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Friday, January 26, 2024

More Spending is Never Enough

Key Takeaways

• More information and debate is needed on program expansions
• CTC expansion should be considered in conjunction with existing support programs
• A full assessment of money being spent needs to be conducted

The forces that compel politicians to spend more money are far greater than the forces that compel them to be provident. Namely, voters not only benefit from spending but overestimate the benefits, underestimate the costs, and are generally poorly informed on issues of spending. It's true that practically every voter knows that the United States's level of debt is literally inconceivably high, but what often gets lost, is program by program, goal by goal, how much we're already spending.

Before diving in, it should be understood, that in this particular case, the CTC expansion and business tax cut are technically paid for by cutting other spending. However, this situation is more of an exception than a rule. And the reason there is an exception this time, is the existence of a poorly designed pandemic tax break that should have been temporary to begin with but wasn't, and is now being abused and costing taxpayers billions of dollars per year.

It shouldn't be costing taxpayers a dollar at all, but because of negligent politicians of the past, they've now created a spending surplus they can redirect to other purposes and appear to be budget neutral. I should also point out that many of these arguments apply to the tax break that is a part of the "deal".

Americans Have No Idea

The level of information needed for Americans or policymakers to form an informed opinion does is not available. It is not provided by government agencies, the media, or even individual blogs, at a level that would be beneficial.

Consider the U.S. poverty rate. It was updated by the U.S. Census Bureau on September 12, 2023. ABC News, USA Today within a day. More reports were issued, and think tanks, blogs, local news all reported on relevant findings.

Now try a search to determine the cost of any program that alleviates poverty or even in total, and how much we spend annually. This surely changes from year to year, but the reporting on it is totally absent unless someone proposes a cut. Doing a search for SNAP (i.e. Food Stamps), the top hit is a story about groups wanting to make it easier to get. For the record, SNAP went from a $63 billion/year program in 2019 to $145 billion in 2023 and projected to settle around $120 billion/year through 2033.

How many Americans considering the necessity of a $35 billion expansion of CTC know that the Biden Administration will have doubled the SNAP (Food Stamp) program during his presidency, already adding $60 billion/year in additional spending?

How many people know that spending on SNAP has doubled since Biden became president? How many people know the size of SNAP? How many people it helps? How much it effects the poverty rate? How effective an additional dollar of SNAP spending is? And this is just one of the panoply of support programs that are meant to help impoverished Americans.

Americans have no idea how much we spend on income support already. Additional spending, not just in this area, but in every budget line, is presented as if it's the first attempt to solve a problem. Journalists and Democrats consistently disregard all spending already dedicated to solving whatever problem their new spending is targeting. Consider, in the recent debate over the CTC, how many people have mentioned the current total cost of CTC? How many stories have mentioned the Earned Income Tax Credit? Temporary Assistance for Needy Families (TANF or welfare in some circles)? SNAP?

Across the budget, new proposed spending is always presented as if it's the first attempt to solve a problem.

To make an informed decision over whether or not the expansion of the CTC is prudent, one should be aware of how much is already being spent on the same issue. Advocates argue that the CTC should be turned into a refundable tax credit1 because it doesn't make sense that the lowest income people receive less benefit. But what this point misses, is that the lowest income people already receive greater benefits from the other programs. This argument could still be correct, but to fully consider it, one must know the complete picture.

In my research for this post, I couldn't even find an estimate of the total benefits provided by income level. The closest I could find, was this report on the effective marginal tax rates for low income Americans, written in November of 2012, more than ten years ago. The purpose of the report was to show how at low incomes, the combination of benefits created a marginal "tax" rate that disincentivized receiving higher private income.

The Supplemental Data indicate that poverty has been solved! According to the 2012 CBO, a single parent with one child who earned zero dollars from a job, would still, by virtue of government assistance, earn 128% of the federal poverty threshold.

According to the Obama-era CBO, poverty in America has already been solved.

In the chart below, taken from the 2012 CBO report (with a single modification to indicate the poverty line with a red dashed line), it is apparent, that even a person who earns no income from a job, nevertheless has disposable income from government assistance totalling $20,000--more than the poverty threshold. Again, how many people know this? Shouldn't this be more prevalent when debating whether or not to increase assistance?

Journalism and Research is One-Sided in Favor of More Spending

Now do a search on CTC expansion. What's the breakdown of stories that support it, are neutral, and oppose it? In my search, eight out of the ten stories on the first page had headlines that were advocating for the expansion. #6's headline said "Here's who would benefit." In the article, it cites anti-poverty experts who say it's a good idea, played up the benefits, criticized the previous, smaller CTC, estimates the number of children who would benefit. No mention of the cost of the program, and of course, any other already existing programs that it would add to.

The remaining headline was neutral, and it did cite the cost of the expansion--$35 billion. It was the only article of the ten that mentioned the cost of the CTC expansion.

Ballyhooed Improvements to Child Poverty Rate Unlikely

One consistent finding that is included in most articles is how the expanded CTC during the pandemic reduced the child poverty rate to 5%, lower than it's ever been. For one thing, the proposed CTC expansion is $35 billion/year. The pandemic expansion cost around $100 billion/year, nearly 3 times as large, so the improvement from this proposal would be unlikely to come close to having the same effect.

The Center for Budget Priorities, estimates that the CTC expansion will lift 500,000 children above the poverty line. Not too surprisingly, in this report, they don't ever mention the percentage effect nor even the total number of children living in poverty. Reviewing other sources, that number is about 9 million (also you can figure this out using numbers provided in a different CBPP report).

The effect, then, of a $35 billion expansion of the CTC, according to the Center for Budget Priorities, which is pro-CTC, is to reduce the child poverty rate from 12.4% to 11.7%. Now, of course, any reduction in child poverty should be celebrated--reducing it by one child should be celebrated--but the cost is a vital factor. If we could raise more children out of poverty for the same cost, we should pursue that.

$35 billion dollars, if given exclusively to families earning zero dollars, would lift 1.4 million families out of poverty. The CTC expansion will lift 1/3 of that.

Conclusion

The CTC expansion, like virtually every other proposed increase in social spending, benefits from an acivic dearth of research and consideration. The benefits it will provide are over-estimated and with a fuller understanding of current low-income support and alternatives, politicians would find a better place for that money that we don't have.

Useful Links

Footnotes

1For the uninitiated, a standard tax credit can only be fully enjoyed if a person owes more taxes than the value of the credit. For example, if a person only owes $1000 in taxes, and the credit is worth $2500, they will only benefit $1000. A refundable, tax credit, on the other hand, disregards their tax bill, and enriches them by $2500 irrespective of their tax bill.

Monday, November 13, 2023

Republicans Should Be Party of Law Enforcement

Key Takeaways

• The IRS desperately needs reform
• Republicans should support the mission of enforcing the law
• Republicans should step up and fix it
• Many conservative approaches to making it better

The Republican Party is the Party of Consistent and Fair Law Enforcement

While the Republican Party has changed over my lifetime, it remains the party that represents the value of law enforcement. Still, the 1980s-2015-type Republicans among us should push for vigorous enforcement of law in all arenas--violent crime, non-violent crime, immigration, and tax payment.

Republicans should push for vigorous enforcement of law in all areas.

Obviously the enforcement of tax law conflicts with the Republican preference for lower taxes, but it also aligns with the (ostensible) Republican call for lower deficits. I want lower taxes and lower spending, but a person has to set priorities, and adherence to the law is a core principle. It's a valuable principle, too, as it can be used across the political battlefield.

What's Wrong with the IRS

The IRS is the least popular government agency in the country. It's no wonder that Republicans use it as a political punching bag. No government agency is more synonymous with excessive and unwelcome investigations into personal lives than the IRS.

The Republican Party should be the party of small, effective government.

In many respects, their disrepute is well-earned. On a basic level, they take a magnifying glass to your capacity to follow the byzantine rules that make up the 75,000 page tax code. If you spent your entire workday reading tax code, and could read one page of the impenetrable language per minute (you can't), it would still take you two and a half months of full-time dedication to finish. No one understands the tax code in full, and yet the IRS expects you to.

Side note: Donald Rumsfeld sent a letter to IRS every year that is worth reading.

But even beyond the basic problem underlying the IRS, they still manage to go out of their way to make themselves less popular. For their review and recovery processes, they target low income Americans, the least able to afford external tax expertise and with the most to lose from additional taxes. The IRS targets them because it's more convenient for them and they get more tax recovery bang for the enforcement buck.

If my own experience is any indication, the IRS is just bullying Americans into paying them more money, relying on their poor understanding of the tax code, their expectation that the IRS must be correct, and their lack of resources and pugnacity. I can recall three instances in my life where the IRS sent me a letter claiming my tax return was incorrect and I owed additional money. It was wrong each time.

I have always done my own taxes. I'm an economist, a policy person, and a do-it-himselfer. While that may have increased the chances I did something wrong, it also provided me the opportunity to learn about the tax code and the process. And also, when the IRS came knocking, to be able to double-check their math/identify my own mistake. Of the three instances, I only found one mistake, and it was a mistake that caused me to pay more than I owed. I can't tell you how much I relished writing the response letter telling them they owed me money.

Lastly, my stepfather received a letter from the IRS last year claiming he owed them more than $10,000. He had hired a new tax person, and he had reconfigured his filing status with my mother to save on Medicare premiums, so he reacted the way everyone reacts when they receive such a letter--terrified that he'd have to pay. I didn't know enough about his situation to say one way or another, but I did tell him that the IRS was 0 for 3 when sending letters saying I owed them more. Sure enough, he spoke with his tax filer, and was assured that he didn't owe any additional money.

My stepfather and I both have the resources to double-check what the IRS says, but for many Americans, that's not an option. I fear the IRS is acting like the private companies that knowingly tack on fees to your bill that you don't owe, cynically betting that their customers won't look or won't want the hassle of arguing and just paying up. Imagine this same organization writing the program that tells you how much you owe!

In addition to the above, the IRS has notoriously terrible customer service. This is a problem that everyone's aware of, and has already seen some improvement since the IRA passed. In my most recent experience, it took a year and a half, dozens of phone calls (most of which never went through), an in-person meeting with the IRS, and the assignment of a taxpayer advocate before my issue was resolved. The taxpayer advocate was completely useless. He called me one time, said there was a discrepancy that I should check and he'd call me back in two weeks. He didn't. So I called him. He never answered his phone nor called me back. I never spoke with him again.

The in-person agent seemed productive at the time. She determined that there was some discrepancy between the Social Security earnings reported to IRS versus on my W2 (in the amount of one penny). She said the problem was resolved, but still nothing happened. Finally, I tried to schedule another in-person meeting (while also sending letters and reaching out to the taxpayer advocate), and the IRS meeting scheduler said that she would resolve the issue and I'd be paid within the month, which actually happened. I'm still not entirely sure what the problem was, as the only person who gave me a specific answer was the one in-person agent, but no one ever confirmed it, and I never saw the discrepancy myself. No person should have to jump through this many hoops (without even knowing what the issue is!) just to reach some resolution.

Finally, on top of all the bureaucratic problems, there's a dangerous politicization occurring, too, like in many government agencies. Erstwhile Democrat '>Matt Taibbi appears to have been specifically targeted, while less well-known people are inexplicably accosted by power-high agents. Then you have politically motivated activists with access to IRS data illegally leaking private tax returns so sympathetic journalists can write data-heavy stories about how the rich aren't paying their fair share.

Ideas to Reform the IRS

So what is to be done? As with many subjects, Republicans have no over-arching plan to resolve this. They prefer to focus on short-term political wins derived from criticizing the IRS's worst behaviors without offering any ideas for a long-term solution.

Should the IRS be torn down and replaced with a better-run institution? The name of the organization doesn't much matter to me, only the structure, its incentives, and its behavior. This is a question better left to marketing gurus.

Self-Funding

Every day claims are made that giving the IRS money produces more money than it costs. This is because they spend their money recovering money from tax cheats. It's a reasonable argument, and could be true, but I'm skeptical about the magnitude of the revenue generation that's advertised.

Even for tax recovery, there's a sort of laffer curve. The researchers and CBO believe we're on the left side of the Point of Optimality. But because of this relationship, the IRS could potentially be self-funding. To be sure, this shouldn't even need to be discussed, because both parties should support tax enforcement to the extent that it produces revenues, and there shouldn't be a tug of war about it.

According to a recent study that the pro-tax-enforcement crowd are waving around, the average audit costs the IRS $6,418, and the average recovery is $13,930. This 2 to 1 ratio seems in line with what CBO says reducing IRS enforcement budget would do to revenues. According to IRS, they audited 708,309 tax returns in FY2022. As long as the average recovery is greater than the average cost, the entire IRS enforcement budget could be self-funded. This would allow for more division, and Congress could separately fund customer service.

Good Governance Measures

The downside of this is that Congress could no longer use the purse strings to manage IRS abuses, but the current system is not working, and needs to change. Congress should instead empower good governance panels.

Given the myriad abuses described above, Republicans (and Democrats) have an obligation to stand up institutional safe-guards. The current safeguards like the IRS inspector general and Congressional Oversight are clearly not enough. There's a lot of room for compromise here. The Democrats want to pursue high income tax absconders and surely want a good experience for taxpayers, and Republicans (should) want appropriate tax enforcement, increased revenues, good governance and fair treatment.

Customer Service - The IRA increased funding for customer service, which seems to have made some difference. The most important metrics should be geared towards reducing wait-times for enforcement actions. Taxpayers should not be spending months and months in limbo waiting for the IRS to get back to them. Congress should require reporting these metrics. Letters sent. Time to completion. Percentage that were correct.

Internal Incentives - IRS agents have several problematic incentive structures. One is to exaggerate the tax obligation of taxpayers. Whether they are low-income or high-income. The other is to behave in ways that elicit sympathy and additional funding from Congress. In the days prior to the IRA, the IRS was complaining about how out-dated their tech was and how it was making them inefficient. Few pundits pointed out that the IRS has an incentive to be inefficient because then they can ask for more money. Similar incentives exist with customer service. More efforts should be made to make sure the IRS isn't gaming the funding mechanism. This is one problem that self-funding could solve. The private sector continuously updates its technology by approximately the amount that is cost-beneficial. That the IRS is decades behind in tech, suggests to me, not that they don't have the funds to update, but they don't have the desire to.

Congress should also stand up several watch-dog groups, or at the very least to mandate reporting on certain topics. There should be a team of economists charged with assessing the IRS recovery efforts, their recovery to cost ratio. They should pre-register their plan, and then be given carte blanche to study it. It should be done periodically to assess where on the tax recovery laffer curve the IRS is.

There should be a panel also that's reviewing how IRS is conducting its recovery process and there are no dimensions of unfairness. Recent experience was that the IRS focused its enforcement efforts on low-income EITC participants. Ostensibly, this was because they provided the highest recovery to cost ratio. There's a logic to that, but there's also a concern that the IRS is focusing its efforts on the least-resourced taxpayers and taking advantage of that. A panel should surely monitor IRS behavior.

Likewise, I think it's arguably unseemly for the IRS to target high-income people, particularly if it's for political reasons, which this announcement is highly suggestive that it is. Even if it's reasonable from other dimensions, the announcement itself makes it seem as though this is a political effort, not a revenue-growing or enforcement one. Not much can be done about this except changing the discussion around IRS.

Competition with IRS?

A market-based solution would have IRS be self-funded, and competing with private tax enforcers. Perhaps this is ultimately unworkable, but such solutions should be explored. After all, the IRS already outsources some of its work to private firms, so doesn't have a problem sharing tax data. Private tax information doesn't even need to be shared, just taxes with names and SSN's censored.

The way it could work is that the Treasury (or the IRS) auctions off blocks of tax-payer returns. Perhaps the blocks are by income, or maybe random. Private companies would bid on them to review and find crimes. The firms could then keep some percentage of the recovered taxes. Depending on the magnitudes, IRS could be self-funded through the bids, or through a portion of the recovery. Obviously, many safeguards would need to be in place, like an appeals process to prevent overzealous private enforcement, but this might be an approach that could restructure the tax enforcement system, improve results, decrease IRS funding, and allow the IRS to focus on customer service and oversight.

Useful Links

Friday, August 18, 2023

Let He with Reservations Cast the First Vote

Disclaimer: This is not intended to support or malign any specific candidate. It is general advice promoting voting when candidates are unlikeable. Any promotion of specific candidates is a result of current polling on race, not policies or characteristics of the candidates.

Dominic Pino said something interesting on the 8/15 edition of The Editors Podcast. He argued that while a majority of Republican primary voters may support Donald Trump, a majority of Republicans probably doesn't, and almost certainly, a majority of people who might consider voting Republican also wouldn't support Trump.

This is a unique election. In my lifetime, these are the two worst candidates ever. Arguably, both are unqualified to be president, but for very different reasons. In elections before 2020, many people would complain about the quality of candidates, and it's true that the two parties' nominees are typically pretty poor representatives of the greatest America has to offer, but to a large extent, that's what the system, as it is currently constituted, can produce. That's also a very complex topic.

The difference with the 2020 election and the two front-running candidates for 2024, is that they're not just sub-optimal people, neither of them should be in the White House with any power whatsoever to make decisions for the country. Many, many people detested Hillary Clinton, but the idea that she was unqualified is ludicrous. The same can't be said for Biden and Trump. It would be easy to make an argument for either one of them that they are unqualified from holding this office.

For Biden, there's not much that can be done in a primary election, when no viable candidate wants to challenge him. For Trump, however, there is an opportunity. This will make practically everyone angry, but the most American thing a person can do is to vote in the Republican primary, for the candidate who's most likely to beat Trump.

This will make practically everyone angry, but the most American thing a person can do is to vote in the Republican primary, for the candidate who's most likely to beat Trump.

Many moderate Republicans, who despise Trump, have also developed a strong aversion to DeSantis because of his stances and focus on cultural issues. Even if they don't think DeSantis should be president, they should still vote for him in the Republican primary, assuming he stands the best chance of beating Trump. It is un-American to believe that Trump is a mortal threat to democracy, but allow him to win the primary and have a chance at becoming president. Right now, polls are pretty close. In fact, Trump has a better chance at beating Biden than DeSantis. Anything can happen between today and the 2024 election, and if you truly believe Trump is unfit for office, doing nothing but hoping things work out is a dangerous gamble.

If you truly believe Trump is unfit for office, doing nothing but hoping things work out is a dangerous gamble.

But you don't like DeSantis, and you're afraid he might win the general and become president. If you're a pro-democracy patriot, you should be okay with that, even if it's not your ideal outcome. In fact, you should want a strong contest between qualified candidates, even if it doesn't go the way you want. Whether you're a full-blooded Democrat, an ambivalent moderate, or a disaffected Republican, the most civic-minded thing you can do is vote for the Republican who stands the best chance of beating Trump.

Perhaps you think DeSantis himself is unqualified, just like Trump, so why vote for him. Here's a great test as to whether you believe a candidate is qualified. Ask yourself, why shouldn't this person be president. Come up with as many answers as you like, but try to be honest with yourself as to why you don't think they should be in office. If the reasons are all policy-related, then the candidate is qualified, but just has different positions. Shouldn't voters make that decision? Don't you want an election where voters can talk about issues and choose who better represents them and not a "my guy's awful, but their guy will usher in Ragnarok" election?

Tuesday, August 15, 2023

The Great Endumbening

A More Nuanced Past

In the aftermath of the terrorist attacks on September 11th, President George W. Bush gave his historic Axis of Evil speech. In addition to the titular triumvirate, the other line from that speech that made a lasting impact was the proposition to other countries that "Either you are with us, or you are with the terrorists."

In the immediate reaction, the country so pro-America and standing behind the commander-in-chief, there was little consternation at this dichotomy, but as the months waned on, and a presidential election loomed, and President Bush used that line, among other things, to push for a war many thought was unrelated and a huge mistake, and to expand the security state at the expense of civil rights, people began to criticize that line.

The biggest criticism was over how it over-simplified the situation. That it's wrong, even if it's rhetorically effective, to paint the world as black and white. John Kerry, Bush's Democratic challenger, came to represent the opposite of Bush's simplistic world. Kerry was the candidate of thoughtfulness and nuance.

"During the last presidential campaign we were endlessly reminded that John Kerry was the standard bearer of the Nuance People, whereas President Bush was the intellectually incurious, black-and-whit, simplistic non-thinker who didn't appreciate life's shades of gray."

Etta Hulme 9/8/04. Fort Worth Star-Telegram

"Nuance is not a word Americans associate with strong leadership. But Kerry called it the essence of his presidency." --NBC News

In fact, it got to a point where George W. Bush was made into Darth Vader in the third and then-final Star Wars prequel.

The Endumbening

Sometime since then and now, however, nuance was thrown out the window, as even something to aspire to. Politicians have often resorted to the black and white-ification of public policy. Climate change policy is a battle between people who want to wreck the economy and those who want to eviscerate the environment. Journalists, though, and the Democratic media complex had promoted it, as an aspect of their push for technocratic rule. Experts, you see, understand policies have benefits and costs, and once they identify all of them, they would be able to govern perfectly.

If I had to pinpoint an exact moment when the zeitgeist changed, it would be when Donald Trump won the 2016 election. From then on, it seems like we are in an entirely different media environment. There is much less tendency to grant that the other side might have strong arguments or that their own arguments are weak, and much more tendency to vilify opponents.

How often does President Biden call every Republican that disagrees with him MAGA? Not to mention Kamala Harris claiming that Florida wanted to "replace history with lies", even though the instigating action by Florida was one that the AP had approved and Democrats (including Harris!) defended six months previously.

In the research for this story, this Slate article came up. In it, the authors gleefully observe that Bush painted himself into a corner with his over-simplistic, un-nuanced rhetoric. He then was in a position where he needed to make a more complicated argument but couldn't because he was trapped by his own one-dimensional world. Humorous in its supreme irony, advertised on this criticism of Bush for being unnuanced was a story about how DeSantis wanted to erase people.

Even in Supreme Court cases, the media consistently dumbs down the esoteric arguments to the point that they're more dissembling than informing. In a decision about whether or not business owners have the power to control their products (not their customers), the media calls that "legalizing discrimination."

Reaching another level is Matt Yglesias. He had the audacity to say that Richard Hanania, even if he was overall a bad person, had some interesting ideas that merited consideration. The left honed in on him.

It's fascinating that lefty Twitter has decided its archenemy is @mattyglesias. Just goes to show that @Atrios still has his mojo.

— Kevin Drum (@kdrum) August 8, 2023

Matt, here, is demonstrating a level of nuance that many on the left have heretofore abandoned. As a result, Matt must be destroyed. It's a particularly interesting episode, because Matt can be open-minded and inclusive but also impressively unforgiving of others who disagree with him, calling Peter Thiel, Marc Andreesen and Elon Musk "immoral."

What to make of all this? Previously, I argued that competition among media is bad for the country, and this is a manifestation of that. It is much easier to attract audience with simple themes of good and evil because people are primed for it. We observe that in fiction, history, and politics. People gravitate toward simple messages. Politicians ave been using it for as long as they needed to persuade people to vote for them. Fiction even longer. Media, though, have lately become more enthralled to it as a result of the increased competition for Americans' attention.

Monday, July 17, 2023

Bidenomics Sleight of Hand

President Biden is claiming the positive economic news is the result of his economic policies but neglects to mention the less-popular aspects of "Bidenomics"

In late June, President Biden sparked a medium-term news cycle by packaging all of his economic policies into a single term--Bidenomics--in an attempt to take credit for the many positive aspects of economic performance the United States has been enjoying.

Before that speech, almost no one was talking about "Bidenomics", and after it, there was a slew of articles celebrating Bidenomics and ridiculing it. In the past week, as new inflation numbers have shown that the inflation spike is largely behind us even though employment numbers remain good, the Biden team is doubling down and taking a victory lap.

To be sure, employment in the US has been excellent, defying the expectations of both pessimists and apolitical analysts. This is Biden's best economic stat. Other primary measures of economic well-being have been more mixed. The economy overall, as measured by real GDP has grown at about a 2.2% annual rate since he took office, including two quarters where it shrank. Before Covid struck, President Trump was presiding over an economy growing at 2.6% per year. In addition, its growth rate has fallen the last two quarters from 3.24% annual rate in 2022 Q3, to 2.57% in 2022 Q4 to 2.2% in 2023 Q1, perhaps due to the Fed's monetary policy.

Then, there's inflation. After peaking in June of 2022, it's been slowly receding. It's still elevated from where the Federal Reserve would prefer it, but there's less chance of a doom spiral. However, even though inflation is ebbing, real wages are still down overall, meaning workers are earning less now than they were when President Biden assumed office.

With employment high and inflation low and signs pointing to the elusive soft landing, President Biden is declaring victory on the economy. And he's ascribing his success to his unique set of policies that got us through--which he calls Bidenomics.

What exactly is Bidenomics?

In His Own Words

In his speech, he gave several explanations, some of which are vague while others are more substantive policy:

• He referred to himself as being "the most pro-union president in American history"
• "Bidenomics is about building an economy from the middle out and the bottom up"
• "making smart investments in America"
• "educating and empowering American workers to grow the middle class"
• "promoting competition to lower costs to help small businesses."
• "targeted investments"
• "We're strengthening America's economic security, our national security, our energy security, and our climate security."
• Bipartisan Infrastructure Law
  • (broadband for rural areas
  • replacing lead pipes
  • fixing "crumbling" bridges
  • upgrading power grid
  • renovating airports and ports
  • union workers, American materials)
• "I believe every American willing to work hard should be able to say where they grew up and stay where they grew up. That's Bidenomics",
• American Rescue Plan
• Increased pell grants
• Increased registered apprenticeships
• No need for a four-year degree
• Universal pre-k
• Free community college
• Affordable child-care
• Easier to join unions,
• fighting to eliminate non-competes,
• pro-small business,
• Medicare drug price negotiation,
• more affordable insurance,
• fewer junk fees
• reducing deficit (both through Covid AND budget negotiation),
• higher taxes for billionaires, no loop holes (crypto, hedge fund investors, oil companies)

Many of the items he includes in Bidenomics are a smattering of policies that any president would probably support (pro-small business, "making smarter investments in America", "educating and empowering American workers to grow the middle class", replacing lead pipes). Many more are standard-issue Democratic policies (Increased pell grants, universal pre-k, affordable childcare, more empowered unions).

White House aides, not surprisingly, said basically the same thing. They "described the term as a broad collection of policies aimed at using government muscle to revive and reshape the economy to help the middle class. They pointed to a range of efforts, including bolstering manufacturing investments, expanding high speed internet access and cracking down on industries that charge so-called junk fees." --Politico

What has Biden actually done?

So what sets Bidenomics apart from previous Democratic presidents? To answer that, let's ignore what Biden himself says and look at the economic policies he's enacted.

The most significant aspects of Biden's economic policy, most would agree, come down to the Inflation Reduction Act, Chips, the infrastructure bill, and the American Rescue Plan. There have been many other things such as some student debt forgiveness and a slew of administrative actions taken, but these probably don't make a large enough difference to the entire economy to consider here.

The American Rescue Plan, most notably, sent checks to most Americans while also expanding subsidies for the ACA healthcare exchanges. The Chips and infrastructure bill doled out hundreds of billions of dollars for microchip production and infrastructure. Lastly, the Inflation Reduction Act spent hundreds of billions of dollars subsidizing green energy and electric cars.

Many Democrats and progressives are characterizing Bidenomics as industrial policy, government picking winners and losers. In this case, the winners are solar power, wind power, the electric car industry, and microchip producers. They say industrial policy works by pointing to the growth of tech production after Democrats decided to pay tech producers to expand production. Americans should keep in mind that getting more of something that you're paying to get more of is not a sign of success.

On the surface, industrial policy always looks like a winner. The reason is because with any government spending, the successes are always more apparent than the failures. Money spent on one industry won't be spent on another. We're not going to see what industries are harmed. We're not going to see them shrink because workers and investors are going to the government spigot. China, the primary example of the kind of industrial policy Biden is touting is stagnating. Industrial policy is a long-term loser with a few, widely touted short-term winners.

Industrial policy is a long-term loser with a few, widely-touted, short-term winners.

The Parts He'd Rather You Not Think About

Add to this, though, the pieces of the economy that Biden isn't taking credit for. Interest rates are higher than they've been since before the 2008 financial crisis. Back then, the fed funds discount rate was set at a high of 6.25% before being reduced for crisis. Today it has gone up to 5.25%, rising 4.75 percentage points in 14 months. As a result, the average interest rate on a mortgage is above 6%, the highest it's been in twenty years.

Additionally, real wages have fallen. Prices have gone up faster than people's earnings have so they are effectively making less than they were when President Biden came into office. Is this one of the components of Bidenomics? If we get high employment at the expense of lower wages, is that a great deal? Before Covid, unemployment was low and wages were high--the best of both worlds.

On top of this, there are elements of Bidenomics, that neoliberals probably aren't as keen about. The protectionism, the made-in-America focus, and the debt reduction that Biden takes credit for, even if it's illusory. Many left-of-center economists have complained about the stipulations in the CHIPs act, where the Biden administration has added unrelated Democratic policies, such as childcare, as requirements to receive the money.

Americans and the media should not let President Biden ignore the unpopular economic policies under his administration.

Like many political slogans, Bidenomics has no real meaning. But Americans and the media should not let President Biden pick and choose which of the policies he's pushed "count". If he wants to say he's responsible for the good economic news, he should be held responsible for the bad news, too. And he should be asked whether he intends to maintain the debt reduction, high interest rates, and high prices that have been part of his winning, as he claims, formula.