The mixed messages of Bidenomics
Sarah Bedford
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President Joe Biden’s eponymous economic plan rests broadly on a central contradiction: Bidenomics is a campaign selling point even though voters strongly disapprove of Biden’s economics.
It is also filled with smaller contradictions that could hamper its ability to deliver.
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Bidenomics promises to create American jobs with vast public investments that require overseas manufacturing. The president’s plan vows to lower the costs of everyday living while pushing some proposals that could drive them higher. It throws billions of dollars at infrastructure projects in the name of creating jobs while limiting what kind of workers can apply.
The full-court press for Bidenomics appears to represent an acknowledgment by the White House that the economy remains a top concern for voters and that Biden will need an answer to questions voters have about when they can expect the value of their paychecks to rise.
Only 1 in 5 people believe the economy is doing well, according to a CNBC poll this month.
Most voters disapprove of the way Biden has approached the economy.
Although inflation has begun to ease from the heights it reached last year, interest rates have hit their highest level in more than two decades, and wage growth slowed during the spring. And the costs of things that people may notice the most — food, fuel, and rent, for example — are still climbing.
That means many people are likely still feeling economic pressure despite the top-line data Biden frequently cites to argue the economy is booming under his leadership.
“I’m not here to declare victory; we got a long way to go on the economy. But I’m here to say we have more work to do,” Biden said during a July 20 speech in Philadelphia. “We have a plan that’s turning things around pretty quickly. Bidenomics is just another way of saying: restore the American dream.”
Biden has made tackling inflation a central part of Bidenomics messaging — but not, in reality, part of its substance.
He frequently touts the passage of the Inflation Reduction Act as evidence of his commitment to bring down prices, even though many economic experts noted the law had few provisions actually aimed at inflation.
The bill “would do virtually nothing to tame inflation,” the Washington Post fact-checker wrote last August.
“The impact on inflation is statistically indistinguishable from zero,” analysts at the University of Pennsylvania’s Penn Wharton School said of the law.
“Enacting the bill would have a negligible effect on inflation” in at least the near term, the Congressional Budget Office noted.
Still, provisions of the Inflation Reduction Act factor heavily into the president’s Bidenomics speeches.
Biden has repeatedly touted the green energy tax credits in the law, which incentivize the production of parts for solar and wind energy plants.
Many of those parts are frequently made overseas, however. Critics have said a dramatic increase in green energy spending will only increase America’s reliance on China.
Biden has acknowledged that China has to date “dominated” the rest of the world in clean energy manufacturing.
“We’re in a real race; China is ahead of us,” Biden said during a July 6 Bidenomics speech in South Carolina.
China produces most of the world’s lithium, nickel, and cobalt — all raw materials needed to make components of clean energy technology.
While the Inflation Reduction Act contained provisions requiring some materials to be domestically manufactured, the Biden administration has acknowledged that Chinese manufacturing will still play a role in its climate agenda.
“The administration has taken some steps that would allow Chinese companies and Chinese goods to enter the market,” Energy Secretary Jennifer Granholm said in May.
Biden also makes his record on job creation a feature of his Bidenomics messaging, often in misleading ways.
“We created 13.4 million new jobs. More jobs in two years than any president has ever made, in four,” Biden said in June during his speech announcing the Bidenomics theme.
The sentiment is misleading because the vast majority of those jobs are not new but rather represent the return of jobs lost during the pandemic.
The economy shed at least 9 million jobs during the pandemic, meaning roughly 4 million new jobs can be credited to Biden during his first two years in office.
Former President Donald Trump created 5 million jobs during his first two years in office, by comparison.
The provisions in the infrastructure bill Biden often touts during his Bidenomics speeches, as well as other legislation, require most infrastructure projects to rely on unions to supply workers.
The construction industry already faces a severe worker shortage, which could slow the progress of infrastructure projects as additional tranches of infrastructure money become available in the months ahead.
Job openings in the construction industry appear to have been climbing since March, with the industry listing 366,000 open jobs in May, according to the Bureau of Labor Statistics.
The Biden administration has mandated that many infrastructure projects funded by the bipartisan law rely on project labor agreements, which the White House has claimed will help make the completion of taxpayer-funded projects more “efficient and timely.”
But some industry experts disagree with the labor restrictions.
“President Biden’s new policy will not help America ‘Build Back Better;’ instead, it will exacerbate the construction industry’s skilled worker shortage, needlessly increase construction costs and reduce opportunities for local contractors and skilled tradespeople,” Ben Brubeck, vice president of regulatory, labor and state affairs at Associated Builders and Contractors, said in a statement last year.
The rules could exclude more than eight out of every 10 construction workers, as union membership in the industry stands around 16%, according to the Bureau of Labor Statistics.
And requiring project labor agreements could jack up the cost of infrastructure projects even more than strained supply chains and increased material prices already have.
Union agreements can increase construction costs by as much as 20% for a variety of reasons, including by reducing competition for contracts, given that many firms won’t bid on them due to their inability to comply with the union workforce requirements.
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A study conducted by the RAND Corporation of a public housing initiative in Los Angeles that included a project labor agreement, for example, found that fewer housing units were built at a higher cost due to the agreement.
The 2021 study estimated that the agreement alone drove a 14.5% increase in construction costs, as well as an 11% decrease in the number of affordable housing units the initiative was able to accomplish.