Today, Explained - Bidenomics

Episode Date: July 20, 2023

A lot of Americans are still feeling iffy about the economy, but Joe Biden’s so proud of how things are going that he’s stuck his name on it. The Washington Post’s Jeff Stein explains “Bidenomics.” This episode was produced by Miles Bryan, edited by Matt Collette, fact-checked by Laura Bullard, engineered by Michael Raphael, and hosted by Noel King. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

It's the rare political ad that becomes canon. Reagan's Morning in America, LBJ's Daisy. This week, the Biden campaign came close. It released this ad about Bidenomics, featuring Biden nemesis Marjorie Taylor Greene. Joe Biden had the largest public investment in social infrastructure and environmental programs that is actually finishing what FDR started. Appearing to praise him. that is actually finishing what FDR started, that LBJ is... Appearing to praise him. ...programs to address education, medical care,

urban problems, rural poverty, transportation, Medicare, Medicaid... Her words. She was actually criticizing Biden's big spending, part of his plan to remake the American economy. Bidenomics is about building an economy from the middle out and the bottom up, not the top down.

Huh. Marjorie said it better, I think. On Today Explained, everybody, including us, is talking Bidenomics. across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. It's Today Explained. Jeff Stein is the White House economics reporter for The Washington Post. In this job, he's watched as the Biden administration tries to remake the American economy. But also, Jeff says, there's a lot of confusion over what Bidenomics is.

It's become this kind of impenetrable term that means everything good and everything bad, and people have lost sight of what actually is going on here. Jeff Stein, give me your definition of Bidenomics. What the administration will say, and I think there's something to this, is that for the last really 30, 40 years in American economic policy, there's been a really heavy emphasis on consumers and reducing costs for consumers. And sometimes you hear this talked about as the neoliberal era, the era of free markets, and what the Biden people are focused

on and what Biden himself is focused on has been kind of expanding the definition of what the economy needs to address, to include workers, to include the manufacturing sector, to include certain sectors and key industries. I knew we couldn't go back to the same failed policies when I ran. So I came into office determined to change the economic direction of this country, to move from trickle-down economics to what everyone on Wall Street Journal and Financial Times began to call Bidenomics. We are seeing really across several different dimensions the Biden administration try to really revolutionize economic policy and the way the federal government interacts with key parts of the American economy by sort of expanding the focus of the government to not just be about reducing prices and benefiting the consumer. Biden economics means industries of the future are going to grow right here at home. At home. I mean it. Not a joke.

This isn't an official White House position, but my observation is that there's really four key areas where Biden has revolutionized policy. Antitrust policy, fiscal policy, industrial policy, and labor policy. Let's walk through those one by one. Antitrust policy. What's the revolutionizing being done there? Well, although it's a semi-autonomous agency that doesn't take direct instructions from the White House, Biden has appointed to the Federal Trade Commission a young woman named Lena Kahn, who's 34, and she has done really a sea change in the administration of that department. Over the past 24 months, the FTC has moved to challenge major transactions that would have eroded competition in critical sectors of the economy. Her view, which reflects that of Biden, is that the American

economy is far too concentrated in the hands of a few companies, that some sectors in particular have become monopolistic, and that a new era of antitrust enforcement is necessary to increase competition to give small businesses a better chance and to reduce sort of the arbitrage effects from a company that can control, you know, many parts of its supply chain, for instance. Last year, the FTC and a bipartisan coalition of 10 state attorneys general charged the two largest pesticide manufacturers with unlawful schemes that prevented farmers from having access to cheaper products costing them billions of dollars. That effort, you know, has been uneven at times.

Lena Kahn has lost several big lawsuits seeking to block mergers. A U.S. appeals court has rejected the Federal Trade Commission's request to pause that deal between Microsoft and Activision from happening. But I think at a minimum, what people in corporate America will tell you is that companies are much less eager to file for consolidation for mergers. And so you're seeing really for the first time in decades, aggressive federal action to rein in the trust, as you might remember from high school with Teddy Roosevelt and the big stick. The dull, purblind folly of the rich,

their greed and arrogance and corruption have produced a very unhealthy condition, Roosevelt wrote. What about fiscal policy? This has been a really big change from Democrats under the Obama administration. President Biden, when he came to office, was very worried about sort of reliving the experience that characterized the economy during Obama, when there wasn't enough economic demand, unemployment was high, the economy was kind of slow, and that was a real millstone for the Obama administration. President Barack Obama says he knows the top question on voters' minds this election year is why has the economic recovery been so painfully slow? People are saying, you know, what have you done?

What Biden did instead was approve a nearly $2 trillion economic stimulus that I think by all accounts, even though, you know, people close to the administration was probably on the big side. But they would say, you know, even its defenders, even people who would acknowledge, people close to the administration was probably on the big side. But they would say, you know, even its defenders, even people who would acknowledge, yeah, maybe it was a little big, would say it was necessary to make sure that the economy ran so hot that workers would be in demand, that they could use their leverage from all the economic demand to bargain higher wages, to bargain better working conditions. If we invest now boldly, smartly, and with unwavering focus on American workers and families, we will strengthen our economy, reduce inequity, and put our nation's long-term finances on the most sustainable course. What about industrial policy? This is something that American presidents

have to focus on. What's Biden doing different? What's the anomics here? Yeah, so obviously climate change has been a key thing that Democrats have wanted to address for at least a decade. And there were lots of ways that the administration could have tackled that. One idea would be to sort of tax carbon and make it more expensive to use products that contribute to global warming. What the Biden administration did instead was try to stand up a clean energy manufacturing sector, try to create this new trillion-dollar industry that will basically make it so clean energy is so cheap that it's exciting, that it's profitable, I should say, for consumers

and companies to make the jump to clean energy. Up until about nine, ten months ago, Europe was considered the overwhelming leader in climate action. China, a little bit to some extent, and the U.S., a distant third. This has propelled us to the top of the list. That has been sort of the Biden administration's approach to a bunch of areas, including the shortage in semiconductors we've seen and the infrastructure that's decaying across the country. We've seen, you know, over the last 40 years, the decline in manufacturing jobs, a lot of those jobs go overseas. And many economists think that that is sort of the appropriate evolution of developed capitalistic high-income economy.

And Biden, with the backing of sort of more liberal economists, has said, no, like that is not an immutable force of nature. We can actually reverse that. We can use government policy to shield with protective tariffs and with government subsidies, industries that are critical to national security and will bring critical benefits to, you know, particular parts of the Midwest and parts of the industrial heartland that have been left behind by the outsourcing of those jobs. And so it's a really different vision of economic growth to say, we're not going to just let the

chips fall where they may, which I think a lot of people will legitimately say has led to, you know, the concentration of capital on the coast, the growth of the finance industry, you know, California, New York doing fine, but Ohio not. And Biden has really tried to say we will use government intervention and taxpayer money to reverse that trend. And what about the policy area that affects us all? What about labor policy? You know, Biden had a really far-reaching agenda on labor. Most of it has been stymied by opposition from Joe Manchin. This is a no. And congressional Republicans. But I think there's, you know, real evidence that they are doing some things that are working.

I mean, the number of workers in a union in this country has steadily declined. The administration has been determined to reverse that number. So far, those efforts, really, we have not seen proof that that's working. But we're seeing a lot of evidence of new labor unrest, in part because of the fiscal policy that's given workers more bargaining authority, and in part because Biden has appointed real, I think it's fair to say, allies of the labor unions to run the National Labor Relations Board, which is sort of in charge of adjudicating disputes between labor and businesses. And that government agency, which Biden really changed, has been instrumental in increasing policing of corporate malfeasance of workers and child labor and encouraging the union efforts we're seeing in Starbucks and Amazon. The choice to join a union belongs to workers alone. And by the way, by the way, Amazon, here we come. Those efforts haven't really led to a macro change in the position of workers,

but it's not, I think it's fair to say, from want of trying. What does the economy look like if Bidenomics is working well at the end of a second Biden administration? Let's say Biden wins. Are we talking about a real reshaping of the American economy? I think, you know, the president's vision for the economy is one in which far more workers are unionized, far more workers are able to get jobs in high manufacturing for a higher pay, a world in which there's much more competition in the corporate that create big political problems for the administration. Coming up, by the numbers, the American economy is pretty good. So why does everyone feel so bad about it? Plus, Jeff Stein accidentally talks his way into a class war? Support for Today Explained comes from Aura. Aura believes that sharing pictures is a great way to keep up with family. And Aura says it's never been easier thanks to their digital picture frames. They were

named the number one digital photo frame by Wirecutter. Aura frames make it easy to share unlimited photos and videos directly from your phone to the frame. When you give an Aura frame as a gift, you can personalize it. You can preload it with a thoughtful message, maybe your favorite photos. Our colleague Andrew tried an Aura frame for himself. So setup was super simple. In my case, we were celebrating my grandmother's birthday and she's very fortunate. She's got 10 grandkids. And so we wanted to surprise her with the AuraFrame and because she's a little bit older, it was just easier for us to source all the images together and have them uploaded to the frame itself. And because we're all connected over text message, it was just so easy to send a link to everybody. You can save on the perfect gift by visiting AuraFrames.com to get $35 off Aura's best-selling Carvermat frames with promo code EXPLAINED at checkout.

That's A-U-R-A-Frames.com promo code EXPLAINED at checkout. That's A-U-R-A-FRAMES.COM promo code EXPLAINED. This deal is exclusive to listeners and available just in time for the holidays. Terms and conditions do apply. all season long. From tip-off to the final buzzer, you're always taken care of with a sportsbook born in Vegas. That's a feeling you can only get with BetMGM. And no matter your team, your favorite player, or your style, there's something every NBA fan will love about BetMGM.

Download the app today and discover why BetMGM is your basketball home for the season. Raise your game to the next level this year with BetMGM, a sports home for the season. Raise your game to the next level this year with BetMGM, a sportsbook worth a slam dunk, and authorized gaming partner of the NBA. BetMGM.com for terms and conditions.

Must be 19 years of age or older to wager. Ontario only. Please play responsibly. If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Explained. 2024 Explained.

It's today Explained. I'm Noelle King. Depending on where you sit in the American firmament, you may think Bidenomics is revolutionary or that it's akin to socialism or like Marjorie Taylor Greene, it might be making you Biden curious. heard earlier, the Biden administration hopes to remake four sectors of American policy to be better for American workers, industrial, labor, antitrust, and fiscal, earth, fire, wind, water, heart. We don't know how this will turn out, and we might not for many years. But Jeff Stein, White House economics reporter for The Washington Post, the Biden administration has to sell Bidenomics to the American people. How's that going? Terribly, to put it bluntly. They are really, really struggling with their economic messaging.

A separate Reuters-Ipsos poll finds President Biden's approval rating falling closer to the lowest levels of his presidency. Just 40% of Americans say that they approve of the job that he's doing. These are numbers that, you know, the economists and pollsters I talk to regularly have been genuinely shocked by over the last two years. At a time where unemployment is extremely low and, you know, we're seeing more new business formation than we have in a very long time, and the size of the economy, the gross domestic product is growing at a really rapid clip, people are still really upset. There was a poll from Economist YouGov asked people, do you believe the U.S. is currently

in an economic recession? Not are we heading there, not is there a chance of one, but do you feel that we are right now in a recession? And you have very close to a majority saying yes, 47% say yes, 29% say no. And it is quite clear that that traces back to inflation and the rise in prices, that the pessimistic story is that those are the, in part, inevitable consequences of an attempt to create an economy that empowers workers more. I wonder whether the perception of biodynamics is fair.

Like the pessimism surrounding it, is it justified? This is a question I've spent a lot of time thinking about and tweeting too much about, frankly. Because there's a narrative that some people have and smart, credible people have, which is essentially that there's something fundamentally irrational and stupid, might be too strong a word, but misguided in Americans' frustrations about the economy. And they'll list the positive indicators I've just cited and say, how can people be about as down on the economy as they were in the throes of the financial crisis and Great Recession. And I think it's a legitimate point.

But I would say, even though it is the case that there are these positive indices, real wages, which is a very simple calculation that economists do, that they just take the cost of goods, you know, just inflation, and then they subtract that from wages, how much people's earnings are going up, that that has been negative for most of the Biden administration. And that's pretty unusual. And maybe that's not the Biden administration's fault, maybe economic shocks from COVID and the supply chain disruptions we saw, the shift in consumption patterns. Also, Russia's invasion of Ukraine also significantly reduced inflation.

So there are all these external factors that are not Biden's fault, certainly. But whatever the cause of it, it seems clear from the data that most workers have not seen their wages increase at the same rate that costs have been going up. And that's a very disconcerting thing. It just means, really, that more people are getting poorer. As a mom, I feel stressed about everything. We find more activities to do that are cheaper, free. That's a thing that most people, I think, would rationally be quite upset about. The other day, my kids were talking about how they miss eating Pizza Hut because that

was, for us, it's a luxury item. Now, it is the case that people at the bottom of the economic distribution, particularly people in the labor market at the bottom 10%, they've seen their wages rise much faster than inflation. So people in the service industry in particular, people who work, you know, as waiters and, you know, bartenders and that kind of work, they've actually done better in the last three years than inflation has risen. Currently, I'm making the most money I've ever made. I mean, I make $30,000 a year,

which isn't a lot. But when you spent your whole life making $22,000, $23,000 a year, which isn't a lot. But when you spent your whole life making $22,000, $23,000 a year, you know, that's some life changing. So you are seeing meaningful gains there. But the downside is that lots of middle class people, and this is not just like annoying tech bros on Twitter, like middle class people, like firefighters and nurses and public school teachers, the value of their dollars have not kept up with inflation. And maybe that's not Biden's fault, but I think that's the response that some people have to the idea that Biden is just getting a raw deal because people don't like him for unrelated other reasons. I thought I saw something recently that said consumer sentiment is improving. for unrelated other reasons. Hmm.

I thought I saw something recently that said consumer sentiment is improving. Is that right? That's correct. The University of Michigan's Consumer Sentiment Index rose to 72.6 in July. That is the highest

it has been since September of 2021. In the last, you know, six months to a year, we've seen really for the first time since Biden took office, real wages start to improve. For the first time since early 2021, the U.S. Labor Department says wages are rising at a faster rate than inflation. Compared to early 2021, wages were up about 4%, while the consumer price index has increased by about 3%. And the thinking is, maybe, maybe not, but maybe the consumer sentiment is a lagging indicator,

you know, it's sort of a delayed effect where we're starting to see consumer sentiment tick up after real wages began to rise. And for the White House, you know, the people I talked to over there, like, oh, thank God, like, finally, this number is looking like it's going in the right direction. And maybe, maybe the public sentiment will change. Now, if it doesn't, then that like, kind of calls into question my whole theory of like, that this is going to change with real wages. But maybe that's not why the public is upset with Biden over the economy, but we'll have to see. It's so interesting that Biden and Biden's administration clearly have these much bigger goals for the American economy,

things that for a lot of people who have jobs or who buy goods, who are not the owners of big companies, seem pretty good. People who want to survive climate change, they seem pretty good. But at the end of the day, when we go to vote, what a lot of Americans are thinking about is not 15 years down the line or even five. It's what is inflation this month? What are gas prices today? At the end of the day, how much does biodynamics really matter if on the day we go to the polls, inflation is at 9% and gas is $6 a gallon? I think that's a really profound point and one worth stopping on and thinking about. I mean, when you look at what the Biden administration has done over the last few years, it's become very clear that they kind of agree with what you just said.

They're not out there saying, don't worry about inflation. We are doing all these great things to transform the economy. Like every bit of messaging that they have is like, we know you're pissed about inflation. We're like working on it. We're sorry, we're trying. And, you know, inflation has come down quite substantially from, you know, the 9% year over year number we saw to close to 3%. And so that's, you know, it's not, the battle isn't won, they would say, but they are seeing huge improvement. And I think you're really astute to point out that like, that might be the precondition for all the other goals we're talking about. And actually, you see them kind of operate this way when you look at how they're willing to put their other goals

on hold temporarily to achieve lower inflation. Just for instance, during the run-up in gas prices, we saw the Biden administration was very eager to take reserves from the strategic petroleum reserve and push them out into the American economy to lower gas prices, because people, as you were saying, were furious about them. Now, if you were purely running a climate strategy of encouraging people to decarbonize, that wouldn't have made sense, but they understand and feel deeply that all their other goals are at risk if they don't get these numbers under control. I think one of the scary possible interpretations that I hope is wrong of the last couple years is that what's happening in the American economy is that Biden has empowered, the working class to make more money and have more power. And that the effect of that has been to push price increases off on the bigger and more politically powerful middle class.

And that the middle class has reacted to that higher power for the bottom end by demanding that it be crushed. And all the supply chain and COVID and war in Ukraine issues are huge confounding variables to this. So it is possible that this is very wrong. But I think there's this very pessimistic, like grimly pessimistic story that attempts to empower the bottom end is just not long-term politically feasible in a system where the middle class can outvote the working class. With some of those other factors like the war and supply shocks abating, we

will I think get a better test in the months to come of whether we can preserve these gains, these really critical gains we're seeing at the bottom, without the political instability in the middle that makes those changes impossible. Washington Post White House economics reporter Jeff Stein. Today's episode was produced by Miles Bryan. Matthew Collette is our editor. Michael Raphael is our engineer. And Laura Bullard is our senior fact checker. The rest of our team includes Hadi Mawagdi, Amanda Llewellyn, Avishai Artsy, Siona Petros, Halima Shah, and Victoria Chamberlain featuring John Ahrens. Our supervising producer is Amina El-Sadi. Our EP is Miranda Kennedy. My co-host is Sean Ramos-Verm. And we

are distributed to public radio stations across these United States by WNYC in New York. Today Explained is part of the Vox Media Podcast Network. And I am Noelle King. Thank you. you