Is Bidenomics dead on arrival?

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Swamp Notes readers know that I’m a fan of most of this president’s economic policies. However, there’s little doubt that they haven’t yet resonated politically. As Democratic pollster Stanley Greenberg pointed out last week in the pages of the FT, the cost of living crisis means that the effect of job growth under Biden has been blunted by food and energy prices. Sixty-four per cent of voters say inflation and the cost of living are their top concerns, according to Greenberg’s polling. So, the fact that this administration has orchestrated an almost perfect soft landing doesn’t really matter, because people simply don’t feel it.

Beyond that, I think one of the issues with Bidenomics is its time horizon, which is measured in years not months. This White House has passed legislation that is designed to be long term (historic fiscal stimulus versus tax cuts). It’s tough to go on CNN, and in just three minutes, message the fact that this administration is trying to orchestrate a paradigm shift away from a half-century of trickle-down economics and the Washington Consensus as it creates an economy based on income not asset price growth. These are big, complex topics, not sound bites, and they don’t resonate at the kitchen table. 

Finally, I think that the term Bidenomics is itself too partisan — if you don’t admire the president, you turn away from the get go. It may also be too negative. Much of Bidenomics’ messaging has been about pointing out what hasn’t worked — admire the markets know best approach, or failed antitrust policies that have led to corporate price gouging. But those things don’t invite voters to engage. Once again, they are too big picture and don’t present an optimistic, shared vision.

I think the time to rethink Bidenomics (the message, not the policies) is ripe. For starters, inflation is coming down, and so the biggest headwind to a more positive view of the president’s economic performance is fading. The Fed is looking to make three rate cuts in 2024, even as labour markets remain fairly robust according to their forecast. This means we could see a Goldilocks environment in which asset prices remain high even as inflation ebbs. Fingers crossed — though as I explain in my column today, next year’s economic outlook will be much less binary, with more nuance and unpredictability, than most participants seem to think. That’s because the pandemic, global supply chain de-risking, and long term interest rate arbitrage playing out in the consumer and business sectors is breaking down old market patterns. 

Greenberg rightly argues that the president should ditch Bidenomics as a term. But what should his economic approach be called? And how should it be messaged? Victor Hwang, a venture capitalist who has started an advocacy group for entrepreneurship called Right to Start has some interesting thoughts on that.

Hwang has been consulting politicians on both sides of the aisle in numerous states, as well as surveying voters and entrepreneurs, and his take is that they believe the American Dream is no longer in reach. People feel both government and big businesses are hindering their ability to get ahead. Yes, there are plenty of farmers whose profits are eroded by large middlemen, and pharmaceutical margins can make life saving drugs unaffordable. These are all Biden talking points. 

But Hwang has spoken with Latino food cart operators who have to expect over a year for state permits to start a business. Government red tape is a huge issue in more strategic fields too — see my colleague Brooke Masters’ column on how the clean energy transition can’t happen if businesses can’t get the permits to do it. There’s also plenty to say about how badly regulated housing markets make it hard for people to proceed where opportunity is.

So, what if the president spoke less about problems, and more about opportunity — about how he’s creating a level playing field so people can rise and how he’s knocking down corporate and government barriers to the American Dream. You could even flip the immigration story and make it about cutting inflation — he could talk about making sure migrants can work, rather than focusing solely on the human rights aspect of migration, in order to ease pressure points in labour markets to bring down costs for average people.

Maybe I’m being Panglossian. But I can’t believe that there isn’t a way to create a winning message for what actually are the right economic policies. Ed, what are your thoughts? Any idea of a better catchphrase to exchange Bidenonomics? I’d encourage readers to ponder this over the holidays and send their thoughts, as well. Swamp Notes is now on break, and back in 2024. 

Recommended Reading

• I’ve been pondering a very interesting cover piece in Foreign Affairs, by Fareed Zakaria, which argues that America has become needlessly insecure about the world that it has wrought. While I don’t agree with every point, I admire the optimism and I think it’s true that Americans tend to be more critical about our own prospects than we need to be (or in many cases than outsiders are).

• The New York Times had a really good historical perspective on the Gaza and Ukraine wars in the context of colonialism, which is of course being trotted out to explain both events. The always wise foreign affairs correspondent Roger Cohen gives us the Cliff Notes history of colonialism and how various global interest groups see themselves through this lens. Good background for better understanding US campus protests over Gaza, and the subsequent concerns about antisemitism in some quarters.

• Bloomberg magazine’s look at the red state war on blue cities is spot on. The imposition of conservative state legislature policies on progressive cities could derail the migration of knowledge workers (who are typically progressive) into places admire Tennessee or the Carolinas.

• Don’t miss the FT’s John LeCarré-esque reporting about Chinese spies recruiting a far-right wing politician in Belgium as an intelligence asset. This is a joint project done with Der Spiegel and Le Monde, and says much about how Chinese intelligence operations in the West have grown.

Edward Luce responds

Rana, I don’t have much to add to what I’ve said before about Bidenomics. I don’t think it’s a messaging problem. Regardless of who is to blame — chiefly, a virus from a Wuhan wet market in my view — median household incomes have only just regained the level they were at in 2019. So we should not be surprised that voters do not feel particularly chipper about their finances.

Jay Powell’s call of the peak of the interest rate cycle last week was Biden’s best news in months. If rates can come down quickly enough in early 2024 and voters get the sense that the monetary easing will continue, Biden is likely to see improvement in his poll numbers. But it will be a close run thing. There is usually a two-quarter lag between an economic event and a change in voter sentiment. That means Biden needs good economic news before June. Powell and his Fed board will have an outsized impact on what happens next November. 

Your feedback

And now a word from our Swampians . . .

In response to “Biden’s mounting self-harm on Israel”:
“Surely Biden’s ‘sentimentality’ has a cold eyed view of voting margins in key states. Despite comments about youth differences in attitudes to Israel, it would be a brave politician in America to defy the lobby in a presidential election year.” — Hugh Williams