Assessing Bidenomics
Is the Biden administration’s economic policy a break with neoliberal orthodoxy, or more of the same?
This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the
July/August 2024 issue.
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Since the earliest days of Joe Biden’s presidentcy, there’s been no shortage of ink spilled analyzing the administration’s economic policy. Commentators have been preoccupied, in particular, with the ways “Bidenomics” may or may not mark a break with the economic policy orthodoxy of the past few decades.
The Biden administration’s approach has been marked by relatively generous social-welfare initiatives (only some of which have passed), large federal investments in infrastructure and manufacturing, and executive appointees that have been more willing to take sides against big corporations when it comes to labor and antitrust laws. Taken together, these elements show a White House that is willing to propose a larger role for the state in terms of setting investment priorities and that is at least somewhat less deferential to corporate power in some domains.
In these respects, Bidenomics indeed seems to be something novel in comparison with the policies of President Barack Obama or President Bill Clinton. The real questions concern the significance of these differences in terms of solving major challenges: climate change, gaping economic inequality, and worsening disaffection with our political institutions. With the 2024 presidential election fast approaching, and voters continuing to give the president low marks on the economy, it is worth reflecting again on what Bidenomics has and has not accomplished.
Whatever sort of break it has made with the past, Biden’s White House and its allies have enacted a policy regime that has (at least from the perspective of most voters) failed to advance living standards to where they were before his term and that has failed to stop organized labor’s long descent. In the absence of the kind of powerful labor movement and left-wing organizations that could force through more aggressive redistribution or a serious industrial policy, the Biden administration’s attempts to steer the economy are operating within the ever-narrower grooves of what is acceptable to capital.
What Is Bidenomics?
After dropping out of the 2020 presidential primary and throwing his weight behind Joe Biden, Senator Bernie Sanders declared that his erstwhile rival could be “the most progressive president since Franklin Delano Roosevelt.” Others in Biden’s orbit ran with this comparison, and the administration’s American Rescue Plan (ARP), signed into law in March 2021, lent this claim some early credibility.
The law was a generous expansion of the welfare state, on the order of $1.9 trillion, meant to address the Covid-19 pandemic and its economic impacts. In addition to sending out $1,400 stimulus checks to most Americans, the ARP expanded and extended unemployment insurance as well as the child tax credit (which policy analysts estimated would cut child poverty in half). The bill included hundreds of billions in funding for public health and for state and local government aid; it contained funding for rental assistance and helping small businesses stay afloat, among other things. For comparison, the stimulus package signed into law by President Barack Obama in the wake of the Great Recession cost $787 billion. The ARP, however, was temporary, with most of its provisions (and related ones enacted under President Donald Trump in 2020) expiring by the end of 2023. The Biden administration attempted to build on and make permanent elements of the ARP with its ambitious Build Back Better (BBB) proposal, which was ultimately defeated thanks to the intransigence of conservative Democratic senator Joe Manchin.
But parts of BBB were eventually incorporated into the Inflation Reduction Act (IRA) of 2022, a compromise that included major investments in green energy while excising most of the social-welfare provisions of the former bill. The IRA allocated $370 billion in climate spending, most of it in tax credits meant to incentivize private investment in clean energy and eco-friendly consumer choices (like buying an electric stove or upgrading one’s home to be more energy efficient).
The IRA came on the heels of two other historic federal expenditures, the Infrastructure and Jobs Act of 2021 and the CHIPS and Science Act of 2022. The former authorized $1.2 trillion in funding for transportation and infrastructure repairs and new projects; the latter allocated over $75 billion to boost domestic semiconductor manufacturing. Beyond these legislative accomplishments, the Biden White House has adopted a relatively progressive orientation in other areas. President Biden’s appointees to the National Labor Relations Board (NLRB) have been friendly to labor compared to the boards of recent past Democratic administrations, which some observers have credited with assisting new organizing wins at Amazon, Starbucks, and elsewhere. The administration has also taken an aggressive approach to antitrust enforcement, with both the Federal Trade Commission and the Department of Justice attempting to crack down on anticompetitive behavior by big corporations including Apple, Google, and Live Nation/Ticketmaster.
Finally, Biden has forgiven federal student loan debt for some borrowers — according to his administration, $153 billion in debt for about 4.3 million Americans. His more ambitious pledge to cancel up to $20,000 per borrower for all those making $125,000 or less has been halted by the Supreme Court. (As I’ve discussed previously in these pages, however, debt-forgiveness advocates say the administration is not using all the tools at its disposal to advance its more expansive forgiveness plans. See “The Heavy, Unequal Burden of Student Debt,” D&S, January/February 2024.)
What’s New?
In all these ways, it’s hard to deny that the Biden administration represents a shift in orientation from the presidencies of Clinton or Obama. “When Obama staffed his administration, he went to Harvard and Larry Summers. Biden came into office with an administration staffed out of the Roosevelt Institute and Elizabeth Warren’s policy shop,” Gerald Friedman, professor of economics at the University of Massachusetts Amherst, told me when I asked him if Bidenomics amounted to a break with prior party orthodoxy. “The difference in policy has been dramatic.”
For Friedman, there is little question that the Biden administration has brought about a sea change in economic policy. “The Biden administration has had the most progressive economic policy since the Great Society of the 1960s, or maybe ever,” he said. “He abandoned the neoliberal policy of free trade with an active industrial policy directed at bringing production back on shore. His administration’s infrastructure investments mark an abandonment of the neoliberal idea that only private investment is productive.” Friedman also cited Biden’s relatively pro-labor and anti-monopoly stances, as well as “aggressive fiscal policy” to bring unemployment to under 4%. I put the same question to economist James K. Galbraith at the University of Texas at Austin. Galbraith — who has elsewhere publicly criticized the Biden administration’s policies — nevertheless also said that Bidenomics represented a novel approach. “Neoliberalism cracked with the great financial crisis — though it was patched up — and broke entirely with Trump and the pandemic,” he told me:
Biden’s people left many of Obama’s neoliberals ([Jason] Furman and [Larry] Summers come to mind) on the sidelines, added infrastructure and green energy (prospects for that are now uncertain) to the mix, and sales from the SPR [Strategic Petroleum Reserve] to bring down oil prices, also adding tariffs and sanctions, while letting large budget deficits do the heavy lifting of supporting economic growth.
What Does It All Mean?
To note that there has been a paradigm shift, however, is not yet to say much about the economic and political impact of that shift. By some metrics — like low unemployment and economic growth, mentioned above, as well as aiding in certain union wins — Bidenomics has seen success. But viewed holistically, from a left-wing perspective, the record looks much more mixed. The shock of the end of Covid-era welfare programs meant a decline in living standards for many, even as unemployment has fallen and real wages shot up in the past year after decreasing since 2020. And as Galbraith himself observed in a March 2020 article for The Nation, many of the statistics that Biden partisans have touted as evidence of a great economy don’t necessarily translate into increased living standards, especially when compared with just before Biden’s term (as opposed to, say, last year).
Galbraith notes, for instance, that the employment-to-population ratio is below where it was in 2020, suggesting that many households that formerly had multiple earners now have fewer, and that average weekly working hours also continue to fall. Matt Bruenig of the People’s Policy Project has pointed out that real disposable income declined for most people between 2020 and 2022, and that real wages only began to recover in 2023 after falling for the first half of Biden’s term.
What about the big industrial policy initiatives? Here, too, our enthusiasm should be tempered: What we are seeing is a program of corporate handouts to select sectors, with little in the way of policy that would ensure desired social or economic outcomes. Though the IRA’s clean-energy investments are historically unprecedented, they also appear to be inadequate to drive rapid decarbonization. A February 2024 analysis, for instance, found that the IRA is not even putting the nation on track to meet the IRA’s own target of a 40% reduction in greenhouse-gas emissions by 2030. And though it does seem to be increasing investment somewhat, the prospect of limited returns continues to hold back private investment in renewable energy.
Writing in Jacobin last year, Andrej Markovčič and I argued that Bidenomics’s “all carrots, no stick” approach to encouraging domestic manufacturing growth was not likely to produce major shifts in investment. Because programs like the IRA and the CHIPS Act simply give subsidies to corporations in the hopes that they will then turn around and invest in, say, solar generation or semiconductor manufacturing, there’s no guarantee that the desired investment will actually be forthcoming. Nor is there any guarantee that, should private actors invest accordingly, the new productive activity will benefit workers. Because many electric-vehicle plants are nonunion or covered by less-generous agreements than are conventional auto plants, for instance, the IRA’s flood of subsidies for EV production actually threatens the living standards of autoworkers (as I discussed in a Dollars & Sense feature last fall; see “Will There Be a Just Transition to Electric Vehicles?” D&S, November/December 2023).
Perhaps the most telling evidence of Bidenomics’ limits comes when we look at what’s happening with the labor movement. Despite President Biden’s labor-friendly NLRB appointees, according to the Bureau of Labor Statistics, about 460,000 workers were involved in major work stoppages last year (those involving at least 1,000 workers and lasting at least one shift). That’s on par with 2018 and 2019, which also saw a massive teacher strike wave — and well below the figures for even the early 1980s, when the labor movement was already well into its long decline.
And despite promising signs of life, and even with the helping hand of Biden’s NLRB, overall union density continued to decrease in 2023, to an all-time low of 10%. The president himself is not directly responsible for union growth or the lack thereof. But we should look at continued union decline in the context of mixed results for people’s living standards coming from Biden’s big spending, as well as a failure to invest real political capital in passing the PRO Act — which many unions argued would be a huge aid in organizing. Overall we have an administration that, while lavishing subsidies on favored sectors of business, is failing to really move the needle in the interests of working people.
If the Biden administration’s ideological shift toward a new kind of liberalism — or maybe something like a return to postwar American liberalism, as political-economy researcher Justin Vassallo has argued — has produced meager results for the working class, that shouldn’t be too surprising. The major shifts in social policy that benefited workers in the 20th century — in particular, the most pro-worker elements of FDR’s New Deal — were largely forced on reluctant capitalists by disruptive labor militancy, strong left-wing organizations, and mass protests. And in European nations that established much more generous welfare states in the 1900s, like the Nordic countries, the labor movement was even stronger and more organized, and developed its own political parties to advance its social vision.
What we are seeing with Bidenomics is in this respect quite different from the New Deal, let alone European social democracy. It looks to be an attempt to shore up liberalism in the absence of a real working-class challenge. But that means an economic program that by and large suits the interests of capital rather than labor.
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