Joe Biden put a brave face on his economic record last week as he stood before a recently rebuilt bridge in Pittsburgh, Pennsylvania, and pleaded for voters to stick with his party in next month’s midterm elections.
“For a lot of families, it’s still kind of tough,” the US president acknowledged. “But there are bright spots where America is reasserting itself, like here.”
Based on most measures of the labour market, Biden should not have any trouble making the case for his economic agenda, which has involved sweeping increases in public spending along with higher tax burdens and stricter enforcement for the wealthy and large companies.
Under the Democrats’ watch since January 2021, the recovery generated 10mn jobs and the unemployment rate shot down to 3.5 per cent.
But months of unrelentingly high inflation — with consumer prices still rising at an annual rate of 8.2 per cent in September — have made “Bidenomics” an almost impossible sell on the campaign trail.
According to a RealClearPolitics polling average, 57.9 per cent of Americans disapprove of Biden’s handling of the economy, while just 38.9 per cent approve, a critical weakness that has left Democrats with a strong chance of losing control of the House of Representatives and possibly the Senate.
“I think the broad policies are very positive for the economy, both near and long-term. So I think he deserves credit. He’s not getting any, though,” said Mark Zandi, an economist at Moody’s Analytics who has advised Republican and Democratic politicians.
“People are having to pay a lot more at the pump, at the grocery store, for rent, and the high inflation is an acid on people’s perception of how well they’re doing and how well the president’s doing on the economy. I think it just colours everything.”
Biden’s economic policies have been executed as a 21st century cross between Franklin Delano Roosevelt’s New Deal and Lyndon Johnson’s safety net expansion, under the assumption that Americans were ready to embrace a stronger government hand in the economy in the wake of the coronavirus pandemic.
Over months of negotiations with Congress, Biden’s plans were somewhat watered down and split between at least four big pieces of legislation. But what he signed into law included trillions of dollars in federal money for direct stimulus payments to households; funding for infrastructure projects; subsidies and incentives for clean energy investments and chip manufacturing; and measures to bring down the costs of prescription drugs.
All of these were top priorities for Democrats that were seen as broadly popular, but they are not being rewarded in the polls.
“[Producing] a boom with these really tight supply chains and complicated international economic relationships is really hard to do,” said Felicia Wong, the president of Roosevelt Forward, the progressive think-tank, who served on Biden’s transition team. “It’s even harder when voters don’t understand it, and for reasons that are understandable, but perhaps unfortunate, politicians don’t talk about it and explain it.”
Heading into the final stretch of their election campaigns, some Democratic strategists and pollsters say the party is struggling to figure out when and how to speak clearly about the economy — compared with other matters, such as former president Donald Trump’s extremism and the gutting of abortion rights by the Supreme Court.
“Democrats need to understand that we have a winning message on the economy and inflation, but rising costs will beat us if we avoid the issue,” wrote Patrick Gaspard, Stan Greenberg, Celinda Lake and Mike Lux in The American Prospect last week.
“Inflation and the cost of living is [people’s] number one concern right now, and they are thinking and talking about it all the time in part because they believe it is getting worse with no end in sight,” they added.
The attacks from the Republican side have been relentless — and politically effective. In campaign ads, on social media and at public events, they have pounded the cash infusions and large-scale spending for sparking and then fuelling inflation — even though the war in Ukraine and supply chain disruptions due to Covid-19 were also big factors.
In recent months, Biden and his economic team have rushed to showcase their economic achievements. Treasury secretary Janet Yellen, who framed the administration’s economic philosophy as “modern supply-side economics”, has been travelling across the country to talk about everything from electric vehicles to tax incentives for clean energy.
Brian Deese, the director of the National Economic Council, visited downtown Cleveland to talk about the administration’s efforts to protect domestic supply chains and revitalise American manufacturing. These efforts have led to a flurry of plans by top companies such as Intel and General Motors to build plants in Ohio, the Midwestern state that has drifted towards the Republicans in recent years.
“It’s an economic strategy . . . that quite explicitly prioritises those places that have been too often overlooked,” Deese said in an interview in the West Wing of the White House last week. “If that continues, and that succeeds, then people will see that and it will make a difference.”
He has also insisted that the economy can avert recession even as the Federal Reserve hikes interest rates — pointing to the health of household balance sheets and the labour market. “If you look at core metrics of economic stability, credit card delinquencies, mortgage delinquencies and personal bankruptcies — they’re all down between 10 and 30 per cent, lower levels than before the pandemic.”
The Biden administration has scrambled to take action to bring down prices in the near term, including through oil releases from the Strategic Petroleum Reserve and threats to do more if needed to bring down the cost of petrol, which is the most politically sensitive good in America.
Even though prices have dropped over the past three weeks, a trend celebrated by White House chief of staff Ron Klain in a tweet on Sunday, they are still above their levels a month ago and a year ago.
Biden, trying to draw a sharper contrast with the opposition, has warned that if Republicans take control of Congress, the US would risk new clashes on taxes and spending that could lead to a debt ceiling crisis and potential default.
Tim Kaine, the Democratic senator from Virginia, said he believed there is a chance that voters will give their party the benefit of the doubt. “They know that none of us have a magic wand. They have different ideas about what the causes are, and I think they get some of the global issues. But what they want to see is a Congress that’s trying to respond.”
Yet some political analysts warn that any recalibration of the economic message may be too late. “It is really kind of clunky: they are trying to sell their policy playbook from 2020 or 2021 for a different environment in 2022, and it does not quite work,” said Ben Koltun of Beacon Policy Advisors.
Source: Economy - ft.com
