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5 pillars of Biden’s economic policy and how effective they’ve been

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President Biden has defined “Bidenomics” as encompassing almost everything good in the U.S. economy — falling unemployment, robust wage growth, new small business creation. And he’s planning to make the concept central to his bid for a second term.

“Bidenomics is just another way of saying, ‘Restore the American Dream,’” the president said in a recent address.

Republicans have defined the term in the almost the exact opposite way. Former president Donald Trump has called Bidenomics “total economic surrender to China and other foreign countries.” House Speaker Kevin McCarthy (R-Calif.) calls it “blind faith in government spending and regulations.”

Beyond the partisan talking points, how has “Bidenomics” changed the U.S. economy?

Since taking office, the president has pushed through dozens of changes and personnel appointments that have upended everything from how workers unionize to how large corporations merge. Biden and his aides have sought to revive domestic manufacturing through a clean energy boom, while also trying — with mixed success — to expand the federal safety net.

Biden’s advisers say the president wants an attempt to move beyond the “trickle-down economics” that defined the last four decades in Washington. Biden frequently says past administrations focused on tax breaks for rich people and corporations, but that he aims instead for “growing the economy from the bottom up and middle out.”

The underlying idea is that new government investment “crowds in” additional investments from private companies, a break from past belief that constraining the public sector would free the private sector to grow more. The result is a federal government that intervenes directly much more than it’s done in decades — to boost unions, block corporate monopolies, and spur economic and industrial growth, among other goals.

“The idea of trickle-down [economics] is if the public sector stops investing — if it just disinvests in our public infrastructure — the private sector will come in and make up the difference,” Jared Bernstein, the chair of the White House Council of Economic Advisers, told Washington Post Live last month. “Joe Biden knows that’s always been wrong, and that, in fact, it’s backward.”

Republicans see “Bidenomics” not as a coherent doctrine, but a collection of sometimes contradictory policies designed to please various interest groups in the Democratic coalition. Critics in both parties have blamed Biden’s attempts to spur growth for exacerbating the highest inflation rates in four decades, and courts have repeatedly blocked his attempts to increase competition among corporate giants. Even to his allies, the execution of Biden’s overarching vision has been, at times, uneven and incomplete.

“Bidenomics is much less a coherent approach to economic policy and much more a grab bag of subsidies designed to advance key interests of the Democratic Party coalition,” said Michael Strain, an economist at the American Enterprise Institute, a center-right think tank.

Here are five key parts of Bidenomics — and how they’ve fared over the president’s first two years in office.

Run the economy hot

Biden’s first major economic act was to sign the American Rescue Plan, a $1.9 trillion stimulus aimed at pushing past the recession caused by the pandemic. Determined to avoid the sluggish growth that characterized the recovery from the Great Recession under President Barack Obama, Biden argued that “the biggest risk is not going too big … it’s if we go too small.”

The result, in part, was the fastest-growing economy in decades. The nation’s gross domestic product surged by roughly 6 percent — a level not seen since the 1980s — as the unemployment rate plummeted and the number of new small businesses soared. The president is fond of emphasizing that the United States has had the fastest recovery among the Group of Seven industrialized Western economies, which he and many economists attribute to the rescue plan. And growth has powered on for two years, including 2023 so far.

But economists are still debating how the rescue plan contributed to inflation. Price increases have proven perhaps Biden’s central political liability, even though Russia’s invasion of Ukraine and supply chain snarls — two factors largely beyond the president’s control — exacerbated the crisis. And although inflation has eased recently, voters still rank it as a top concern.

 

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Theo Argitis: Taking stock of Canada’s complicated economy before tomorrow’s Bank of Canada decision – The Hub

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Theo Argitis: Taking stock of Canada’s complicated economy before tomorrow’s Bank of Canada decision  The Hub

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Here is Trump economy: Slower growth, higher prices and a bigger national debt

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If Donald Trump is re-elected president of the United States in November, Americans can expect higher inflation, slower economic growth and a larger national debt, according to economists.

Trump’s economic agenda for a second term in office includes raising tariffs on imports, cutting taxes and deporting millions of undocumented migrants.

“Inflation will be the main impact” of a second Trump presidency, Bernard Yaros, lead US economist at Oxford Economics, told Al Jazeera.

“That’s ultimately the biggest risk. If Trump is president, tariffs are going up for sure. The question is how high do they go and how widespread are they,” Yaros said.

Trump has proposed imposing a 10 percent across-the-board tariff on all imported goods and levies of 60 percent or higher on Chinese imports.

During Trump’s first term in office from 2017 to 2021, his administration introduced tariff increases that at their peak affected about 10 percent of imports, mostly goods from China, Moody’s Analytics said in a report released in June.

Those levies nonetheless inflicted “measurable economic damage”, particularly to the agriculture, manufacturing and transportation sectors, according to the report.

“A tariff increase covering nearly all goods imports, as Trump recently proposed, goes far beyond any previous action,” Moody’s Analytics said in its report.

Businesses typically pass higher tariffs on to their customers, raising prices for consumers. They could also affect businesses’ decisions about how and where to invest.

“There are three main tenets of Trump’s campaign, and they all point in the same inflationary direction,” Matt Colyar, assistant director at Moody’s Analytics, told Al Jazeera.

“We didn’t even think of including retaliatory tariffs in our modelling because who knows how widespread and what form the tit-for-tat model could involve,” Colyar added.

‘Recession becomes a serious threat’

When the US opened its borders after the COVID-19 pandemic, the inflow of immigrants helped to ease labour shortages in a range of industries such as construction, manufacturing, leisure and hospitality.

The recovery of the labour market in turn helped to bring down inflation from its mid-2022 peak of 9.1 percent.

Trump has not only proposed the mass deportation of 15 million to 20 million undocumented migrants but also restricting the inflow of visa-holding migrant workers too.

That, along with a wave of retiring Baby Boomers – an estimated 10,000 of whom are exiting the workforce every day – would put pressure on wages as it did during the pandemic, a trend that only recently started to ease.

“We can assume he will throw enough sand into the gears of the immigration process so you have meaningfully less immigration, which is inflationary,” Yaros said.

Since labour costs and inflation are two important measures that the US Federal Reserve weighs when setting its benchmark interest rate, the central bank could announce further rate hikes, or at least wait longer to cut rates.

That would make recession a “serious threat once again”, according to Moody’s.

Adding to those inflationary concerns are Trump’s proposals to extend his 2017 tax cuts and further lower the corporate tax rate from 21 percent to 20 percent.

While Trump’s proposed tariff hikes would offset some lost revenue, they would not make up the shortfall entirely.

According to Moody’s, the US government would generate $1.7 trillion in revenue from Trump’s tariffs while his tax cuts would cost $3.4 trillion.

Yaros said government spending is also likely to rise as Republicans seek bigger defence budgets and Democrats push for greater social expenditures, further stoking inflation.

If President Joe Biden is re-elected, economists expect no philosophical change in his approach to import taxes. They think he will continue to use targeted tariff increases, much like the recently announced 100 percent tariffs on Chinese electric vehicles and solar panels, to help US companies compete with government-supported Chinese firms.

With Trump’s tax cuts set to expire in 2025, a second Biden term would see some of those cuts extended, but not all, Colyar said. Primarily, the tax cuts to higher earners like those making more than $400,000 a year would expire.

Although Biden has said he would hike corporate taxes from 21 percent to 28 percent, given the divided Congress, it is unlikely he would be able to push that through.

The contrasting economic visions of the two presidential candidates have created unwelcome uncertainty for businesses, Colyar said.

“Firms and investors are having a hard time staying on top of [their plans] given the two different ways the US elections could go,” Colyar said.

“In my entire tenure, geopolitical risk has never been such an important consideration as it is today,” he added.

 

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China Stainless Steel Mogul Fights to Avoid a Second Collapse

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Chinese metal tycoon Dai Guofang’s first steel empire was brought down by a government campaign to rein in market exuberance, tax evasion accusations and a spell behind bars. Two decades on, he’s once again fighting for survival.

A one-time scrap-metal collector, he built and rebuilt a fortune as China boomed. Now with the economy cooling, Dai faces a debt crisis that threatens the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry Co., along with plants held by his wife and son. Its demise would send ripples through the country’s vast manufacturing sector and the embattled global nickel market.

 

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