Biden’s economic policy leadership is in doubt

With a 41%  approval rating and a general election only 17 months away, President Biden has chosen to tout the success of self-proclaimed “Bidenomics” as a key strategy to assure four more years in the White House. It is a strange strategic choice, for by concentrating on economic issues he is focusing upon the portion of his administration’s policies about which the voters feel least convinced. Only 33% of American adults say they approve of Biden’s handling of the economy and only 24% say national economic conditions are in good shape, according to a recent Associated Press-NORC Center for Public Affairs Research Poll. Clearly, Biden’s economic policy leadership is in doubt.

In raising “Bidenomics” to the forefront of his playbook, the president must first detail for the American public what it is and how it has worked. Historically, there have been two parts of his economic strategy. The first involved the $1.9 trillion American Rescue Plan, passed in March of 2021. Designed to offset the economic impact of the pandemic, the plan relied on stimulating the economy by sending checks of up to $1,400 to Americans earning less than $75,000. It also provided grants to small businesses and organizations impacted by the pandemic.

A second component of Bidenomics, discussed by the president in Chicago, was initiated in late 2021 and consisted of federal investment in infrastructure, semiconductor production and renewable energy.

Both parts of the plan were not particularly innovative. The first was simply an allocation of federal money to individuals, companies and organizations. Like similar allocations by the Trump administration, it produced a dubious slew of illegal recipients from which the SBA and other governmental organizations are still trying to recover funds. The second was simply Keynesian economics designed to force money into segments of the economy deemed suitable by decision makers in Washington. The ironically named Inflation Reduction Act of August 2022 was part of this wave of spending. Together, these two parts of government spending, retroactively identified as Bidenomics, were collectively distinguishable by their size, representing one of the largest peacetime influxes of funds into U.S. economy in history, but they were ill-timed.

By the time that the many stimulus portions of Bidenomics  were in place, the impact of the pandemic was mostly over. As a result, the classic case of inflation materialized — namely too much money chasing too few goods. The scarcity of raw materials drove prices up. Initially some workers were complacent about returning to the workplace given the stimulus checks they had received, and they reacted slowly to job offers. The resulting labor shortage quite naturally drove up wages in almost every industry from manufacturing to restaurants. The result was that the annual consumer price index rose 8.5% for the year ending in March of 2022 — a 40 year high. Prices increased for everything from groceries to used cars.

Compounding the pressure on prices was a complacent Federal Reserve. Rates, which had hovered at levels not seen since the early 1950s, added significantly to the inflationary behavior of consumers in general and particularly home buyers who believed they must buy now to avoid future price increases.

The Biden administration is not solely responsible for the economic malaise currently plaguing the U.S., but Bidenomics has played a major role in creating it. As a result of a series of poorly conceived,  and ill-timed stimulus programs, inflation has caused the hourly wages of Americans to decline by 3.16% during the 29 months of the Biden presidency, according to the U.S. Department of Labor. If this is the result of Bidenomics, I doubt many would find it a compelling plank in a future presidential campaign.

Michael A. MacDowell of Estero is president emeritus of Misericordia University and a director of the Calvin K. Kazanjian Economics Foundation.

This article originally appeared on Fort Myers News-Press: Biden’s economic policy leadership is in doubt