent. We hear a lot about FDR’s remarkable accomplishment, passing 15 separate bills in the first 100 days of his New Deal administration in 1933. The Democrats’ second infrastructure bill, if passed, would have been equally remarkable. It is best understood as an attempt to compress the equivalent of Roosevelt’s fifteen separate initiatives into one giant piece of legislation.

It’s exhausting simply to read through the list of the second infrastructural bill’s major provisions: universal preschool, subsidies for child and elder care, a program of school lunches, paid medical leave, expansion of Medicare (and Obamacare and Medicaid), massive investments in a green economy, additional investments in physical infrastructure, a Civilian Climate Corps (modelled on FDR’s storied Civilian Conservation Corps), affordable housing, Native American infrastructure, support for historically black colleges and universities, and an expanded green card program for immigrant workers and their families. We’ve heard a lot about the way in which the filibuster warps American democracy and about the arcane process of “reconciliation” that, in a few instances, allows for a filibuster “workaround.” We’ve heard a lot less about how the Democrats, in difficult political circumstances, have come within two Senate votes of achieving a legislative breakthrough on a scale that rivals FDR’s legendary 100 days.

And despite pundit declarations to the contrary, Democrats’ attempt at breakthrough is not yet dead. It is true that the reconciliation infrastructural bill no longer has a chance of reaching an expenditure level of $4tn. If such a bill passes, it is likely to be in the $1.5-2tn range. The many major initiatives currently contained within it may have to be shrunk by a third. That will disappoint Bernie Sanders and Alexandria Ocasio-Cortez and their supporters, who had originally set their eyes on a $6tn package. Yet, history offers a different perspective. The Biden administration might still deliver a package of programs across its first year totaling $5tn: an estimated $2tn for a downsized reconciliation infrastructural bill; $2tn for America’s Rescue Plan already approved; and the $1tn for the bipartisan infrastructure bill that is sure to pass the House at some point. This “shrunken” 2021 package as a whole would still rival (as a percentage of GDP) government expenditures during the most expensive years of the second world war. It would exceed by more than five times the size of Obama’s 2009 economic recovery plan.

The ambition of Biden’s spending package reveals the distance that US politics has travelled since the Great Recession, when Obama relied for economic guidance on a group of economic advisors drawn from the neoliberal world of Robert Rubin and Goldman Sachs, and of Wall Street more broadly—figures such as Timothy Geithner, Lawrence Summers, Peter Orszag, and Michael Froman. Elizabeth Warren had not then launched her political career, and Sanders was a lonely voice in the Senate. They were certainly not regarded as Democratic Party heavyweights. They now are. That Biden ultimately sided with the progressives during the 27 September week is a sure sign of their influence.

The progressives’ influence is equally apparent in Biden’s decision, in the days leading up to the expected vote on the bipartisan infrastructure bill, to nominate Saule Omarova to be Comptroller of the Currency. Omarova, a law professor at Cornell University, is a radical who wants to democratize and nationalize finance in America in ways never done before. In her legal writings, she has argued that the Federal Reserve ought to be turned into a people’s bank where Americans would keep their deposit accounts (rather than in private banks, as is currently the case). This newly configured Fed, in her vision, would also establish a “national investment authority” charged with directing Federal Reserve capital to projects that serve the public interest. Omarova may not receive confirmation from the Senate; even if she does, she may simply be a pawn in Biden’s campaign to get the mainstream Jerome Powell reappointed as Fed chairman. But by nominating Omarova, Biden has spurred a conversation already underway about how to restructure the Fed in ways that make it less of a cloistered institution serving elite interests and both more transparent and more responsive to the democratic will.

Omarova is hardly a singular figure in Biden circles. Stephanie Kelton, an economics professor at Binghamton University and a former chief economist for Democrats on the US Senate Budget Committee, has argued in a widely-read book (The Deficit Myth) that governments can sustain much larger deficits than conventional economic theory prescribes. High-volume government expenditures, properly targeted, she asserts, will not slow economic growth but enhance a “people’s economy.” Lina Khan, appointed by Biden to chair the Federal Trade Commission, believes that social media and e-commerce giants such as Amazon exercise the kind of monopoly power that damage both the economy and American democracy. She has authorized the FTC to scrutinize the practices of these corporate titans with a view toward either breaking them up or subjecting them to much stricter public regulation than they have yet known. More generally, she aims to restore a regime of public regulation of private corporate power that FDR and his New Dealers did so much to bring into being—and that the Reagan Revolution did so much to break up. The bipartisan fury directed at Facebook during congressional hearings last week suggest that Khan’s views may have broad popular appeal.

It is still too soon to know which of these progressive views and the governing proposals that issue from them will prevail. The Democrats are operating in a political environment far more hostile than what Roosevelt faced in 1933, when he enjoyed large majorities in the House and the Senate. If they fail to pass versions of both infrastructural bills this autumn, the Democrats will seriously damage their chances of maintaining their majorities in the House and Senate in 2022. But it is also true, as is the case with the populist mobilization that Trump has engendered on the right, that the new progressivism is not going away anytime soon. We have entered a new political era, one in which the principles and strategies that guided the party during the Clinton and Obama eras no longer suffice.

• Gary Gerstle is Mellon Professor of American History at Cambridge and is writing The Rise and Fall of the Neoliberal Order (2022). He is a Guardian US columnist