Biden is good for the economy

Phil Anderson

“...Wall Street didn’t build this country, the great middle class built this country.” President Joe Biden  

In March I wrote that “trickle down” economics – Reaganomics –  has failed to deliver on its promises of prosperity because it is based on faulty thinking. The economy is not fueled by tax cuts that only make rich people richer.

President Biden’s economic agenda – Bidenomics – believes that middle class and working people are the real drivers of the economy. It is their spending that creates demand, which stimulates business investment and a more stable economy (“Bottom up middle out economics” March 21, 2024). President Biden’s economic policies are a paradigm shift from trickle-down to a bottom up philosophy. This embraces the common-sense maxim “we all do better when we all do better.”

Contrary to what one hears in the media, Biden has done a lot, despite Republican opposition, to implement this economic agenda. Jared Bernstein is the chair of Biden's Council of Economic Advisers. He was interviewed on   the Pitchfork Economics podcast and explained the basic thinking of Bidenomics (“The Future of Bidenomics,” February 13, 2024). 

Bernstein says the failure of “top-down, trickle down economics” is not a political judgment. It is supported by empirical evidence. Forty years of tax cuts and disinvestment in public goods has only “exacerbated inequality and damaged growth.” He says Biden's approach is based on three basic concepts.

The first is empowering people. The impact of unequal power in economic relationships is rarely discussed but is important to how economies actually function in the real world. Assuming that “markets” are perfectly efficient and that people and business owners have equal power is absurd. But the obvious power differences are commonly ignored in economic policy decisions. In the real world unions give workers bargaining power.

Government also balances the scales with employment and wage and hours laws. In rare cases economic conditions, like the current labor shortage, can favor workers. But mostly employers don’t pay people what they are worth (the classical economic theory). They pay people what they have to and usually as little as possible. This is why Biden has been supportive of unions and is acting to strengthen labor laws. Unequal bargaining power affects other areas of the economy.

For practical purposes consumers are helpless against deceptive, harmful or fraudulent business activities, especially by large corporations. Government-required consumer protection laws and remedies are essential to fairness in the “market place.” Even business-to-business relationships need power-balancing mechanisms. The power disparities between smaller  businesses and the giants requires government-imposed rules and control of monopolies.

The ability to negotiate Medicare drug prices is an example of balancing power to protect consumers. Republicans and drug company lobbyists have for years prevented Medicare from using its bargaining power to lower drug prices. Biden changed this in the Inflation Reduction Act.

A second change in economic policy is Biden's reversing decades of under-funding for public goods and public infrastructure. The Infrastructure Investment and Jobs Act allocated more than $1 trillion to address many years of deferred maintenance and neglect of crumbing public infrastructure. It also allocated money for expanding broadband, improving the electric grid and clean water and public health and safety needs. The Duluth-Superior high bridge replacement is funded by this bill. It passed in November of 2021 with little Republican support.

The third change has been to foster more competition to lower costs and prices. Republicans oppose any kind of regulation on big corporations, especially efforts to control the size and market share of companies. They favor deregulation, which historically has led to more  consolidation and less competition.

The Biden administration has been much better at trying to prevent business mergers and consolidations. Biden's first two years, when the Democrats controlled the House and the Senate, were very productive in passing legislation to implement his economic agenda.

The American Rescue Plan in 2021 dealt with pandemic relief. It authorized $1,400 payments to most people to keep the economy from crashing. It also extended and provided extra unemployment benefits, expanded the child tax credit, created a pandemic small business loan program and provided grants to states to help schools with pandemic costs. This vital legislation barely passed with no Republican support.

In August of 2022 the CHIPS and Science Act was passed  authorizing $280 billion in new funding for scientific research and to boost domestic manufacturing of semiconductors. Being help primarily for business, this did have bi-partisan support. The Inflation Reduction Act of 2022 enacted a variety of measures to help people, address climate change and reduce the deficit with corporate tax reforms. The bill targeted better law enforcement for tax avoidance and required corporations to pay a minimum of 15%. It took action to lower drug and health care costs. It provided incentives to promote green energy, electric vehicles and energy efficiency. The law provided the largest investment ever enacted to address climate change.

There were many positive benefits to this legislation but all Republicans in both houses voted against the bill. Vice President Harris had to break a 50-50 tie in the Senate for it to pass.

Biden also achieved success in passing significant gun safety legislation, the Respect for Marriage Act (all states must recognize same-sex marriages), and The Electoral Count Reform Act (to clarify how the process works). He took action on many issues with executive orders and administrative policy changes. The list of reforms Democrats were unable to achieve because of Republican opposition (and opposition from two conservative Democratic Senators) includes: ending the filibuster, overturning the Supreme Court's weakening of voting rights laws, police accountability, immigration reform, relief for student loan debt, paid leave and child care and the “Women’s Health Protection Act” to supersede state restrictions and guarantee the right to an abortion.

The history of these important legislative achievements (and the failures) is clear evidence that Biden's agenda is focused on helping people, solving serious problems and creating a better, fairer, more just society. In contrast the current Republican-controlled House of Representatives is notable for its incompetence, failure to act on necessary budget bills, failure to address anything of importance and inability to even work together within their own party.

Biden's economic agenda is much better than a return to the failed trickle down policies of the past. As I have written in the past, Republican polices hurt people. Voters need to remember this in November.