Bidenomics, a term that is being used lately to describe the economic policies of President Joe Biden, has become the talk of the town, especially in his post-Congress speech days.
The term is not strange, as similar terminologies have been used in the past to refer to the economic policies of different presidents, for example, the economic policies of Ronald Reagan as “Reaganomics” and those of President Obama as “Obamanomics.”
The term Bidenomics was coined in the aftermath of the $1.9 trillion COVID stimulus package and became even more popular now with the arrival of the infrastructure package and American Families Plan.
However, the biggest challenge of Bidenomics remains the highly divided Senate, as every plan of Bidenomics is bound to face severe resistance in the upper house of the Congress, at least until the 2022 midterm.
With the focus to reinitiate the subsidized regimes, what are the basics of Bidenomics? Let’s see.
Bidenomics: A Reversal toward the Welfare Schemes
The idea of welfare first emerged during the Presidency of Bill Clinton, who later had to abide by the Republican proposal to end the concept of the welfare state.
Clinton accepted the Republican proposal to end the welfare schemes because not doing this would have jeopardized his re-election.
Many thought it to be the end of the welfare agenda in the United States, but none of them pictured President Joe Biden in the White House.
Recently, President Biden signed the most extensive expansion of government assistance since the 1960s. This new law from Biden will guarantee increased income to poor and middle-class families who will receive the monetary benefits.
By implementing huge tax cuts, Republicans increased the wage gap between rich and poor Americans, for which they were often criticized.
With COVID-19, the concept of too much governance and introducing welfare schemes by the government has been appreciated by many stakeholders.
Without a government assistance program, the American rescue package was just a pipe dream, suggesting that government interference in the economy and promoting welfare is a promising sign to save millions of people from hunger.
Taxes: A Building Block of Bidenomics
With the introduction of welfare schemes comes tax hikes to sponsor those schemes, and this is the case with Bidenomics as well.
Donald Trump has always been against governmental giveaways, so he ended up further concentrating the money in fewer hands by providing the top 20% of Americans with $1.9 trillion tax cuts.
Even though implementing taxes is an essential pillar of Bidenomics, Biden is in no mood of putting additional taxes on people earning less than $400,000 per year.
Biden remains unchanged in his approach to tax collection, saying that wealthier must pay their fair share to the economy of the country.
Trump’s tax cuts profited the average Americans in no way, yet 660 billionaires of the United States became trillionaires owing to these tax cuts.
Under the new law signed by President Biden, 93% of American children will receive benefits. This will eventually increase the income of people of the lowest quintile by 20%, in the second-lowest by 9%, and middle class by 6%.
Besides, the most astonishing thing is that this bill failed to receive even one Republican vote, while Trump’s tax cut received 279 Republican votes in Congress.
The two major plans of Bidenomics, i.e., the infrastructure bill and the American Families plan, are also driven by tax hikes so that subsidies can be given to those in need.
The idea that tax cuts boost the economy comes from a fairly understood economic policy of laissez-faire. However, experimentation in this field has proved that tax cuts only promote temporary and short-term growth.
Bidenomics depends on the formula of increasing the income of the middle and poor class while the country has been subjected to a conservative economic agenda of providing tax relief to the rich and eventually making the poor suffer.
The Three Pillars of Bidenomics
Bidenomics can be summarized in three phrases; more stimulus, tougher regulations, and gridlock. President Biden reversed much of the Trump administration’s aggressive policies to kick start the economy and minimize the divide created on purpose.
The Biden administration is prioritizing investment in economic development, infrastructure, education, and clean energy. They are ready to face challenges such as climate change as well as the monopolization of big tech companies.
Bidenomics focus on creating a two-track economy that will be domestically dynamic yet internationally competitive with innovative sectors.
The idea goes beyond welfare, i.e., empowering people to get a better life without any assistance from the government.
The idea comes from Japan in the 1970s, when the country created a world-beating export sector with giants such as Toyota, Panasonic, and many others that everyone in the United States is familiar with.
These giants contributed to only twenty percent of the economy, yet the rest was managed by domestic sectors such as retail, health care, agriculture, utilities, etc.
The Biden Administration is focusing on such domestic sectors for the creation of jobs that will allow Americans to earn for themselves and eliminate the need for any assistance.
Certainly, the tax hike is an essential pillar of Bidenomics, yet in no way is it promoting socialism in the country.
Socialism is an entirely different phenomenon with no private property, and this is surely not going to happen under the Biden administration.
Imposing taxes always build a stronger economic model, as it circulates the money in the economic sectors.
For Bidenomics to survive, the Democrats should push harder to win the 2022 mid-term Senate elections by a bigger margin, or they will once again land in the troubled times of today where Republicans are trying to block each and every policy of the Biden administration.