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Bidenomics Has Lowered Americans’ Standard of Living

Biden’s policies have resulted in prices on everything increasing by 20% while Americans' income has risen much less than that.

President Biden’s economic policies are hurting the average American, which is why his approval rating is so low. Bidenonomics is not geared to provide optimum economic outcomes but rather to try to reach social and climate change goals. While the Democratic Party has a long history of pursuing social justice through economic policies, Biden’s policies are way out of balance.

What is Bidenomics?

Bidenomics attempts to influence energy supply, energy consumption, and energy prices. On his first day in office, Biden moved to reduce the supply of oil. He believed that climate change was an existential threat to America. He knew that climate change could not be reversed or stopped, but by minimizing and perhaps eventually eliminating the carbon released into the air daily from gasoline powered autos, he could slow climate change.

The reduction in the supply of oil caused gasoline prices to increase by more than 50%. He reasoned that the higher gas prices would mean consumers would buy fewer gas-powered cars and more electric vehicles (EVs). To further encourage EV consumption, he offered to have the taxpayers pay $7,500 of the cost of the car for every EV purchaser.

Biden also offered billions of dollars of low-cost loans to manufacturers to encourage EV production. The result was that every auto manufacturer started to make electric cars. Biden considered this costly taxpayer funded program to be a success.

But consumers didn’t want EVs. That caused an over-supply which eventually led to falling prices and large losses for auto makers. Those who bought EVs saw the cars depreciate in value rapidly.

Higher energy prices pushed up costs for business. That eventually led to upward pressure on product prices, contributing to inflation.

Bidenomics also included large increases in government spending, mostly for climate change and to cure perceived social injustices. The large spending increases led to a massive public debt. The increased spending also led to excess demand in the economy which pulled prices up and increased inflation.

The social spending programs gave free taxpayer money to anyone that the administration deemed needed it. Perhaps one explanation for why the labor force participation rate remains so low, is that these social spending programs have discouraged at least some Americans from returning to the labor force after the pandemic.

The low participation rate created a labor shortage. In the hospitality field where wages are generally low. It wouldn’t take much of a government handout for a hospitality worker to leave the workforce.

The labor shortage led to higher wages and higher labor costs for business. That results in higher consumer prices leading to more inflation.

Bidenomics also includes a more heavily regulated business environment to stop business from taking advantage of consumers and raise prices or offer smaller packages at will.

Biden wanted to eliminate “shrinkflation and price gouging.”

The increased oversight and regulatory environment raised costs for business. That put upward pressure on prices and led to more inflation.

Regarding Bidenomics taxing policies, the belief is that the wealthy do not pay their “fair share.” As a result, Biden attempted to raise taxes on the wealthy. If he is successful, the higher tax rates for corporations and the wealthy will reduce capital formation. That raises the cost of equity capital to business and puts upward pressure on product prices. That leads to more inflation.

For the first 18 months of Bidenomics, and for some unknown reason, the Federal Reserve kept interest rates near zero and kept purchasing tens of billions of dollars of government debt monthly. That policy led to increases in market demand in the economy. Since there was already excess demand from the deficit spending, this led to more inflation.

Bidenomics has resulted in a 20% increase in the average price of everything, with some necessities seeing prices increase as much as 50%. Since household incomes increased by less than 20%, households were forced to purchase fewer goods and services or to purchase inferior goods. That means there was a decline in the standard of living.

That’s why his approval ratings are so low. He gives statistics, whether completely true or not, showing why our economy is doing so well. Unemployment is low, new jobs are being created and the economy is growing. He says, “It’s strong.”

However, the average household has experienced a decline in their standard of living.

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Michael Busler

Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 35 years.

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