In Speech On Bidenomics, Biden Tries To Turn The Page On Reagan (And Every President Since)

In a major speech on Wednesday outlining his economic policy, Joe Biden took a page from his old pal Barack Obama. When Obama ran for reelection in 2012, he embraced the pejorative name given to his signature policy achievement — Obamacare. In Chicago today, Biden embraced the insult the Wall Street Journal Opinion page gave to his economic plans — Bidenomics.

“I did not come up with the name,” Biden noted. But he would now embrace it to tout what the White House sees as significant economic achievements and a new vision of economic policy for the country.

And this is where Biden departed from his old ticket mate Obama. He did, also like Obama, denounce the old supply-side economics that have dominated American policy-making since Ronald Reagan put them in place in 1981. But then Biden explained how his policies actually mark a break with this economic model — and while he didn’t say it, how they break with the policies of both Obama and Bill Clinton.

“Trickle-down failed the middle class, it failed America,” Biden said. “It blew up the deficit. It weakened our infrastructure and stripped the dignity, pride and hope out of communities.”

Bidenomics stands on three legs, Biden explained. The first is a reinvigoration of public investment in domestic industry, research and development and infrastructure. Second, the empowerment of workers by protecting and expanding labor unions. And, third, increasing competition through antitrust enforcement and policy.

These are all breaks from the economic consensus that has dominated within both political parties, from Reagan through Clinton up to Donald Trump. That consensus favored private investment directed by a global financial system, not governments; free trade; workforces unburdened by labor unions (to best advantage capital); and mergers and acquisitions favoring monopolization.

Trump first cracked that consensus by jettisoning the GOP’s embrace of free trade in 2016. Biden, who has kept Trump’s trade policy largely in place, looks to crack it further.

In a key part of his speech, Biden touted the public investment his administration has undertaken in legislation passed by the Democratic-controlled Congress in his first two years, including the CHIPS and Science Act, the bipartisan infrastructure law, and the Inflation Reduction Act. These included investments in building new manufacturing facilities, providing broadband internet access, removing lead water pipes from schools and homes, upgrading power grids, and on, and on.

Beyond the laundry list, Biden made a notable argument aimed at the heart of the old economic consensus.

“Under trickle-down economic theory was that public investment would discourage private investment. Give me a break!” Biden said. “Public investment declined here at home. Industries that we invented started to move overseas like semiconductors. … Over time, we went from producing 40% of those chips to producing 10%. Not anymore! Bidenomics means that industries of the future are going to grow right here at home.”

This is a far cry from the opinion of his Democratic predecessors that economic globalization powered by private markets was like a force of nature that could not be altered or resisted.

Biden administration officials have been emphasizing this as not a one-off, but a shift in economic policy in a series of high-profile speeches in recent months.

In April, national security adviser Jake Sullivan gave a speech at the Brookings Institution outlining the connection between foreign policy and the new economic thinking. In that speech, Sullivan blamed free-market ideology for gutting America’s manufacturing base, lowering wages and harming security.

“There was one assumption at the heart of all of this policy: that markets always allocate capital productively and efficiently — no matter what our competitors did, no matter how big our shared challenges grew, and no matter how many guardrails we took down,” Sullivan said.

Instead, the Biden administration would change tack to pursue “targeted public investments … to lay a foundation for long-term growth.”

“This is about crowding in private investment — not replacing it,” Sullivan said. “It’s about making long-term investments in sectors vital to our national well-being — not picking winners and losers.”

Similarly, U.S. Trade Representative Katherine Tai criticized the old free trade consensus and announced a new direction aimed at helping small business and workers instead of “the bigs” in a major speech on June 15 at the National Press Club.

“Trusting markets to allocate capital efficiently … We thought a rising tide would lift all boats,” Tai said. But, in doing so, she added, “we did not include guardrails to ensure that it would be the case.” This led, she said, to a “race to the bottom, where exploitation is rewarded and high standards are abandoned in order to compete and survive.”

Previous presidents, including Obama with his proposal for a public infrastructure bank in 2014 and Trump with the never-arriving infrastructure week and grandiose statements on trade policy, made stabs at this shift in the Washington Consensus. Now, Biden is arguing that unlike them, he has actually done it.

But this new economic consensus isn’t really so new, Biden argues at the same time. In his speech, he pitched it as a restoration of original American ideals and values. Of a way, if you will, to make America great again.

“[Trickle-down economics] didn’t represent the best of American capitalism, let alone America. It represented a moment where we walked away from how this country was built,” he said. “Bidenomics is about the future. Bidenomics is another way of saying, ‘restore the American dream,’ because it’s worked before.”