President Biden continues to promote Bidenomics as a success during his campaign trail. However, many Americans do not necessarily share this sentiment. Democrats and left-leaning independents state that Bidenomics was relatively successful.
According to the Conversation, the U.S. economy has been relatively impressive under Biden since 13 million jobs have been created, and the federal deficit, which worsened under President Trump, has bounced back under Biden’s rule. But the reality is that Bidenomics has not improved the U.S. economy as it intended to do. More specifically, it did not improve the economic and financial condition of the lower-and-middle-income households.
According to Randy Feenstra’s press release, Bidenomics impoverished American families rather than lifting them up. The Iowan U.S. Representative stated: “Bidenomics has failed to deliver financial relief to a single American family. Thanks to wasteful government spending, Americans have accrued more than $1 trillion in credit card debt to survive in the Biden economy and endure the harsh impact of inflation…”
Average hourly earnings by all private workers under Bidenomics (1982-1984 U.S. Dollars)
Source: U.S. Bureau of Labor Statistics
The Iowan congressman’s statement isn’t wrong. According to the U.S. Census Bureau, real median household income was $74,580 in 2022, a 2.3% decline from the 2021 estimate of $76,330. Moreover, the money income Gini Index decreased by 1.2% between 2021 and 2022 and the average hourly earnings of all private workers declined during that same period from $11.4 to $10.9 then slightly increased from $10.9 to $11.00 (in 1982-1984 U.S. dollars), according to the U.S. Bureau of Labor Statistics.
The major reason why Bidenomics has been unsuccessful is that it practiced demand-side economics. Demand-side economics could be summed up as the economic theory that relies on government spending to stimulate economic growth in order to encourage consumer demand. That means, the government can increase spending on goods and services, or cut taxes, to put more money in the hands of consumers and businesses. This will lead to an increase in demand for goods and services, which will stimulate the economy.
The issue with this approach to economics is that government spending leads to budget deficits and national debt. When a government spends more money than it collects in taxes, it runs a budget deficit. This means that the government has to borrow money to finance its spending. Over time, this can lead to a large national debt and more importantly, it leads to inflation, therefore to the erosion of the purchasing power of consumers.
Another problem with government spending is that it can lead to inefficiency and waste. Government programs can be complex and bureaucratic, and they can be difficult to manage effectively. This can lead to waste and inefficiency. This has been the case with Bidenomics. For example, the Biden administration wasted $1.9 trillion on the American Rescue Plan Act, which included a $350 billion bailout for state and local governments, even though many of these governments were already in good financial shape. The bill also included a $15 billion bailout for the airline industry, even though the airlines had already received a $50 billion bailout in 2020.
Another example of misallocation of capital from Bidenomics regarding the Infrastructure Investment and Jobs Act. The bill, which is a $1.2 trillion legislation, included $110 billion for electric vehicles, even though electric vehicles only account for a small fraction of the US auto market. The bill also includes $66 billion for passenger rail, even though passenger rail is a relatively inefficient mode of transportation.
Bidenomics has proposed a number of tax increases, including an increase in the corporate tax rate and a capital gains tax increase for high-income earners. These tax increases could have a negative impact on middle-class households, either directly or indirectly. For example, an increase in the corporate tax rate could lead to job losses or lower wages for middle-class workers. A capital-gains tax increase could reduce the value of middle-class households' stock portfolios.
Bidenomics may have had good intentions, but the implementation produced outcomes that were contradictory to their intentions. Bidenomics worsened real household incomes.