President Joe Biden’s economic strategy, “Bidenomics,” is a failure.
Let’s start with inflation. The Biden administration claims that the Inflation Reduction Act of 2022 fights inflation, lowers healthcare costs, fights damaging climate change, and reduces the federal deficit. Not one of those statements is true. Inflation remains elevated above the Federal Reserve’s 2% target. Healthcare costs are soaring, with many families struggling to pay their medical bills. Households are spending the most on food in over 30 years. Hundreds of billions of dollars are being invested in green energy, but many nations in Asia continue to build new coal-fired plants. China will build 300 new coal-fired plants before its planned emissions peak. Among oil, natural gas, and coal, coal contributes the most by far to climate change.
True, the employment market is strong. But economists know that it is easy to generate jobs and stimulate the economy through helicopter drops of money. The problem is that Biden’s so-called Inflation Reduction Act creates jobs through borrowed money. Deficit spending is out of control. The economy of the United States is running a 6.3% federal deficit at a time when the economy is operating at capacity. Large deficit spending drives inflation. The bill will ultimately come due for the administration’s deficit spending. That likely means tax increases. And tax increases reduce work, savings, and investment. Consequently, economic growth slows.
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Other measures of progress are equally uninspiring. The manufacturing sector has been in recession for 16 consecutive months. Despite the $1.2 trillion infrastructure bill, deficient infrastructure costs the typical household $3,300 a year. The Biden administration claims that the CHIPS and Science Act will reduce U.S. dependence on semiconductors manufactured outside the U.S., but little money has actually been released to semiconductor manufacturers. Moreover, Taiwan Semiconductor, the world’s leading semiconductor fabrication company, is delaying construction of its planned facilities in the U.S., saying it is too expensive to manufacture in the U.S. and that the U.S. lacks the necessary supply of skilled labor. At this point, the CHIPS and Science Act is a failure.
Top line: when it comes to the household budget, climate change, energy, healthcare, infrastructure, and semiconductor independence, Bidenomics is a clear failure. What is most disturbing is that the bill for all the debt-financed projects has yet to come due. The U.S. net deficit to GDP ratio is around 100%. When the bill comes due and interest rates start to rise, America risks an economic bust.
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note.
