In anticipation of the forthcoming presidential elections, the White House has kickstarted a new public relations strategy called “Bidenomics,” crafted to shape President Joe Biden’s economic blueprint. While addressing a union assembly in Philadelphia on June 17, the president suggested this model was successful, despite its elusive definition.
So, what is the essence of Bidenomics, and how effective is it?
A White House communique delineates Bidenomics as a triad of components:
- Substantial government investment in renewable energy and semiconductor production
- Support for unions and domestic manufacturing
- The promotion of competition
The White House asserts that these policies have ushered in an economic revival, resulting in over 13 million jobs, including almost 800,000 in manufacturing, and spurring a manufacturing and clean energy surge.
Legislation like the 2022’s CHIPS Act commits $280 billion to fortify U.S. semiconductor manufacturing, and the Infrastructure Act of 2021 commits over $65 billion towards “clean energy” initiatives. The 2022 Inflation Reduction Act further augments this drive with an extra $394 billion for clean energy via tax breaks, loans, and grants.
Chief Economist Jonathan Williams at the American Legislative Exchange Council criticizes this model as “trickle-down big government,” with a persistent focus on expanding government power and excessive spending.
National Security Advisor Jake Sullivan asserts that Biden inherited a significantly eroded industrial base, noting that the prior public investment strategy had languished. Though primarily focused on security issues, Sullivan has emerged as a vocal critic of Reaganomics’ policy of tax reductions, trade liberalization, and deregulation.
Yet, the government’s capacity to influence private industry effectively has met with considerable criticism, most notably from Arthur Laffer, an economist and former advisor to Presidents Ronald Reagan and Donald Trump. He contends that government intervention often leads to inefficiency and misallocation of resources.
Steve Hanke, an economics professor at Johns Hopkins University, adds that Bidenomics merely exemplifies government interference intended to reshape the economy according to the administration’s vision. He also warns of the inherent risks in government-controlled industrial policy, where winners and losers are chosen through governmental levers such as taxes, subsidies, regulations, tariffs, quotas, and outright bans.
Bidenomics encourages automakers to shift production to electric vehicles (EVs) through subsidies, grants, and stricter emissions regulations. However, there are genuine concerns about the feasibility of this approach, given uncertainties about consumer adoption, sourcing materials for batteries, and the capacity of the U.S. electric grid to accommodate the demand for charging.
The Biden administration’s quest to transition from fossil fuels to renewables, like wind and solar, also faces similar hurdles. Additionally, it risks increasing dependence on nations that control the refining of the necessary minerals, like China, potentially compromising national security.
Hanke reminds us that similar industrial policies in the 1980s, used by Japan, still need to deliver long-term growth, thereby questioning the wisdom of adopting such approaches.
A significant aspect of Bidenomics is the surge in government regulations, ranging from stringent EPA emissions standards to new SEC requirements for auditing CO2 emissions. Critics claim these regulations impose high costs on households, with a report by the Committee to Unleash Prosperity estimating an increase of nearly $10,000 per household, in stark contrast to the Trump administration, which allegedly reduced regulatory costs by $11,000 per household.
Critics also assert that Biden’s administration is unduly keen on centralizing authority within federal agencies to the detriment of local government. They argue that such centralization negates the American tradition of state autonomy and competition, a fertile ground for policy experimentation and regional economic development.
According to these critics, the Biden administration’s policies have undermined state autonomy, encouraged an extensive government agenda, and disproportionately flooded state budgets with federal aid, impacting the natural competitiveness between states.
While Bidenomics has its champions, the Republican perspective suggests that its one-size-fits-all approach, over-reliance on government regulation, and neglect of state autonomy could lead to inefficiencies and overbearing government control, undermining the very spirit of the American enterprise.