The Truth Behind Biden's Economic Policies: Debunking Myths and Myopia
Amidst the hyperbole and partisan rhetoric surrounding the current state of the US economy, it is crucial to dispel certain myths and acknowledge the reality behind Bidenomics. Misinformed opinions paint a picture of failure, but the facts tell a different story.
The Deficit: Beyond Simple Explanations
The assertion that Biden's policies have run up the deficit by $6 trillion, bankrupting the nation, is overly simplistic and often based on a lack of nuance. While it is true that the deficit has increased due to several factors, it is an oversimplification to attribute this entirely to Biden's actions. Economic deficits are influenced by a variety of factors, including global economic conditions, policies implemented during previous presidencies, and the unique challenges posed by the COVID-19 pandemic.
Understanding the Preceding Context
During the Trump presidency, the economic landscape was profoundly affected by the 2020 shutdowns due to the pandemic. This led to a significant increase in federal spending on relief measures. In 2021, while the deficit did decrease, it is important to note that this was largely a result of the normalization of the economy rather thandue to any direct action by Biden. The deficit spending was projected to decrease regardless of who was in power, but the Democrats chose to increase spending, leading to a rebound and a projected deficit of over $2 trillion in 2023.
Job Growth: Beyond the Surface
The claim that job growth in the US is due to Biden's policies is misleading. While there has been strong job growth and an unemployment rate at its lowest in 50 years, much of this is a consequence of the end of the pandemic. Prior to the pandemic, the trajectory of job creation and unemployment rates was already heading in a positive direction, as evidenced by historically low unemployment figures in 2019.
The graph below shows the trajectory of unemployment rates. It is clear that the low unemployment rate under the Trump presidency was part of a broader trend that began in the Reagan era. The spike in unemployment during the pandemic was a temporary aberration that quickly resolved as the economy reopened. However, recent data suggests that unemployment rates may continue to rise, which is a more pressing concern for policymakers.
![Unemployment Rates]()Wage Growth vs. Inflation: A Synchronized Problem
The narrative that there is no wage growth due to inflation is also a fallacy. While it is true that inflation has been a significant issue, the relationship between inflation and wage growth is more complex. Wage growth has been outpaced by inflation, which has eroded purchasing power for many Americans. This is particularly troubling as inflation has risen sharply, particularly for essential goods like groceries.
The Consumer Price Index (CPI) has increased significantly since 2020, and food prices have seen a particularly large increase. This has resulted in higher interest rates, affecting mortgage and credit card rates for consumers. The higher cost of living disproportionately affects low-wage earners, who see the smallest increases in wages and the largest increases in expenses.
Conclusion: A Balanced View of Bidenomics
The reality is that Bidenomics has brought about some positive changes, including strong job growth and wage increases for many workers. However, these achievements must be balanced against the backdrop of increased deficits and rising inflation. It is important to contextualize these developments and not attribute them solely to the policies of any single presidency.
At the end of the day, the US economy is a complex web of factors, and a more comprehensive understanding is necessary to make informed decisions and shape appropriate policies for the future.