Government is no longer shying away from pushing investment toward specific goals and industries. Spending on public works is back in fashion. New free-trade treaties are no longer at the heart of the nation’s international strategy. Challenging monopolies and providing support for unionization efforts are higher priorities.
You can trace the break in part to new circumstances and challenges, as national security adviser Jake Sullivan argued in an important speech of his own in April.
Heightened competition with China and the urgency of dealing with climate change are part of the story. So is the long rise of wealth and income inequality accompanied by the collapse of many of the country’s industrial communities. The breakdown of supply chains during the pandemic put an accent on resiliency and an emphasis on bringing home manufacturing, for semiconductors especially but for other products, too.
The shift also has to do with [with Biden’s] unease with the Reagan-era economic consensus that hovered over Democratic administrations….
The confidence Biden and his lieutenants have in the new path is reflected in their eagerness to tout the word “Bidenomics,” a label the president now embraces after initially being abashed about paternity for a school of economic thinking….
As a political matter, Biden wants to show that his signature policies on technology, climate action and infrastructure are working. On Wednesday, he stressed they are producing well-paying jobs for those who have been on the short end of economic growth: Americans without college degrees and those living in places with “hollowed out” economies….
[In his speech, Sullivan proposed] a “new consensus” to replace “a set of ideas that championed tax cutting and deregulation, privatization over public action and trade liberalization as an end in itself.” The old formulas, Sullivan argued, not only failed to address new problems; they didn’t work on their own terms.
“In the name of oversimplified market efficiency,” he said, “entire supply chains of strategic goods, along with the industries and jobs that made them, moved overseas.” The idea that freer trade “would help America export goods, not jobs and capacity, was a promise made but not kept.” He stressed the need for “a modern American industrial strategy” and the benefits of “moving beyond traditional trade deals to innovative new international economic partnerships”….
The Post’s Jennifer Rubin expands on the topic:
The economy has created 13 million jobs, inflation has been more than cut in half, huge investments are being made in infrastructure and green energy, wage growth has begun to outpace inflation, the first drug price controls are going into effect and the biggest corporations will finally be forced to pay something in federal taxes. Yet polls show voters incorrectly think we are in a recession and remain negative about the economy [note: although the polls could be wrong].
Beginning this week, the White House is making a focused push to narrow the gap between performance and perception. On Monday, senior Biden advisers … released a four-page memo explaining the president’s vision, which they call “Bidenomics”:
Bidenomics is rooted in the simple idea that we need to grow the economy from the middle out and the bottom up — not the top down. … Implementing that economic vision and plan — and decisively turning the page on the era of trickle-down economics — has been the defining project of the Biden presidency.
They then ticked off a list of accomplishments: an economic recovery five years earlier than expected, … nearly 800,000 manufacturing jobs, a higher job-participation rate for working-age Americans than at anytime in the past 20 years….
[The strategy has three parts:] “targeted investment” that encourages private investment (comparing it to Franklin D. Roosevelt’s rural electrification and Dwight D. Eisenhower’s interstate highway program); empowering workers (made-in-America provisions, increasing Pell grants…); and promoting competition (enforcing antitrust rules, cracking down on noncompete clauses, Medicare negotiation for lower drug prices)….
According to a White House fact sheet, the bipartisan infrastructure law has already created 35,000 projects across the country. Its green energy push has spurred more than 150 battery plants and 50 solar plants. “In all, we’ve seen $490 billion in private investment commitments in 21st century industries since the President took office, and inflation-adjusted manufacturing construction spending has grown by nearly 100% in just two years,” the fact sheet announced. “New data … shows the clean energy workforce added nearly 300,000 jobs in 2022 and clean energy jobs grew in every state in America. … Inflation-adjusted income is up 3.5% since the President took office, and low-wage workers have seen the largest wage gains over the last year.”
A recent Treasury Department report emphasized the volume of that investment and the quality of jobs created. “Real manufacturing construction spending has doubled since the end of 2021.” It found: “Within real construction spending on manufacturing, most of the growth has been driven by computer, electronics, and electrical manufacturing. Since the beginning of 2022, real spending on construction for that specific type of manufacturing has nearly quadrupled.” Because such investments increase productivity, the result should be both increased growth and downward pressure on inflation.
Biden’s [and the Democrats’ electoral] success will depend on continued growth, job creation and inflation reduction. But it’s hard to deny the results so far have been impressive. Economists may look back on this time as an inflection point when historic investments ushered in a new era of domestic manufacturing, gave a new lease on life to the Rust Belt and improved the balance sheet of middle–class Americans.
Whereof One Can Speak 🇺🇦 