A string of positive economic news — slowing inflation, an upward revision in gross domestic product, continued strength in the job market, signs of a nascent surge in factory construction — has the Biden administration going all out to define “Bidenomics” as the doctrine of our time.
As a basic exercise in credit-taking, it makes a lot of sense. The U.S. has had the strongest GDP recovery from the pandemic of any developed country, and though inflation remains above target, it is lower than what any peer country is experiencing. Anything the White House can do to call attention to those facts is smart.
Still, Bidenomics as a doctrine looks an awful lot like an accident. Once upon a time, in the era of Build Back Better, President Joe Biden’s economic vision had three major pillars that have all since crumbled.
One was a view that an adequate recovery from the pandemic required a major investment in the “care economy,” with big new federal programs to subsidize child and elder care. Another was a legacy-defining push to slash child poverty with an expanded and fully refundable Child Tax Credit. The third was a move away from the Clinton- and Obama-era focus on long-term deficit reduction in favor of a view that new spending should be paid for but that fiscal discipline as such was not a major concern.
The first two of these fell by the wayside due to narrow congressional majorities, and the third was quietly abandoned by the administration as Build Back Better transmogrified into the Inflation Reduction Act.
Beyond that, Democratic operatives now characterize Bidenomics in terms of ideas like taxing the rich as a preferred path for deficit reduction rather than cutting Social Security and Medicare.
This is good politics and sound policy, but it’s not remotely distinctive from Obamanomics or Clintonomics or, frankly, Mondalenomics — it’s exactly what Democrats have been saying ever since the Reagan Revolution. To the extent that there’s anything truly different about Bidenomics is that in distinction to Obama’s measured approach, Biden launched his administration with super-stimulative fiscal policy and helped achieve a rapid recovery to employment rates that match or exceed where we were before the pandemic.
Many of us expected the pandemic to produce a sluggish recovery that would once again see millions of person-years of idleness and unemployment and new waves of young people entering a labor market that had no interest in them. Avoiding that outcome is genuinely worth celebrating.
The inflation that was induced by being so insistent about it was genuinely troubling, but the fact that inflation has now diminished significantly without a recession is important. America’s year of soaring prices won’t leave scars on people’s lives the way mass unemployment does.
But I hope that even as the administration takes its victory lap, it can see the landscape clearly. The emergence of ultra-low unemployment is an incredible win. But precisely because it’s a win, it’s not a repeatable path forward for economic growth that can deliver us four more quarters — or four more years — of solid results.
That leaves us with more difficult questions for the future. For example, the premise of the Biden care agenda that America’s labor force participation rate is unusually low for a rich country remains true. And the economic recovery has not been even across geographies. Many states remain below their pre-pandemic employment peaks and most urban downtowns are reeling from falling commercial real estate values and population loss. The Federal Reserve’s interest rate increases have helped curb inflation but have also created a situation where high borrowing costs may limit mortgage lending and business investments.
These are better problems to have than the problems Bidenomics helped avoid. But they won’t be solved with the tools that have been used so far. To succeed, the newly brash, bold, self-congratulatory rhetoric is going to need to be paired with more creative policymaking and more attention to supply-side issues than we’ve seen so far.
Matthew Yglesias is a columnist for Bloomberg Opinion.
