Yahoo Finance This week in Bidenomics: I did that
As the Republican presidential field swells with candidates, President Joe Biden is making the case for why voters should reward him with four more years. His prospects depend on whether voters believe him.
Biden published an editorial in the Wall Street Journal on June 8 boasting of his accomplishments during the last year, as inflation fell from 8.9% to 4.9%, employers created 4 million jobs, and an oft-predicted recession failed to materialize. He also highlighted pledges he made a year earlier, in another WSJ editorial, to show that he has fulfilled those promises.
Like all presidents, Biden takes credit for favorable developments, whether he did anything to bring them about, or not. He also fudges on negative trends to present the sunniest possible interpretation. So here’s an assessment of Biden’s claims and whether they’re credible or not.
CREDIBLE
“I won’t meddle with the Fed.” Kudos to Biden for staying mum on the Federal Reserve’s aggressive interest-rate hikes, unlike his predecessor Donald Trump, who frequently criticized monetary policy moves he didn’t like. Biden’s silence respects the independence the Fed needs to do its job credibly.
13 million new jobs, including 800,000 manufacturing jobs. The numbers don’t lie. These are the correct gains in employment since Biden took office in 2021. Whether he made this happen is another question, given that he arrived as a huge Covid-rebound was underway, juiced by $4 trillion in stimulus spending during the Trump administration. Biden did sign another $2 trillion stimulus bill in 2021, which probably did help the recovery (but also fueled inflation).
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“I fought hard to bring Democrats and Republicans together to compromise on the budget.” Biden caught flak from liberal members of his party by agreeing to modest spending cuts as a condition of suspending the federal borrowing limit in the debt-ceiling deal he signed on June 3. But Biden clearly views this as a virtue. He’s tacking to the center as the 2024 elections approach, reasoning that moderates and swing voters want the bipartisanship he says he can deliver. It did seem to work in 2020, when Biden ran to the right of liberal firebrands Bernie Sanders and Elizabeth Warren.
Capping insulin costs. Last year’s Inflation Reduction Act limited monthly out-of-pocket spending on insulin for Medicare enrollees to $35 per month, which should save 1.5 million patients around $500 per year. That’s a small portion of all health-care spending, but given how hard it is to change any part of the nation’s labyrinthine medical system, sure, call it a win.
Boosting green-energy and infrastructure spending. Biden negotiated and signed a big infrastructure bill in 2021, something that eluded Trump despite his supposed interest in it. Last year’s Inflation Reduction Act is the biggest US investment in green energy. Some critics call these programs corporate welfare, but Biden promised to pursue these priorities, and succeeded.
SPECIOUS
“I made tackling inflation my top economic priority.” Biden may have made inflation a priority, but his policies have little to do with receding inflation. More important are Fed rate hikes, the end of COVID supply-chain distortions, a gradual return to normal economic trends, and the slow spend-down of excess savings accumulated during the pandemic.
Lowering gasoline prices. Biden argues that selling 180 million barrels of oil from the US strategic reserve helped bring down oil and gas prices. It may have helped a little, but 180 million barrels is only a couple days’ worth of global supply. Much bigger factors were weak demand for energy in China, adjustments following sanctions on Russia and growing production in the United States. Oil prices are set in global markets and prices rise and fall in the United States same as they do everyplace else.
Unsnarling supply chains. Global supply chains seized up during COVID, contributing to goods shortages and rising prices. They’re now largely back to normal. But that’s the market fixing itself, not the leader of any country riding to the rescue.
Stabilizing rents. “Rents continue to moderate,” Biden wrote in his June 8 editorial. That might be news to millions of renters. Housing inflation, including rent, has been one of the most persistent and painful types of inflation. Rent inflation was 8.8% in April, and that’s been getting worse, not better. Economists do think rent inflation will start to ease, which is probably why Biden used the cagey phrasing, “continue to moderate.” But rent is not really moderating, yet.
Reducing the deficit. This is the biggest laugher in Biden’s menu of so-called accomplishments. Biden talks up “the $1.7 trillion drop in the deficit during my first two years.” Technically, Biden is right. But only because massive amounts of COVID stimulus sent the deficit from $984 billion in 2019 to $3.1 trillion in 2020. So Biden is comparing the latest annual deficit of $1.4 trillion to the outlier number from 2020 and declaring victory. In reality, the budget outlook is terrible. The government has run a $2.1 trillion deficit during the last 12 months and Congressional Budget Office forecasts show the deficit going only one direction: up. Biden’s best hope on this issue is voters will be too busy to notice what's happening.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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