Joe Biden recently provided a glimpse into what a rematch between him and Donald Trump may entail. At least a portion of it.
The more mundane aspects of Donald Trump’s attraction are frequently hidden by the craziness of his political persona, at least in the eyes of his detractors. The economic argument is the most persuasive one used by Trump and the one that Biden should be most concerned about in 2024. In 2016, Trump ran as a savvy businessman who would use his expertise in contracts for the benefit of the American people. Trump claimed, “I’ve been greedy, greedy, greedy my entire life.” “I’ve taken all the cash I could.” I’m very avaricious. But right now, I want to have American-style greed.
Trump said that the establishment had betrayed you. They gave China your job in exchange. Your buildings, roads, and bridges were allowed to deteriorate. They valued the work they did, which takes place in front of a computer, requires advanced degrees, takes place in offices as opposed to factories, and in cities as opposed to towns, but they disregarded the labor you did. They prospered while you received nothing. According to exit surveys, Trump received significant majorities from people who felt that the economy was “fair” or “poor.”
Trump did not use such criticism to advance an agenda while he was president. Although there were some islands of action—trade policy being the most notable—incoherence predominated. The weeks for infrastructure are passed. Tax reductions favored the wealthy. There was no plan to improve American industrial capabilities or to increase the bargaining strength of non-college employees.
Trump, however, had the good fortune to be elected while the economy was booming. He continued to make that boom. In spite of fiscal problems, he collaborated with legislative Republicans to cut taxes and increase spending. He chose Jay Powell to head up the Federal Reserve, and Powell managed to keep interest rates low and the labor market brisk. In February 2020, the unemployment rate was 3.5 percent. Both wages and inflation were growing.
When COVID struck, Trump and Nancy Pelosi, the speaker, collaborated to pour trillions of dollars in support payments into the economy. Despite a rise in unemployment, employees as a whole did not suffer. In a rematch in 2024, this will be Trump’s greatest source of power. Only about a third of voters think Biden has done a good job handling the economy. Trump is by far the more dependable economic manager, according to polls.
In Chicago on Wednesday, Biden gave a sneak peek of the counterargument he’ll present in his much-anticipated address outlining “Bidenomics.” According to Biden, I fulfilled what Trump could only promise.
With regard to his economic plans, Biden contrasted them with “40 years of trickle-down.” The assumption that tax reductions at the top will result in prosperity at the bottom is typically referred to as trickle-down economics. Biden uses it to refer to a more permissive economic system, sometimes referred to as “neoliberalism.” According to him, the trickle-down effect was the idea that “it didn’t matter where you made things.” This “meant slashing public investment” and turning a blind eye as “three-quarters of U.S. industries grew more concentrated.” The period of forty years includes not just the administrations of Donald Trump, George W. Bush, George H.W. Bush, and Ronald Reagan, but also that of Bill Clinton and, yes, Barack Obama. Astute readers will observe this.
It would be wise to reflect on this subject. There are several former employees of the Obama and Clinton White Houses in the Biden administration. However, it does not perceive a natural continuation with such legacies. In important respects, it perceives itself as a departure from them.
Jake Sullivan, Biden’s national security adviser, who had previously served as a major adviser to both Hillary Clinton and Barack Obama, made this point quite clear in a speech to the Brookings Institution back in May. Sullivan criticized the idea that “the type of growth did not matter.” He claimed that this had resulted in administrations that had allowed Wall Street to flourish while “essential sectors, like semiconductors and infrastructure, atrophied.” The “assumption at the core of this policy: that markets always allocate capital productively and efficiently” was rejected, according to him.
He also offered a brief apology for his own party. The repercussions of our foreign economic policies, he said, were not completely taken into account by our domestic economic programs. Democrats had contributed to a Washington consensus that “had frayed the socioeconomic foundations on which any strong and resilient democracy rests” by allowing globalization and automation to destroy indigenous manufacturing.
The goal of Biden’s address in Chicago was to portray him as a Democrat who had taken these lessons to heart. First, he placed a lot of focus on location. Every hard-working American, he continued, “should be able to say where they grew up and stay where they grew up.” “That’s called Bidenomics.” He repeated it later. “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.”
I discussed this idea with Jared Bernstein, the head of Biden’s Council of Economic Advisers. One of classic economics’ most naive presumptions is that location is irrelevant since, as long as there are decent jobs available someplace, people would go to fill them, according to Bernstein. “That’s not really how it operates,” Housing costs are one factor in why it doesn’t work that way. “It’s a little bit of a fantasy, even with the pay differentials, to think that you can move from rural America, where housing is cheap, to expensive-housing America,” he added.
The investments being made under the Inflation Reduction Act and the bipartisan infrastructure package are the foundation of Biden’s response. In Manhattan and San Francisco, you don’t build wind and solar farms. To the dismay of Democratic governors, you don’t even have to do it in blue states. Since he was elected, an iron-air battery factory is being built in Weirton, West Virginia, “on the exact site where a steel mill closed at the turn of the century, bringing back 750 good-paying jobs, bringing back a sense of pride and hope for the future.” Biden’s red states will receive $623 billion in renewable energy investments by 2030, according to the Rocky Mountain Institute, a sustainable energy research organization, as opposed to $354 billion for blue states.
Biden’s strongest stance against Trump comes from all of these factories, battery plants, electric car charging stations, and auto manufacturing facilities. Biden noted: “Construction of manufacturing facilities here on U.S. soil climbed barely 2 percent on my predecessor’s leadership in four years after contrasting the infrastructure weeks Trump never delivered with “the infrastructure decade” he did. 2 percent. It has increased under my control by almost 100% in the past two years.
Biden made a point of noting, “We don’t need everyone to have a four-year degree in the economy we’re establishing. If you can acquire one, that’s terrific; we’re working to make it simpler for you to do so. However, you no longer require it to land a well-paying job.
On this, Bernstein didn’t mince words. “I’ve been in Democratic administrations when attending education was essentially the answer to problems with the labor market. The president has recognized that as false. Biden “realizes something everyone should know,” he continued. A little over two thirds of the workforce lack college degrees. Furthermore, there is no Bidenomics variant that excludes two-thirds of the labor force.
However, Biden’s case for his program was a little weaker in this instance. He touted his support for apprenticeship programs and unions, but he mentioned more ideas to encourage individuals to enroll in college than to find meaningful work without a degree.
The tight labor market that Biden has overseen is the finest thing he has done for employees with less education. Since February 2022, the unemployment rate has been below 4 percent, and often marginalized employees are benefiting. The salary difference between Black and White workers has almost closed, and advances in pay have been especially significant for those without a college degree. However, the Biden administration’s pleasure in such figures simply highlights the underlying issue it faces: under Trump, Americans had positive sentiments toward the economy. Under Biden, they don’t feel good about it.
The explanation is straightforward: Real wages have been declining as a result of growing inflation. It will take time for Biden’s long-term investments, his initiatives to restore American manufacturing and generate millions of new jobs, to decarbonize the American economy. People must adapt to the economy now, not in ten years.
The good news is that real wages have increased over the previous few months, which is good for both Biden and America. Since its peak, inflation has decreased by more than half. Forecasters who had predicted a recession in 2023 with certainty are now taking precautions. According to Moody’s Analytics’ Mark Zandi, the economic slowdown won’t affect us at all. The 2024 election may very well be determined by whether the good economic news persists. Trump’s best ideas have been appropriated by Biden, who has pursued them with a tenacity and dedication that Trump has never shown. But if Americans continue to wish for Trump’s economy, it won’t matter much.
