Did Biden deliver on his promise to revive the economy?
Investigating Biden’s Promises: Restoring the Economy
President Joe Biden ran for office with a mission to restore the soul of the nation, rebuild the middle class, and unite the country. As we approach 2024, it’s time to assess whether he has delivered on his promises. In this Washington Examiner series, Oath of Office, we will delve into Biden’s performance. Part Two focuses on his pledge to revive the economy after the pandemic recession.
The State of the Economy
When President Joe Biden took office, the economy was still reeling from the effects of the pandemic, and uncertainty loomed. Let’s take a look at how the economy has fared as we approach 2024.
During the 2020 elections, Biden vowed to restore the economy from the pandemic-induced slump and generate millions of jobs. While significant sectors of the economy have rebounded and the labor market remains strong, there is a new challenge: the worst inflation in generations, which has undermined some of the economic gains.
What Did Biden Promise as President in 2020?
Currently, Biden’s economic performance is receiving low ratings. The White House has tried to highlight the positive aspects of the economy, branding them as ”Bidenomics.” However, factors like inflation have overshadowed these achievements, leading to widespread discontent.
The Inflation Challenge
The elephant in the room is inflation. It has affected almost every aspect of the economy, causing hardships for workers and families struggling to make ends meet. During Biden’s campaign, inflation was not a major concern. However, voters have now linked it, rightly or wrongly, to his tenure in office.
In November, inflation, as measured by the consumer price index, reached 3.1%, surpassing the Federal Reserve’s long-term goal of 2%. Although this rate is more manageable than the peak of 9% in June of the previous year, it still poses a significant challenge.
Who is to Blame for Inflation?
Assigning blame for inflation is difficult. Republicans point to the pandemic-era relief measures pushed through by Biden and Democrats in early 2021, known as the American Rescue Plan, as a cause of inflation. However, there were also coronavirus stimulus packages under former President Donald Trump that contributed to the excess cash and consumer demand.
The Federal Reserve also shares some responsibility. During the pandemic, the central bank kept interest rates near zero for an unprecedented period. These cuts stimulated demand and led to a surge in economic output, driving inflation higher. While Biden respects the Fed’s authority to set interest rates, he reappointed Fed Chairman Jerome Powell, who was in charge during the pandemic when rates were slashed.
According to Brian Riedl, a budget expert at the right-leaning Manhattan Institute, wages have not kept pace with inflation. Median real compensation for workers has declined under President Biden, exacerbating the impact of inflation.
Job Creation
In December 2020, shortly after winning the election, Biden pledged to add millions of jobs to the economy and restore the labor market’s health after the pandemic.
On the surface, Biden has delivered on this promise. Since taking office, over 14 million jobs have been added to the economy on a seasonally adjusted basis. Biden has touted this as record job growth, surpassing his predecessors.
However, it is crucial to consider the context. When Biden assumed office, the economy was still millions of jobs short of pre-pandemic levels due to widespread business shutdowns. Many of the jobs Biden claims to have added are simply positions that were lost and then regained during the reopening phase. Therefore, a significant portion of the 14 million employment figure should be seen as job recovery rather than genuine job growth.
The unemployment rate has also returned to pre-pandemic levels, currently fluctuating between 3.4% and 3.9%. However, critics argue that achieving low unemployment rates by overheating the economy can have long-term consequences.
Tax Policies
During his campaign, Biden promised not to increase taxes for those earning less than $400,000 annually. Although he faced opposition from Congress, Biden attempted major tax changes, including raising the corporate tax rate and increasing taxes for high earners. However, these proposals were blocked.
Biden did manage to enact a corporate minimum income tax as part of the 2022 Inflation Reduction Act. Critics argue that while there hasn’t been a direct tax levy on those earning less than $400,000, the burden of various taxes on businesses indirectly affects the middle class. Additionally, Biden maintained several tariffs implemented under Trump, which also impact consumers.
The Recession Outlook
So far, the United States has avoided a recession due to the Federal Reserve’s interest rate policies. Biden and his administration express confidence in achieving a ”soft landing,” where inflation will subside without triggering a recession.
However, some forecasters predict at least a mild recession in the coming year. This scenario does not bode well for Biden, especially considering his already low economic approval ratings during an election year.
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To note that the majority of these job gains can be attributed to the reopening of the economy following the pandemic-induced lockdowns. While the job market has shown signs of recovery, certain sectors, such as hospitality and leisure, continue to struggle.
Moreover, the quality of these jobs is a point of concern. Many of the new jobs created are low-wage or part-time positions, which may not offer the stability and benefits that workers need. In addition, the labor force participation rate remains below pre-pandemic levels, indicating that many individuals are still not actively seeking employment.
Infrastructure and Investment
An important aspect of Biden’s economic agenda is his proposed infrastructure plan. The Build Back Better plan aims to invest in physical infrastructure, such as roads, bridges, and broadband, as well as human infrastructure, including education and healthcare.
While the infrastructure plan has garnered bipartisan support in some areas, finding common ground on funding and implementation remains a challenge. Republicans have expressed concerns about the size and scope of the plan, suggesting that it could lead to further inflation and increased taxes.
The success of Biden’s economic agenda relies heavily on the passage of the infrastructure plan. If implemented effectively, it has the potential to create jobs, stimulate economic growth, and address long-standing infrastructure issues in the country.
Conclusion
As we evaluate Biden’s performance in restoring the economy, it is evident that challenges remain. While the labor market has shown signs of improvement, inflation and the quality of jobs created are points of concern. Addressing these issues will be crucial in ensuring long-term economic stability and prosperity.
Moving forward, it is essential for policymakers to strike a balance between stimulating economic growth and controlling inflation. Implementing effective measures to address rising prices and ensuring that workers have access to stable and well-paying jobs should be top priorities.
As President Biden’s term progresses, it will be interesting to see how his economic agenda plays out and whether he can deliver on his promise to restore the economy and build a stronger middle class.
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