According to several leading indicators, the economy is doing very well under the leadership of President Joe Biden.
Real gross domestic product (GDP) has grown by 5% since 2019. Unemployment has fallen to a low of 3.7% after a peak of nearly 15% in the early days of the COVID-19 pandemic. And inflation, though still higher than pre-pandemic levels, appears to be moderating. Real wages have increased by 3.5% since Biden took office, with low-wage workers receiving the biggest gains between July 2022 and July 2023.
Yet many Americans still seem decidedly unhappy with economic conditions today. Several recent polls have found that people in the United States hold a negative view of the economy and how President Biden is handling it, even when macroeconomic indicators are good. For example, the Michigan Consumer Sentiment Index, which has been measuring the level of consumer confidence nationwide since 1978, found that consumers’ feelings about the economy and their personal finances — though from an all-time low — last summer. are up — were still pretty negative in August. 2023. And July 1st new York Times The poll found that only 20% of Americans would rate the economic situation today as “excellent” or “good”. (In contrast, 49% described the economy as “bad”.)
The disconnect has left many pundits wondering what is happening, with some highlighting Americans’ low opinion of “Bidenomics”. Partiality or ignorance. However, look beyond top-line metrics like GDP growth or unemployment, and you’ll find a more complex story. Many Americans report they are struggling financially, partly due to the shutdown of many early-pandemic welfare policies. So even though the U.S. economy has reaped continued benefits from those programs and seen a jobs boom due to the federal government’s historic investments in clean energy and domestic manufacturing, many are resentful of feeling kicked out the bottom of the ladder. Has been given. Them.
The federal government is giving with one hand and taking with the other, rather than linking needed investments in green manufacturing and infrastructure with social security provisions to protect the vulnerable.
The situation suggests that high-level metrics such as GDP growth and unemployment are not good proxies for Americans’ quality of life or economic justice. It also demonstrated the need for a progressive economic program combining ambitious “demand-side” welfare policies with “supply-side” investment programs such as the Inflation Reduction Act (IRA). This combination is likely to be more conducive to actually helping people – as well as being politically popular.
Bidenomics: Success and Failure
We cannot dismiss the high points of today’s economy, or the role of Biden and the national Democrats in rebuilding it. Real GDP and job growth have not only recovered from the initial Covid recession – they have also outpaced the recovery of many other advanced capitalist countries. The United States is doing better than most of these countries in reducing both inflation and unemployment. The resulting tight labor market has helped reduce income inequality for the first time since the 1980s.
Biden and the Democrats in Congress can take some credit for all this. The relatively liberal welfare policies he passed at the start of the pandemic helped stimulate demand, which eased the recession and made the recovery stronger than otherwise. Recent policies such as the bipartisan infrastructure bill, the IRA and the CHIPS Act have led to major investments in domestic manufacturing, further boosting the economy.
So why aren’t Americans celebrating Bidenomics? in a comprehensible article new republicKate Aronoff points out that many people don’t know and probably don’t care about the administration’s efforts to address climate change and create jobs, including the IRA. The problem is that many of these policies are “pretty boring,” says Aronoff: “Few people wake up in the morning excited about the American share of manufacturing employment, or tax credits for installing heat pumps.” She argues that such projects should be linked to more visible public investment in things like parks, swimming pools and national forests, and government support for arts and culture – making sure “people are having a good time,” and They know that the government is responsible for this.
Fair enough. Creating community spaces for leisure has long been an important element of progressive and left-wing political projects. But the rejection of Biden’s economic record isn’t just about ignorance or indifference to his policy achievements. A lot of Americans are really struggling with economic hardship today. Consider some of the results from the Federal Reserve Board of Governors’ 2022 Survey of Household Economics and Decision-Making (SHED):
- 73% of adults said they are financially well – a 5% decrease from last year.
- The share of adults in 2022 who said they were worse off financially than a year ago was 35%, the highest level recorded since SHED began asking the question in 2014.
- 23% of adults said their expenses increased last year but their income did not.
The Census Bureau’s Household Pulse survey includes similar revelations: Food insecurity is at its highest since Biden’s inauguration, for example.
give with one hand, take with the other
As authors Stefan Semler and Branko Mareštic have argued, it is not too difficult to find an explanation for all this. The Biden administration allowed the temporary end of sweeping welfare policies and economic protections implemented during the pandemic. These included emergency Medicaid and food stamp expansions, an eviction moratorium, an increase in the child tax credit, and many other anti-poverty measures.
With these policies coming to an end, it is no wonder that many people are struggling. Homelessness rates have risen to nearly 40% in major cities including New York and Chicago, with evictions rising; more adults are forgoing medical treatment due to cost; And only 63% of adults said they could cover a hypothetical $400 emergency expense with cash, down from 68% in 2021. The impending end of the moratorium on federal student loan repayments threatens to make things worse.
Biden and the Democratic Party succeeded in breaking with prior policy orthodoxy in two ways. The first was the passage of the US rescue plan in early 2021, a relatively generous expansion of the welfare state in response to the COVID-19 crisis, largely focused on providing direct aid to households. The second break came with the bipartisan infrastructure bill, the IRA and the CHIPS Act – investments focused on promoting supply-side production, including green industries. These policies are intended to boost domestic manufacturing and job growth, and help accelerate the country’s decarbonization.
Biden still has opportunities to help working people, and there are many steps he and national Democrats can take now to improve people’s lives and increase political support.
But by letting the post-Covid welfare state collapse, the economic and political benefits of this new industrial policy are being undermined. The federal government is giving with one hand and taking with the other, rather than linking needed investments in green manufacturing and infrastructure with social security provisions to protect the vulnerable.
From a policy point of view, it doesn’t make much sense. “Demand-side” and “supply-side” policies serve different goals, and both types of programs are necessary to create an economy that meets everyone’s needs. We need the government to invest aggressively in clean energy and green jobs. We also need programs that guarantee people health care, food, and housing.
no time for complacency
Politically, it is quite clear why welfare has been marginalized – an attempt to pass a more permanent expansion of the welfare state in the form of Build Back Better (BBB) failed in Congress. It was the persistence of conservative Democrats like Senator Joe Manchin (DW.Va.) that ultimately sank the BBB. Yet it’s a strong case to be made that Biden and other Democratic leaders have given up in store by failing to use their leverage. Progressives wanted to add a vote on the BBB to the bipartisan infrastructure bill, which Manchin strongly supported. By allowing the vote on the infrastructure bill to go ahead first, the party leadership lost most of its negotiating power to Manchin to agree on the BBB. The saga first called into question the authenticity of the Biden administration’s commitment to the social spending bill.
But Biden still has opportunities to help working people, and there are many steps he and national Democrats can take now to improve people’s lives and increase political support. This would mean aggressive use of executive power. First and foremost, the Biden administration must extend the student loan repayment moratorium, and it must use all the powers at its disposal to fulfill its promise to cancel student loan debt. This spring, the Congressional Progressive Caucus put forth a list of other items Biden could implement via executive orders. These include providing generous sick leave and holidays and expanding access to health care premium subsidies by strengthening Service Contract Act rules.
Biden may also take the highly popular step of legalizing marijuana at the federal level. The administration has announced plans to negotiate lower prices on many drugs for seniors under Medicare, but Biden may take even more aggressive action to reduce drug prices across the board. Although they are currently hampered by a Republican House majority and a much smaller Senate majority, Congressional Democrats could campaign on unconstrained welfare state measures like the end of the Child Poverty Act by Representative Rashida Tlaib (D-Mish.) that would directly provide children . allowances.
With the 2024 presidential election showing Biden in a tight race with presumptive Republican nominee Donald Trump, Democratic complacency is extremely dangerous. Given that the former president and his team will come with experience and a real plan, Trump’s second presidency is likely to be far worse than the first. They plan to, among other things, clean house in the federal bureaucracy and fill it with loyalists, call for the unitary executive doctrine to give Trump complete control over the executive branch while shielding him from prosecution, and put the bill first on climate. Rolling back the insufficient progress since then. Change. The Trump administration will also almost certainly replace Biden’s pro-labor National Labor Relations Board with a blatantly anti-labor board.
To avoid this gloomy scenario, Democrats must take seriously Americans’ negative views about the economy. It is meant to take action to provide material benefits to working people while improving their economic security. It also requires offering an exciting, positive alternative political vision to counter the GOP’s whining. It will be up to progressives and leftists inside and outside Congress to articulate such a vision and demand that Biden and the Democratic Party act on it.