There is a new word in the American political lexicon. Bidenomics, coined after President Joe Biden, neatly summarizes the slew of economic policy changes he has introduced which, if implemented will dramatically change the role of government. The policy platform that Biden is proposing places him diametrically opposite President Ronald Regan, the darling of the American right.
Some 40 years ago Reagan proclaimed, government is the problem - not the solution. He famously said, when government expands, liberty contracts, and that has remained the Republican mantra ever since. Biden, on the other hand, thinks the government can be an agent for change, and help make prosperity a shared experience.
Reagan served as President from 1981 to 1989. As per the Republican narrative, it was a good time for America. The economy was booming, unemployment and inflation were low and the stock market was going through the roofs. Reagan had a simple formula for success: cut taxes for the rich, deregulate the domestic market and reduce the role of government. To him, the rich - especially big corporations - are the real drivers of the economy and creators of new wealth. If you help them get richer, the accumulated wealth will eventually trickle down and benefit everyone, including the poorest of the poor. Economists later called it - you guessed it - trickle-down economics.
Unfortunately, trickle-down economics was never the answer. As Meherun Etobori of United for Fair Economy, a Washington think tank, explained in 2003, Reaganomics did not lead to economic or income growth, nor did it create jobs. The best illustration of trickle-down economics was made by famous liberal economist John Kenneth Galbraith, who said, if you feed enough oats to the horse, some will pass through to feed the sparrows. Substitute horse for the rich and sparrows for the poor, and voila, you have Reagan's trickle-down economics.
In other words, trickle-down economics is great if you are rich. Not so if you sit at the bottom of the totem pole. Although during the Regan years a few became fabulously rich, the overwhelming majority were left only with horse shit. As a result, the disparity between the rich and poor began growing, and 40 years later, by the beginning of 2020, it became the highest in the western world. The US census bureau admits, now more than 12 percent of American women and 10 percent of men live in poverty, their annual income being under $25,000. Poverty is especially stark among children, more than 6.2%, that's 1 in every 6 children, go hungry every night. The picture is sadder when it comes to minorities: 20 percent of African-Americans and 25 percent of Native Americans are poor and have no real opportunity to move up.
Joe Biden, while campaigning for the presidency, repeatedly voiced his opposition to trickle-down economics. 'It did not work in the past; it does not work now.' He repeated it last month while addressing a joint session of the US Congress. 'My fellow Americans, it's time to grow the economy from the bottom up and middle out.' Biden put forth a plan that would invest in, what he called the 'human infrastructure,' allowing the middle class to grow and the very poor to get out of poverty. To mobilize resources, Biden has proposed new taxes on the fortunate few, both individuals and corporations, but raise none on the middle class. Almost like an apology, he said, he did not want to punish the rich for being who they are, but they must pay their fair share.
Taxing the rich alone will not undo the excesses of Reaganomics. This will require a whole new approach to wealth distribution, including widening opportunities for the poor and the middle class in such areas as health, education, and employment. The economic plan outlined by Biden proposes to do just that.
Overcoming the fierce resistance put up by the Republicans, Biden has already signed into law a stimulus package worth almost two trillion dollars that not only provides resources to fight Covid - 19 but also addresses the inequities laid bare by its lingering economic impact. The pandemic has hit all sections of society, except the very rich. Particularly hard hit have been the poor and middle class. According to the Joint Commission on Taxation, nearly 80 percent of Biden's stimulus proposes to help the bottom half of the society, helping to lift many millions out of gnawing poverty. Not only will they receive one-time cash incentives worth $1,400, but will also benefit from numerous provisions that will address systemic discrimination and inequities. It could end hunger among 50 percent of the children considered poor. The additional cash benefits, including child tax credit and unemployment benefits, will bring home close to $ 50,000 to each of the nearly 15 million poorest families.
Indeed, this is the first broad-based economic plan since President Roosevelt's New Deal that targets the poor and disadvantaged. This is a war on poverty, euphorically declared the Washington-based Urban Institute.
This shift is even more apparent in the two subsequent economic plans - one dealing with infrastructure and the other with American families - that Biden has introduced. The two projects worth over $4 trillion, if allowed to be implemented, have the potentials to revolutionize American society and economy. They will rebuild the country's crumbling highways and bridges, expand access to the broadband network to millions in rural districts and retool America's schools so that the country stands ready to compete with China and other nations aggressively using technology to move ahead. As for his family project, it is the first genuine attempt since Lyndon Johnson's Great Society in the 1960s to strengthen the country's social and economic safety net. It wants to provide cash incentives for childcare, introduce annual paid leave, guarantee pre-kindergarten for all children, launch a free two-year community college program, train teachers and reward scientific innovations. In short, getting America to leapfrog to the next level.
In the words of Roosevelt Institute's Felicia Wong, this is a remarkable moment for America. No doubt, all this is still in the realms of possibility. Biden must first overcome the opposition of the Congressional Republicans, who after the unbridled spending spree of the Trump years have discovered the virtue of austerity. Even within his party, several centrist Senators are unwilling to go all in with Biden. One silver lining for him: most Americans (yes, including many Republicans) seem to agree with him that the government can and should be an agent for change.
The writer is a journalist and author based in New York.
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