What is Bidnomics, what effect has it seen in America, how helpful will it prove in the elections?

2024 is going to be a very important year for the global economy. There will be elections in some of the largest and most influential economies. These include India, Russia, UK, EU and America. Collectively, the GDP of these countries is more than $54 trillion which is about 52% of the global GDP in 2023. Because of their deep interconnectedness, these countries and their leaders will not only determine the direction of their respective economies but will also influence the shape of policy making in other countries. However, from a global perspective, the most important of these elections may be in the US, where as things stand, President Joe Biden is likely to seek re-election. However, with about 12 months remaining, Biden faces a tough challenge from Donald Trump. Most opinion polls show that President Biden’s approval rating is at its lowest point.

What is the logic behind Bidenomics?

In May 2021, ExplainSpeaking wrote about the broad outline of President Biden’s policy agenda and its importance. You can read that excerpt here. Bidennomics is a term used colloquially to refer to any policy choices made by the Biden administration. But the term was not coined by Biden or his team, even though they have adopted it over the years. This does not mean that Bidenomics does not have any solid ideas behind it. This occurs even though it is a reaction to the dominant way in which the American economy was structured, especially since 1981 when Republican President Ronald Reagan took office.

What is Bidnomics?

According to the White House, Biden’s economic vision focuses on three key pillars:-

Making smart public investments in America.

Empowering and educating workers to grow the middle class.

Promote competition to reduce costs and help entrepreneurs and small businesses thrive

In other words, Bidenomics involves policies that improve America’s physical and digital infrastructure, reduce its trade dependence on rivals such as China, raise the standard of living available to the middle 40% and bottom 50% of the US population, and All these things increase opportunities and, in doing so, promote job creation within their borders. To achieve these goals, the Biden administration has made changes to the tax regime as well as its spending options. On the one hand, it aimed to raise $737 billion through greater taxation, while on the other, it decided to spend $500 billion in new spending to invest in clean energy and reduce health care costs. It has taken several steps to prevent the concentration of economic power in the hands of a few and attempted to empower labor unions to protect labor rights.

what was the effect

In terms of GDP growth, America has left all major developed countries behind. The US economic growth level is only 1.4% below the pre-pandemic trend, in other words, its recovery has been so rapid that it is almost where it would have been had the COVID pandemic not occurred. For perspective, according to RBI calculations, India will return to pre-pandemic trend levels by 2035. The US economic recovery has been so strong that even a sharp and sudden increase in interest rates by its central bank to control historically high inflation has not led to the recession that many had predicted. The same is true for the unemployment rate, which has fallen sharply since Biden took office and reached a historic low. The American economy is creating millions of jobs at such a fast pace that there are two vacancies for every unemployed person in the economy. High energy prices and supply constraints have exacerbated the side effects of the extra money that the government injected into the economy (immediately post-Covid) to revive it. Inflation has since reduced substantially but has still not reached the target level of 2%.

So why are so many people unhappy with Bidenomics?

This has to do with the fact that Bidenomics has not led to the kind of improvement in income and wealth inequality that many had hoped for. The truth is that it has only been two and a half years. The second reason is related to ideological disagreement with Bidenomics. Given its logic and its components, the ultimate goal of Bidenomics is to reduce existing inequalities in the economy. Although many Americans appear to be benefiting from this issue, nearly as many Americans are not. One of the Biden administration’s claims is that a strong labor market has led to improved wages and working conditions. The White House claims inflation-adjusted incomes have increased 3.5% since the president took office, and low-wage workers have seen the largest wage gains over the past year.