As summer unfolds, US President Joe Biden and his team are making a concerted effort to promote “Bidenomics” as a pivotal message in his upcoming reelection campaign. Whether this concept will resonate with voters remains uncertain, but if it gains traction, it carries both opportunities and risks for Biden’s political future.
“Bidenomics” is a relatively novel term that many Americans have yet to grasp fully. In some ways, it functions as a basket of economic positives — representing Biden’s endeavors to take credit for favorable economic trends. This behavior is not unique, as most presidents strive to claim successes while evading responsibility for economic downturns.
Nonetheless, the contours of Bidenomics are starting to crystallize. The President and his team have consistently underscored their approach of “building the economy from the middle out and the bottom up”. This strategy deliberately rejects the conventional Republican concept of trickle-down economics.
Historically, Republican economic policy has rested on the assumption that reducing regulations and taxes for affluent Americans and large corporations would stimulate investment in the broader economy, ultimately benefiting middle and lower-income groups. The tax reform achieved during the Trump administration serves as an illustration, funneling substantial and enduring tax cuts to corporations and wealthy individuals.
Democrats have long criticized this approach, and Bidenomics boldly embraces a different path. It prioritizes government investment in infrastructure, research and development, and the expansion of the social safety net to foster economic growth, encompassing both public and private investment. Biden is unhesitating in advocating for increased taxes on large corporations and the affluent, a move intended to fund public investments while shielding the middle class from tax hikes.
Bidenomics zeroes in on specific areas deemed pivotal by the President for generating broad-based economic growth. These include infrastructure, semiconductors, and clean energy. The administration is making efforts to retain a significant portion of these investments within the US, aiming to bolster American manufacturing jobs and curtail dependency on foreign supply chains.
Additional components of Bidenomics involve “empowering workers” through diverse educational initiatives, reinforcing unions, and enhancing competition by strengthening the enforcement of antitrust regulations.
Drawing on lessons from his tenure as vice president during the recovery from the Great Recession, Biden advocates for swift and substantial government intervention to fuel economic revival. In response to the COVID-19 crisis, he championed expansive measures, including the American Rescue Plan for additional stimulus. Despite concerns about potential inflation, Biden prioritized fiscal tools to drive recovery while entrusting the Federal Reserve with controlling inflation through monetary measures.
Biden and his team are convinced that Bidenomics has proven its effectiveness. Since the pandemic, the US has experienced a faster economic recovery compared to peer economies. In the second quarter of this year, the gross domestic product grew by 2.4 percent, surpassing many expectations. Inflation rates have subsided, and core inflation is lower than in most advanced economies. Unemployment remains historically low at around 3.5 percent, and the economy continues to generate new jobs. A crucial development is that wages began to outpace prices in the spring, marking the first such occurrence in two years. The administration attributes these positive economic and job growth trends to key legislative accomplishments, including the 2021 American Rescue Plan, the 2021 Infrastructure Investment and Jobs Act, and the 2022 Inflation Reduction Act.
While there is validity in Biden’s claims of economic progress, there is also a degree of exaggeration and selective data usage, as is customary in politics. Republicans have criticized both Biden’s assertions and his economic policies, contending that his initiatives augment government intervention in the economy and contribute to inflation.
Yet, the outcome of the 2024 election hinges on voters’ sentiments toward the economy. Electoral results are less influenced by the accuracy of economic statistics and claims and more by public perceptions. While voters aren’t solely driven by their wallets, economic factors play a substantial role. Inflation, often a salient economic concern for voters, has left a lasting impact. Although the annual inflation rate has declined to 3.2 percent, the shock of experiencing the highest inflation rates in decades (9.1 percent in 2022) still lingers, resulting in elevated prices.
The experience of inflation, along with other factors, has contributed to low approval ratings for Biden’s economic management. Although some polls indicate incremental improvements in public perceptions of the economy, approval ratings for Biden’s economic stewardship remain around 37 percent in recent polls. A recent CNN poll highlighted that 51 percent of Americans believe the economy is deteriorating. While economic indicators point to progress, with many positive indicators, the gains are recent and not yet tangibly felt by many Americans. Additionally, Democrats contend with the persistent perception among some Americans that Republicans fare better on economic matters.
By embracing the concept of Bidenomics, the President is staking a significant wager on economic outcomes, despite a president’s limited control over the economy’s trajectory. If American sentiment toward the economy improves significantly by November 2024, Bidenomics could play a pivotal role in securing his reelection. Conversely, if public perceptions of the economy fail to improve, or worse, deteriorate, the Republican Party stands to gain.
