President Joe Biden’s key economic plan—known as Bidenomics—is centered on the pillars of public investment, empowering middle-class workers, and promoting business competition. This approach is positioned in opposition to trickle-down economic theory, which holds that reduced taxes for wealthy individuals and corporations will result in benefits for other participants in the economy as well.
- Bidenomics refers to the economic agenda of President Joe Biden.
- Bidenomics is largely in opposition to Reaganomics, the policies of former President Ronald Reagan that are commonly associated with trickle-down economic theory.
- President Biden has aimed to achieve the goals of Bidenomics through key pieces of legislation, including the American Rescue Plan Act of 2021, the Inflation Reduction Act of 2022, and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022, among others.
- The goals of Bidenomics include the promotion of green energy and domestic manufacturing, support of union participation, increased tax rates for wealthy individuals and corporations, and reduced prices for consumers for healthcare goods and services.
What Is Bidenomics?
Bidenomics refers to the broad economic platform that President Biden campaigned on prior to the 2020 election and on which he remains focused heading into the 2024 election. This platform includes provisions to extend healthcare access, increase taxes for the wealthy, make major investments in green energy and other infrastructure, and support the middle class.
One of the major legislative components aiming to enact the positions of the Bidenomics platform is the American Rescue Plan Act of 2021, a part of Biden’s Build Back Better Plan, which included $1.9 trillion in economic rescue funds related to COVID-19. The American Rescue Plan provided individual direct stimulus payments, eviction and foreclosure moratorium support, funds for testing and vaccination, and more.
Another key piece of legislation for the Biden White House is the Inflation Reduction Act of 2022. This law aimed to reduce the deficit, lower inflation, and boost investments in domestic energy production, among other goals. It contained some of the same provisions as the Build Back Better Act, which failed in the U.S. Senate.
The White House has said that Bidenomics helped the U.S. economy to add more than 13 million jobs from the beginning of President Biden’s term through June 2023. At the same time, the country has faced steep inflation and a series of interest rate hikes from the Federal Reserve following the war in Ukraine and the lingering effects of COVID-19.
How Bidenomics Works
The White House describes the goal of Bidenomics as “building the economy from the middle out and the bottom up.” The platform is founded on the belief that elements of U.S. economic policy in recent decades fostered inequality, shocks including the Great Recession, a slow pace of growth, and an exacerbation of climate change.
In response to these challenges, Bidenomics focuses on the core goals of public investment, worker empowerment, and promoting competition. Below, we take a closer look at each of these central pillars of Bidenomics.
Investing in America
The first focal point of Bidenomics is on investment in American business and infrastructure. Specifically, it includes investments in clean energy and related industries, a push to increase semiconductor manufacturing in the United States, and funds to update, improve, and build out additional infrastructure across the country.
Three key pieces of legislation have primarily contributed to these efforts. Besides the Inflation Reduction Act, mentioned above, the others are the Bipartisan Infrastructure Law and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act.
The Bipartisan Infrastructure Law was passed by Congress and signed into law by President Biden in November 2021. It designates $1.2 trillion for investment in repairing and building roads, bridges, and rail lines, providing clean drinking water and access to high-speed internet, aiming to reduce the impact of the climate crisis, creating a national network of electric vehicle charging stations, and more. The White House said the law would contribute to the creation of 1.5 million jobs per year for a decade.
The CHIPS and Science Act was signed into law in August 2022 after receiving bipartisan approval. It provides $280 billion in funding for the nanotechnology, clean energy, quantum computing, and artificial intelligence (AI) industries. The bill aims to strengthen U.S. semiconductor research and manufacturing, boost U.S. wireless technology development, and support regional and local technology and research hubs.
Another component of President Biden’s investment in infrastructure is related specifically to achieving a zero-emissions building sector. His administration has set a goal of reducing the cost necessary to decarbonize new and existing housing by half over the span of a decade. To achieve this goal, the administration is offering credits to underserved communities to help retrofit buildings, providing states with dedicated clean energy funding, and granting billions in resilience funds to communities likely to be heavily impacted by extreme weather events as a result of climate change.
The second pillar of Bidenomics is worker empowerment and education. The White House says it aims to invest in registered apprenticeships and career technical education programs at a higher rate than any prior administration. Included in this effort is advocacy for universal prekindergarten and free community college.
President Biden has also made efforts to support unions through the work of the White House Task Force on Worker Organizing and Empowerment, among other efforts.
The final pillar of Bidenomics is the promotion of competition to help small businesses and others to lower costs. These efforts are predicated on the belief that higher rates of competition across sectors will lead to lower customer costs and higher wages for workers.
The earliest efforts to promote competition came in the first stages of Biden’s presidency, when he signed the Executive Order on Competition to signal that the administration would aggressively enforce antitrust laws.
One of the major impacts of these actions has been in the realm of healthcare. For example, the Biden administration allowed hearing aids to be sold over the counter instead of via prescription, significantly reducing the cost to the consumer. President Biden has also supported efforts to lower prescription drug costs to save taxpayers $160 billion across 10 years by allowing Medicare to negotiate lower prices.
Although not a core goal of Bidenomics as outlined by the White House, changes to taxation are a key component of each of the above pillars. Bidenomics holds that the responsible way to fund each of the above projects is through increasing taxes on the wealthy and major corporations.
At the same time, Bidenomics proposes that working people and families with children have taxes reduced by nearly $800 billion over the next 10 years, with additional funds added to the Child Tax Credit and Earned Income Tax Credit (EITC) pools. Additionally, President Biden has aimed to reduce the deficit through legislation.
Bidenomics vs. Reaganomics
In crafting and sharing his economic platform, President Biden has frequently positioned his approach in opposition to trickle-down economics, a tenet central to the platform of former President Ronald Reagan in the 1980s. President Reagan’s broader economic vision, known as Reaganomics, was built on a view that the economy could be built from the top down, rather than the middle out and bottom up, according to Biden advisors Anita Dunn and Mike Donilon. This is in many ways the opposite of Biden’s approach.
Some of the core features of Reaganomics included investing heavily in national defense, ending union contracts, dramatically cutting taxes for corporations and wealthy individuals, and deregulating business. President Reagan’s landmark economic achievements include a series of laws reducing taxes, particularly a 1986 tax bill that significantly reduced the tax rates of the wealthiest individuals from 50% to 28%, as well as doubling the defense budget to more than $300 billion by late in his presidency. Reagan also deregulated the natural gas and banking industries and relaxed enforcement of the Clean Air Act, opening up large areas of land for private oil and gas development.
Reaganomics holds that sweeping changes to free up money for wealthy citizens and large corporations will eventually benefit middle- and lower-class Americans. Bidenomics takes the opposite view: By supporting the growth of the middle and lower economic classes, the thinking goes that the entire economy will benefit. Bidenomics approaches this by enacting changes that are essentially opposite to Reaganomics, including supporting unions instead of ending union contracts, increasing taxes on the wealthy, and investing in infrastructure and public works.
Praises and Criticisms of Bidenomics
Bidenomics receives strong support from some and vocal criticism from others. While praise and criticism often fall along political lines, this is not exclusively the case.
In July 2023, Ellen Zentner, chief U.S. economist for Morgan Stanley, offered praise for President Biden’s economic agenda in a research note. Zentner said that the Infrastructure Investment and Jobs Act was “driving a boom in large-scale infrastructure” and had contributed to “broad strength” in manufacturing construction. Zentner added that U.S. economic growth for the first half of 2023 was “much stronger” than Morgan Stanley had anticipated, as the bank nearly quadrupled its full-year gross domestic product (GDP) growth expectation to 1.9% based on the success of Bidenomics.
Yale School of Management professor Jeffrey Sonnenfeld is another prominent figure in the world of economics to praise President Biden’s approach. Sonnenfeld and his colleague, Steven Tian, credit Bidenomics with reducing inflation, maintaining low levels of unemployment, and bolstering the stock market.
As the race between Republican presidential candidates for the 2024 election has heated up, Bidenomics has been a frequent target during and outside of debates. Candidates, including Tim Scott (before he dropped out) and Ron DeSantis, have criticized President Biden’s approach for its high levels of spending and for regulating the oil and gas industry.
Republicans in the U.S. House of Representatives have pointed to achievements Biden has cited as maybe actually being attributable to pandemic recovery. For example, Republicans say that almost 72% of all job gains since 2021 were due to pandemic recovery, not new job creation, and that wages have failed to keep up with inflation.
Other critics have focused on particular elements of Biden’s economic plan. Former Clinton administration Treasury Secretary Larry Summers, for instance, said that he largely supports Bidenomics but that the president’s focus on “manufacturing-centered economic nationalism” is “increasingly dangerous” over time.
The Future of Bidenomics
The future of Bidenomics hinges largely on the president’s efforts to seek reelection in November 2024. Biden has touted economic benefits that he associates with the success of Bidenomics, including increases in wages and jobs created, low levels of unemployment and inflation, and manufacturing growth. Indeed, President Biden has integrated the term “Bidenomics”—originally used by Republican opponents to denigrate his economic plans—into his own communications.
Despite the economic successes coinciding with President Biden’s term, a full quarter of American voters support Bidenomics’ major achievements but still feel that the president has not succeeded on an economic level. As of October 2023, former President Donald Trump leads Biden in several swing states, in part because voters have said they do not believe Biden has handled the economy well.
Has Bidenomics Been Good for Workers?
By many metrics, Bidenomics has been good for workers. Unemployment rates as of September 2023 are 3.8%, lower than at most times since the 1950s. The Consumer Price Index, a measure of inflation, was up 3.7% from September 2022 to September 2023, down from a peak of 9% months earlier. Overall labor income per working-age adult, adjusted for inflation, has climbed as well.
What Is the Key Focus of Bidenomics?
The three key pillars of Bidenomics are investments in American infrastructure, clean energy, and business; empowerment of workers in the middle and lower classes; and promoting competition across businesses and sectors.
The Bottom Line
Bidenomics refers to the broad set of economic policies and actions instituted under President Joe Biden. Broadly, these include efforts to invest heavily in American infrastructure, green energy initiatives, domestic manufacturing, and related areas. They also include a set of tax policies aiming to reduce taxes for middle-class workers and increase tax rates for wealthy individuals and large corporations. Bidenomics supports union involvement and urges increased competition in business to reduce costs for consumers and increase wages for workers.
During the first years of President Biden’s administration, he has signed several key pieces of legislation in support of these goals. Over this period, inflation has dropped from its highest levels following the start of the war in Ukraine. The White House has pointed to low unemployment rates, large numbers of jobs created, reductions in prices of medicines, and heavy investment in green energy and manufacturing initiatives as successes of Bidenomics. On the other hand, critics have said some of these benefits can be attributed to pandemic recovery or other factors and that Bidenomics has not achieved many of the goals it set out to accomplish.