Why ‘Bidenomics’ matters a lot
President Joe Biden might not seem like a revolutionary, but he is presiding over a fundamental change in the nation’s approach to economics. Not only is he proposing a major break from the “trickle-down” policies of Ronald Reagan, as Biden highlighted in a speech in Chicago last week. He is also departing from many orthodoxies that shaped the presidencies of Democrats Bill Clinton and Barack Obama.
Government is not shying away from pushing investment toward specific goals and industries. Spending on public works is back in fashion. New free-trade treaties are no longer at the heart of U.S. international strategy. Challenging monopolies and providing support for unionization efforts are higher priorities.
You can trace the break in part to new circumstances and challenges, as national security adviser Jake Sullivan argued in a speech of his own in April.
Heightened competition with China and the urgency of dealing with climate change are part of the story. So is the long rise of wealth and income inequality accompanied by the collapse of industrial communities. The breakdown of supply chains during the pandemic put an accent on resiliency and an emphasis on bringing home manufacturing, for semiconductors especially but for other products, too.
The shift also has to do with who Biden’s long-standing alarm over his party’s alienation from working- and middle-class voters and an unease with the Reagan-era economic consensus that hovered over Democratic administrations.
“When I worked for him as vice president,” Sullivan told me, “he would frequently talk to me about his underlying discomfort with some of the prevailing economic assumptions, both with respect to trade and domestic investment.” The confidence Biden and his lieutenants have in the new path is reflected in their eagerness to tout it as “Bidenomics.”
Biden wants to show that his signature policies on technology, climate action and infrastructure are working. In Chicago he stressed they are producing well-paying jobs for those who have been on the short end of economic growth: Americans without college degrees and those living in places with “hollowed out” economies.
The address was part of a campaign to counter economic unease that has left Biden with middling approval ratings despite historic job creation. A recent Treasury Department report touted “a striking surge in construction spending for manufacturing facilities,” which has doubled since the end of 2021.
Bidenomics has gone global. One indicator is the exceptional and ongoing debate Sullivan’s speech provoked in proposing a new consensus to replace “a set of ideas that championed tax cutting and deregulation, privatization over public action and trade liberalization as an end in itself.” The old formulas, Sullivan argued, not only failed to address new problems; they didn’t work on their own terms.
“In the name of oversimplified market efficiency,” he said, “entire supply chains of strategic goods, along with the industries and jobs that made them, moved overseas.” The idea that freer trade “would help America export goods, not jobs and capacity, was a promise made but not kept.” He stressed the need for “a modern American industrial strategy” and the benefits of “moving beyond traditional trade deals to innovative new international economic partnerships.”
Sullivan advised Hillary Clinton’s 2016 campaign, and that election’s outcome provoked a long period of reflection on the anger he encountered throughout the country. “As I traveled across the United States on behalf of the campaign,” Sullivan wrote in Democracy Journal in 2018, “I was reminded again and again how the broken aspects of the American economy were not the inevitable product of disembodied forces like ‘globalization’; they were very much the product of policy choices shaped by decades of conditioning.”
Sullivan told me his speech “is really a description not just of my own journey on these issues” but also the journey of his generation responding to “the shortcomings of the previous approach.”
Can Bidenomics become an international template for the center-left as Reaganomics was for the center-right in the 1980s? Already, Biden’s climate policies have echoes in the approaches of Australian Prime Minister Anthony Albanese and British Labour Party leader Keir Starmer.
Biden is selling his program hard because he knows that the standing of Reaganomics was secured only after Reagan’s reelection. The same will be true of the word Biden first resisted and now holds high.