After months of gloom, the Biden administration is increasingly eager to define — and talk about — Bidenomics.
Why is this important: The White House is not presenting major new policy proposals. Instead, he talks about Biden’s economic record as something to embrace, suggesting a change in tone as the midterm elections and beyond approach.
- The president’s advisers see both an improving short-term outlook and a list of political achievements that will support longer-term goals such as rebuilding American manufacturing capacity and tackling climate change.
Driving the news: The White House this morning released a 58-page “economic plan” outlining what officials consider their key achievements, and yesterday Treasury Secretary Janet Yellen launched an economic tour embracing similar themes.
Between the lines: By midsummer, the economy and domestic politics looked like a major drag on the Democrats’ political fortunes. Soaring inflation, growing recession worries and a legislative deadlock over key elements of President Biden’s plans were a toxic combination.
- But when speaking with economic officials in the Biden administration over the past few weeks, there has been unmistakable dynamism in their approach.
- Passing major climate and health care legislation (the Cut Inflation Act) and strengthening the semiconductor industry (the CHIPS Act) helped a lot. The same is true for falling gasoline prices and other signs of moderating inflationary pressure.
- Administration officials are enthusiastically pointing to a recent report by Goldman Sachs’ economics team saying a soft landing for the economy — with inflation coming down without a recession — may be plausible after all.
Speaking in Detroit, As Ford executives and factory workers watched, Yellen dusted off an economic framework she first presented to the virtual crowd in Davos earlier this year: the modern supply-side economy.
- The idea is to expand the supply side of the economy – not through tax cuts or deregulation (as is traditional supply-side economic thinking), but by injecting large sums of money in sectors and communities that have been “neglected for too long,” which will “raise the ceiling of what our economy can potentially produce,” Yellen said.
The plan of the White House cites the possibility of progress on “decade-long economic challenges,” which range from building more resilient supply chains to bolstering domestic manufacturing and clean energy infrastructure.
Yes, but: There have been recent victories on inflation – especially a long period of lower gasoline prices – but there is no guarantee that this will continue.
- Happy messages about the economy may not read well in an era of skyrocketing grocery prices and overall prices rising faster than wages (until recently, at least).
- Yellen acknowledged that the Biden administration’s biggest near-term challenge is to bring down inflation “without sacrificing the economic gains of the past two years.”
In addition, if Republicans win one or both houses of Congress in November, the window for major legislative achievements will likely close. Biden advisers, however, see some potential for smaller-scale bipartisan bills on issues such as housing policy.