Bidenomics taxes workers through inflation to fund green industrial policy
Washington Examiner
Despite inflation slowing from its near-double-digit peak, the economy remains President Joe Biden‘s biggest roadblock to reelection. Hence, he unleashed a risky strategy last week to reverse the narrative by embracing “Bidenomics,” a phrase first used as an insult. He wants to turn it into a winning brand featuring intervention and a rejection of what he tediously labels “trickle-down economics.”
“Bidenomics is about building an economy from the middle out and the bottom up, not the top down,” Biden said Wednesday, adopting his usual mumbo juimbo, “and there are three fundamental changes that we decided to make with the help of Congress and been able to do it: first, making smart investments in America; second, educating and empowering American workers to grow the middle class; and third, promoting competition to lower costs to help small businesses.”
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The public knows the president is delusional and Bidenomics is a bust.
Just a third of adults polled by the Associated Press approve of Biden’s economic performance. Contrary to the claims of the president’s allies, that’s not because of conservative criticism, but rather a matter of dollars and cents.
Biden inherited an economy with consumer inflation at just 1.4%, a pandemic-fueled unemployment rate of 6.3% that already was plummeting, and a post-pandemic explosion of economic growth. Because Republicans tacked on another $900 billion in COVID-19 spending in a fruitless, eleventh-hour attempt to win the Senate runoffs in Georgia right before Biden’s inauguration, the 46th president didn’t need to pass any new stimulus.
But, of course, he did so anyway, so he could claim to be the motor of the economy instead of just a fellow who hopped on for the ride. Biden spent $1.9 trillion more on the American Rescue Plan, producing a tidal wave of short-term spending. Federal Reserve Chairman Jerome Powell made the costly and mercenary decision to finance Biden’s spending until the president nominated him for a second term.
Since Powell’s confirmation, Fed monetary policy has been at war with the White House’s fiscal policy. While the Fed increased interest rates at the fastest clip in 40 years, Biden continued to blow out the budget, tacking on nearly $7 trillion of new debt. That’s on top of what already was by far the highest debt-to-GDP ratio since World War II, not to mention the looming insolvencies of Social Security and Medicare.
At the same time, Biden crushed economic output. Whereas the previous administration’s deregulatory agenda reduced average annual household costs by $11,000, according to University of Chicago economics professor Casey Mulligan, Biden’s new regulations cost $10,000 per year.
Between hamstrung output, new debt to finance Biden’s spending, and growth in economic demand (more cash chasing fewer goods), the Fed’s race to contain inflation has slowed to a crawl. Consumer price inflation decreased from last year’s apex of 9.2% to 4%, but the Fed’s preferred core measure, which strips out the volatile categories of food and energy, has been stuck at or near 4.6% since January. That’s more than twice the Fed’s official target rate, and there’s little reason to believe core inflation can fall further without more drastic action.
And we’re all paying the price. Since Biden took office, prices are up more than 15%. According to the Committee to Unleash Prosperity, nominal weekly pay has inched up by $200 for the average family but buys $100 less of value, amounting to a $5,600 loss in annual purchasing power.
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“I believe that every American willing to work hard should be able to get a job no matter where they are — in the heartland, in small towns, in every part of this country — to raise their kids on a good paycheck and keep their roots where they grew up,” Biden said. “That’s Bidenomics.”
No, that isn’t Bidenomics except insofar as it is wishful thinking. What it means in practice is that Biden has abandoned the classical liberalism of his predecessors on both sides of the aisle in favor of a debt-dependent industrial policy, choosing winners and losers based on his green manufacturing agenda that imposes costs on workers and consumers alike. Big Government (and by extension, Biden’s chosen Big Businesses) win. Ordinary workers pay the price with the most onerous tax of all — inflation.