This week in Bidenomics, President Joe Biden has embraced the term "Bidenomics" to describe his economic plan. In a recent speech, he playfully stated, "What the press has now called 'Bidenomics,' I don't know what the hell that is. But it's working." However, while Biden may be coy about the term, he certainly understands what Bidenomics entails. The challenge lies in ensuring that voters understand it too, which is why Biden is embarking on a campaign to educate the public about his accomplishments and improve the national mood. This campaign can be seen as the starting point for Biden's 2024 reelection bid.
Despite perceptions that Biden is ineffective and lacking in vigour, he has been making progress on issues that have troubled previous presidents. Although his occasional gaffes have become legendary, Biden has effectively dealt with the highly publicized standoff over raising the US borrowing limit, outmanoeuvring the chaos wing of the Republican party that would have welcomed a catastrophic default.
During his first two years in office, Biden has successfully negotiated and signed several significant bills that will reshape industries such as energy, automotive, and semiconductors in the United States for years to come. Remarkably, he achieved this with the slimmest majority possible for his Democratic party in the Senate.
So, what exactly is Bidenomics? It involves leveraging the power of the government to redirect the economy and address perceived market failures of the past three decades. Globalization, for instance, has led to the decline of America's blue-collar workforce due to the relocation of manufacturing overseas. In response, Biden's Democrats have enacted legislation that provides strong incentives to bring certain types of manufacturing back to the United States, with a preference for firms that employ unionized workers. According to Biden, capitalism has been slow to respond to the urgent need to combat climate change and reduce carbon emissions. To accelerate progress, the Inflation Reduction Act, signed by Biden last year, offers hundreds of billions of dollars in incentives for both power producers and consumers to transition to green energy. Again, there is an emphasis on creating union jobs.
The CHIPS Act of 2022 aims to revive high-end semiconductor manufacturing in the United States while countering China's growing economic influence. Additionally, the 2021 infrastructure law, signed by Biden, represents the most significant effort in decades to rebuild roads, bridges, and other structures, prioritizing renewable energy and union employment. Biden also plans to utilize powerful regulatory agencies like the Environmental Protection Agency and the Securities and Exchange Commission to shape the economy in favour of working-class Americans and promote renewable energy. Overall, Bidenomics involves a couple of trillion dollars in fiscal spending supported by robust regulation and enforcement. As an additional claim, Biden suggests that all of these efforts will somehow contribute to reducing inflation.
However, the success of Bidenomics remains uncertain. According to a June 23 analysis by Beacon Policy Advisors, the challenge lies in reconciling the competing priorities within Bidenomics. Attempting to tackle climate change, support labour, and lower inflation simultaneously is akin to solving a Rubik's Cube. Trying to appease everyone often leads to satisfying no one. As time passes, the consequences of Bidenomics are becoming apparent, with both supporters and critics claiming vindication. For example, on June 22, the Energy Department announced a $9.2 billion low-interest loan to a Ford Motor Co. joint venture, which aims to build two electric-vehicle battery plants in Kentucky and one in Tennessee. This represents the largest loan of its kind ever issued by the government.
While this loan is not directly tied to new Biden legislation, Ford's decision to expand its electric vehicle production is partly influenced by the generous incentives provided in the Inflation Reduction Act of last year, which significantly reduces the cost for buyers and
inputs from/ yahoofinance
