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Is ‘Bidenomics’ Even a Thing, Really?


June 28, 2023

The White House is saying that President Biden’s speech today in Chicago will be on the subject of “Bidenomics.” The choice to use that term is a meaningful one, according to the Financial Times:

Biden’s move reflects growing confidence inside the White House that he can gain more political credit for his sweeping economic legislation, which has pumped billions of dollars into infrastructure, clean energy and chips manufacturing as he pursues his campaign for re-election in 2024.

Let’s mostly set aside whether Bidenomics, overall, has helped or hurt the American economy. While I think the nearly $2 trillion American Rescue plan was too big and played a role in the subsequent inflation surge, it’s certainly too early to judge the long-term impact of, for example, the clean energy subsidies. But I would note that a White House memo released Monday was a bit of an eye-roller with its claim that Biden “faced an immediate economic crisis when he took office.” This wasn’t FDR in 1933, at the worst of the Great Depression. The Biden presidency reminds me of that runner that starts on second base during extra innings of a major league baseball game — except in this case, Team Biden thinks it hit a double.

As Douglas Holtz-Eakin, former director of the Congressional Budget Office, points out, the Biden administration started with a tailwind, not a headwind, with the economy growing at a rate of 6.3 percent (versus 1.3 percent now) back in January 2021 and unemployment having already fallen from a peak of 14.7 percent in April 2020 to 6.3 percent. “The momentum on both fronts has only diminished in response to a dose of Bidenomics,” Holtz-Eakin observes.

But hold up: Is “Bidenomics” really a thing? Does it have substance? Is it more than just a bit of political branding so voters more strongly connect the president to popular new programs rather than to persistent problems, such as inflation? Does it offer a coherent economic theory of the case, one that would allow us to predict what a second-term agenda might be like?

The writers of that White House memo, senior advisers Anita Dunn and Mike Donilon, suggest Bidenomics is, indeed, a thing of substance rather than a mere marketing gimmick:

Bidenomics is rooted in the simple idea that we need to grow the economy from the middle out and the bottom up—not the top down. An economy where we build more in America, empower and invest in American workers, and promote competition to lower costs for working families. Implementing that economic vision and plan—and decisively turning the page on the era of trickle-down economics—has been the defining project of the Biden presidency. 

Such a collection of political phrases—“middle-out,” “trickle-down”—obscures a tension in the Biden economic program, one the memo writers ignore or simply fail to understand. That tension can be seen in the various strings, such as mandates to offer childcare and rejecting stock buybacks and dividend issuance, attached to the new federal subsidies for domestic semiconductor manufacturing. Given the historical difficulty of making industrial policy work, such requirements would seem, at best, orthogonal to the national economic and defense security goal of boosting chipmaking here at home even as they risk making that goal harder to achieve.

I mean, what happened to Treasury Secretary Janet Yellen’s “modern supply-side economics?” Or was that just a branding exercise, too? Is the policy priority here improving the economy’s productive capacity—which is what ultimately raises living standards—or is something else? To govern is to choose. To govern wisely is to acknowledge the existence of trade-offs and opportunity costs. For example: Regulations that preserve coastal views for luxury homeowners also make it superhard to build wind turbines that help transition the economy away from fossil fuels. (Other regulations that many environmentalist interest groups like make it hard to build new energy transmission infrastructure.) Appeasing some interest groups on social policy will make it hard to “build back better.”

So what is Bidenomics, again? Did I miss a different memo?