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Bidenomics and America's New Economic Agenda

29 Sep 2023
By Colin Chapman FAIIA
Vice President Kamala Harris delivers remarks to Department of Defense personnel, with President Joe Biden and Secretary of Defense Lloyd J. Austin III, the Pentagon, Washington, D.C., Feb. 10, 2021. Source: Public Domain Media /

While the presidential primary witnessed its second Republican debate without Trump, Biden has sent his Vice President Kamala Harris to promote the administration’s economic successes. There is still some confusion in the public about the economy, but it is clear that Bidenomics is working. 

Like a fading Vaudeville actor in a light entertainment television series of the seventies, Joe Biden has rolled out his latest party trick: to beat off the challenge from former president Donald Trump to win next year’s election. He has ordered his running mate, 58-year-old Kamala Harris, to come out from what many observers regard as relative obscurity to travel across the length and breadth of America with one main purpose – to get out and win the votes of the young people known as Gen Z, those born in the late 1990s and early 2000s.  In a rare joint press conference with Ms Harris last weekend, the president also put her in charge of a new White House office for gun violence prevention; effectively putting her in charge of confronting what is arguably the biggest domestic problem facing the United States today.

Before we try to analyse whether Harris is up to her new tasks, we should examine what they involve, including the fact that the 82-year-old Biden seems to have hardened his determination to run with Harris rather than considering alternatives. An immediate and substantial challenge to Biden, Harris and the administration’s spin doctors are deciding how to explain the recent package of economic policies to a confused populace and bewildered Western allies. Some see the policies as an endorsement of Trump’s “Put America First” rhetoric, subsidising American products to the disadvantage of European or Asian competitors.

Republicans swiftly labelled the policies “Bidenomics” as a term of derision, but when the president and Harris realised their policies were starting to have a positive impact they adopted the term themselves. Alas, this sentiment does not seem to have filtered through to public opinion where, despite success in lowering inflation, lifting workers’ real wages and improving the jobs outlook, opinion polls show Americans remain negative about their economy.

What exactly is Bidenomics?  One way to think of it is as the antidote to Reagonomics, the economic policies of the administration of Ronald Reagan in Washington, Margaret Thatcher in London, and many others of the time. The theory was – and remains – that if you cut taxes for the well-off and major corporations, often enabled by cuts in public spending – it will have a beneficial trickle-down effect on society generally.

Bidenomics is much more complicated, seeking as it does to build economies from the bottom up, with a strong emphasis on improving the lot of the middle classes.

Brian Deese, the man who as director of the White House National Economic Council, was largely responsible for Bidenomics. Now visiting professor at the renowned Massachusetts Institute of Technology, Deese believes that Bidenomics is essential if the United States is to achieve its stated goals to fight climate change, in which private investment will be a vital element.  For many years climate strategies have been focussed on making pollution more expensive, as an elegant way of trying to address the climate crisis, but the focus now should be on strategies to make zero carbon technologies cheaper.  The political economy in the United States is such that the only way to meet the level of ambition needed to address the climate crisis is to focus on making zero carbon technologies cheap as quickly as possible, and that the urgency and scale necessary is a big part of the strategy itself.  This approach forms the theory behind the Inflation Reduction Act – to try to use public investment to drive down the cost of energy technologies.

The numbers look promising. In the last year through the end of the second quarter of 2023, US$213 billion of clean energy investment was put into the U.S. economy.  Importantly, that’s not announced investment – pledges merely made in media releases – it is actual investment, representing an increase of 35 percent from the year before and up 165 percent from five years earlier. This was reassuring for U.S. investors, though the fallout from Bidenomics is still having a big impact on the international business community which is trying to work out to what extent their leaders should respond.

A big complication has been the news that world trade volumes fell at their fastest annual pace for almost three years in July. The latest World Trade Monitor report published by the Netherlands Bureau for Economic Policy Analysis, was evidence of slowing global growth in the face of high inflation, bumper rate rises in 2022 and increased domestic spending. China, the world’s largest goods exporter, posted a 1.5 percent fall, the eurozone a 2.5 percent contraction, and the US a 0.6 per cent decrease.  This news created a mood of near panic among some commodity producers, and anger in export-dependent countries like China and the European Union nations. Last week, the EU’s top trade official, a Latvian named Valdis Dombrovskis, headed for Beijing for crisis talks with his Chinese counterpart.

The EU has a €390 billion trade deficit with China, so the fact that the four days of talks ended cordially must be regarded as a limited success, with both sides signing up to a set of export control mechanisms, mirroring a similar deal Beijing made a few weeks ago with the United States. Under the deal, China has agreed to buy a raft of agricultural products from the EU and establish a regular dialogue on trade which will review, among much else, the EU’s ban on the export of certain high-tech products to China.

The EU-Beijing summitry of the last week has been an important step towards normalising relations between two of the world’s biggest trading blocs, with Brussels deciding it is unwise to go too far towards reducing China’s influence in Europe. The talks ended with Dombrovskis recognising that there are still strong headwinds facing the relationship, the strongest of which is China’s failure to condemn Russia for invading Ukraine. Beijing supports the territorial integrity of states, “so it’s very difficult for us to understand China’s stance on Russia’s war against Ukraine as it breaches China’s own fundamental principles,” he said.

So, where does this leave Bidenomics? The answer, I think, is “in a good place” – it is one of the successes of the administration as Biden faces down the challenge from Trump next year.  Can Kamala Harris deliver on her new brief?  I see no reason why not. She is probably no more obscure as a public personality than was Biden himself during the many years when he was vice president, and I predict that by the end of next year she will be on the cover of Time magazine as the American woman of the year. Harris has an incredible record of public service.

Harris, born in Oakland, California, to parents who migrated from India and Jamaica, graduated from Howard University of California, Hastings. Throughout her long legal career, she served both as a prosecutor and as a defender. When she was elected California’s attorney-general she oversaw the largest state justice department in the US, including establishing the state’s bureau of children’s justice. When elected attorney-general, Harris won a US$20 billion settlement for Californians whose homes had been foreclosed as well as a US$1.1 billion settlement for students and veterans who were taken advantage of by a for-profit education company. She is a formidable individual and it would be unwise to underrate her.  We must remember that she is critical to winning the vote of black women in America as well as generation Z. Before being delegated her latest responsibilities, she undertook a tour of colleges where she was particularly well received by the age group she is now targeting.

This week I recommend a short clip from Deese who talked recently with the Financial Times’ distinguished chief foreign correspondent Gideon Rachman. Listen to the whole podcast here.

Colin Chapman FAIIA is a writer, broadcaster, public speaker, who specialises in geopolitics, international economics, and global media issues. He is a former president of AIIA NSW and was appointed a fellow of the AIIA in 2017. Colin is editor at large with Australian Outlook.

This article is published under a Creative Commons License and may be republished with attribution.