During the election campaign, US President Joe Biden radically breaks with the economic policies of his predecessors. Because the Americans believed for many years that good framework conditions for companies will eventually reach everyone.
By Jannik Tillar
The fact that US President Joe Biden has a tailwind is probably best illustrated by a scene from Wednesday. There is Biden, framed by US flags, on a stage in Chicago and speaking to the American people. It’s about the economy and how well it has developed recently. Biden explains that 13 million jobs have been created. Behind him are giant signs that say “Bidenomics.”
This scene would have been unthinkable just a few months ago. Not the speech itself, but the ambience. For a long time, Biden and the economy were considered antonyms, two opposing terms such as victory and defeat. But since Biden’s billion-dollar location policy took effect, “Bidenomics”, a portmanteau of Biden and Economics, has become a catchphrase in the presidential election campaign.
Joe Biden wants to score with the economic agenda
It is not the first attempt to score points with voters with Biden’s economic agenda. So far, however, this has not been successful. In almost every poll since 2021, Americans have disapproved of the Biden administration’s economic policies. However, this was also due to rampant inflation, which meant real wage losses for many citizens. But with the current combination of a resilient labor market and falling inflation, Biden’s team believes it’s now in a better position to sell its policies — hence the open use of the term bidenomics for the first time.
Bidenomics is more than a term, it stands for the greatest economic change since the 1980s. Back then, President Ronald Reagan introduced trickle-down economics. Their core message: at some point, good framework conditions for companies will reach the general public and even the poorer classes – like through a funnel into which something is poured at the top.
US President reverses economic policy
Biden is now, in a sense, reversing that Republican mantra. “The President is taking a middle-out, bottom-up approach to economic growth, with a strong focus on growing our middle class,” said Lael Brainard, executive director of the White House Economic Council.
For Republicans, trickle down is still the leitmotif. Typically, it revolves around tax cuts for wealthy and large corporations. Proponents say the benefits will flow to the middle class and working Americans, boosting overall economic growth. However, many experts dispute the effectiveness of this practice.
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Biden’s democratic predecessors such as Bill Clinton and Barack Obama also curtailed supply-side economic policy, but did not use it to build a line of communication for the election campaign, as Biden is doing now.
Biden argues that the supply-side trickle-down economy has cost jobs and hollowed out the middle class. In fact, Biden has been concentrating on this group of people for a long time – for example as chairman of the Middle Class Task Force in the Obama administration. “Bidenomics is rooted in the belief that if we grow the middle class, we grow the economy,” said Olivia Dalton, Deputy White House Press Secretary.
Three basic principles of bidenomics
One of Biden’s key demands is that large and well-funded companies pay their fair share of taxes. In a fact sheet that the White House recently distributed to journalists, a total of three basic principles are presented:
1. Public investment in the US
The Biden government wants to concentrate primarily on the areas of infrastructure, energy transition and semiconductors and also attract private investments for this. Since Biden took office in 2021, nearly $500 billion in private sector commitments have already been stimulated. These were mainly driven by three major packages, the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the Chips Act. These provide for direct financing and tax incentives for the public and private construction of production facilities. This week, Biden also announced plans to invest a total of $42 billion in 5G rollout. The aim is to enable more Americans to be connected and to close the digital divide between regions.
2. Empowering and training American workers
When it comes to training, the US government focuses primarily on two areas: jobs of the future and simple jobs. The $500 million Good Jobs Challenge package is intended to help here. Biden believes that simple jobs could later become jobs with better pay, benefits and working conditions. Employers eventually sought to attract and retain workers. And the more jobs that are created in total, the more bargaining power there is for workers.
3. Promote competition
The Biden administration has launched a series of measures to boost competition between companies. The digital giants Amazon, Alphabet & Co. are feeling the effects of this, and are currently being subjected to a series of lawsuits by the competition authority FTC. But Biden is also focusing on the pharmaceutical industry. For example, a passage of the Inflation Reduction Act mandates that Medicare members’ insulin costs may not exceed $35 per month.
However, whether these measures go down so well with the Americans can be seriously questioned. The Biden government knows that too. She worries that the economic problems that emerged during Biden’s presidency – including inflation, labor shortages and faltering supply chains – have now become entrenched in American minds as political failures. Republicans have scathingly criticized Biden’s economic record, particularly on inflation, as the consumer price index last month was still four percent higher than a year earlier.
“[Biden] continues to pursue the same policies of big government and big spending that got us into this mess in the first place,” said John Thune, a Republican senator from South Dakota. “And so, frankly, I’m surprised that the President continues Saying things like, ‘hardworking families reap the rewards of politics’. Hardworking families certainly benefit from the president’s policies, but that has little to do with their performance.”