Overview of Biden’s Economic Policy (Bidenomics)
President Joe Biden’s economic policy, often referred to as “Bidenomics,” is based on three main pillars: public investment, worker empowerment, and promoting competition. His administration has focused on these areas to drive economic growth “from the middle out and the bottom up,” contrasting it with what they describe as past policies that disproportionately benefited the wealthy and corporations. Several major legislative initiatives and economic policies have been enacted under Biden’s administration, including the American Rescue Plan, the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act.
- Public Investment in Infrastructure and Industry: Biden’s administration has directed over $1.2 trillion to infrastructure projects like roads, bridges, and high-speed internet expansion through the Bipartisan Infrastructure Law. The CHIPS and Science Act allocated $280 billion to boost U.S. semiconductor production and advance new technologies such as quantum computing and clean energy. These investments aim to strengthen the manufacturing base and create millions of new jobs across the country(Investopedia).
- Worker Empowerment and Support: The administration has made efforts to increase wages and provide better job opportunities through programs such as registered apprenticeships and career technical education. Biden has also focused on increasing the power of unions by supporting collective bargaining and project labor agreements. This emphasis has helped reduce unemployment, which fell below 4% much earlier than expected, and led to record lows in joblessness for groups like African Americans, Hispanics, and women(The White House).
- Promoting Competition: A significant part of Biden’s strategy involves increasing competition to help small businesses and reduce consumer costs. This includes allowing over-the-counter sales of hearing aids and empowering Medicare to negotiate lower drug prices. These measures aim to lower healthcare costs and enhance consumer welfare(Investopedia).
Economic Metrics and Impact on the Middle Class
- Job Creation and Employment: Since Biden took office, the U.S. economy has added over 13 million jobs, largely driven by public and private investments in infrastructure and clean energy. The clean energy workforce alone added nearly 300,000 jobs in 2022(The White House). This job growth has benefited the middle class by reducing unemployment to pre-pandemic levels and boosting job security in various sectors.
- Real Wages and Income: Despite challenges like inflation, real wages have shown moderate growth. Real average hourly earnings increased by 1.2% between February 2020 and May 2024, while real median weekly wages grew by 0.83% during the same period. Disposable per-capita real personal income also increased by 6.06% from the fourth quarter of 2019 to the first quarter of 2024. These gains indicate that the purchasing power of middle-class Americans has somewhat improved relative to pre-pandemic levels, though inflation remains a concern(FactCheck.org).
- Healthcare and Tax Policy: Healthcare costs have been a major focus of Biden’s economic policy. Under the administration, health insurance premiums for those under the Affordable Care Act (ACA) have been reduced by an average of $800 per person per year, contributing to a record-high 16.3 million people signing up for ACA coverage in 2023. Additionally, the Medicare Part D prescription drug law caps insulin prices at $35 per month and limits out-of-pocket pharmacy costs to $2,000 annually. These measures have provided substantial financial relief for middle-class families reliant on these programs(The White House).
- Inflation and Cost of Living: Inflation has been a persistent issue during Biden’s term, influenced by factors such as the COVID-19 pandemic’s lingering effects and the war in Ukraine. The Federal Reserve’s response, including multiple interest rate hikes, has aimed to temper inflation, which has impacted the cost of living for middle-class families. However, despite these challenges, wage growth has generally kept pace with or exceeded inflation, helping to prevent a significant loss in purchasing power for many middle-class workers(Investopedia).
Joe Biden’s Inflation Reduction Compared to Other Countries
President Joe Biden’s administration has managed to reduce the U.S. inflation rate significantly compared to other major global economies. During his term, the U.S. has seen a relatively faster reduction in inflation from its peak levels. As of mid-2023, U.S. inflation was the lowest among the G-7 nations (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) and lower than the average inflation rate of the G-20 nations, which include some of the world’s largest economies(PolitiFact).
In July 2023, the U.S. surpassed Canada in achieving the lowest inflation rate among the G-7, and its inflation rate was also lower than many other developed countries, including Belgium, Israel, the Netherlands, Norway, and Sweden(PolitiFact). This achievement is notable given that the U.S. faced steep inflation earlier in Biden’s term, which peaked at a 40-year high of 9.1% in June 2022, primarily driven by supply chain disruptions, high energy prices, and lingering effects of the COVID-19 pandemic.
The rapid reduction in inflation can be attributed to several factors, including the implementation of the Inflation Reduction Act in August 2022, which aimed to lower healthcare and prescription drug costs, and investments in clean energy and manufacturing. These measures have not only tempered inflation but also positioned the U.S. for sustainable growth by creating a more resilient supply chain and boosting domestic production(U.S. Department of the Treasury).
Comparison with Other Global Economies
In comparison to other major economies, the U.S. has demonstrated a more robust recovery and lower inflation. For instance, inflation in European nations has remained high due to greater exposure to energy supply shocks from the Russia-Ukraine conflict. As of mid-2023, many European nations continued to experience elevated inflation rates compared to the U.S., despite similar or more aggressive monetary tightening measures(PolitiFact)(U.S. Department of the Treasury).
Additionally, countries like the United Kingdom and Germany have faced challenges in reducing inflation to pre-pandemic levels, partly due to slower recoveries in consumer demand and industrial production. The U.S., by contrast, has seen a quicker rebound in real GDP, which was 5.4% above its pre-pandemic level by mid-2023—better than the performance of other G-7 economies(U.S. Department of the Treasury).
Overall, Biden’s approach to tackling inflation through targeted investment, boosting domestic production, and regulatory measures has proven relatively effective, resulting in a lower inflation rate compared to many of its global peers. This, combined with strong employment growth and consumer demand, indicates that the U.S. is experiencing a healthier economic recovery than many other advanced economies.
Conclusion
Biden’s economic policies have focused on building an economy that benefits the middle class through strategic investments in infrastructure and clean energy, worker empowerment, and cost-lowering measures in healthcare and manufacturing. While these policies have led to substantial job creation and real wage growth, ongoing inflation and cost of living challenges continue to be significant issues for many middle-class Americans.