Joe Biden did not help the US economy. He did worse

To President Joe Biden’s credit, his policies did not cause many of the economic problems we face today. But they made them worse. More worryingly, his policies could reduce future growth and make the economy less equal and sustainable.

The president does not usually have much influence on the current economy; it does not set prices for energy and assets. But this administration was particularly productive when it came to making economic policies, and most of those policies were bad for the economy. A healthy economy is growing, has low stable inflation, is resilient to shocks, is able to create and adapt to new technologies, and has some degree of equity among its constituents. Biden’s policies undermine all of these things.

Biden insists the economy is strong, and to some extent it is true: unemployment is low and household balance sheets are still in good shape. But inflation is high, GDP figures are weak despite a 2.6 percent jump in the third quarter, a recession is looming, after-inflation wages are falling, and so is the stock market. Biden didn’t cause inflation — it was the result of supply constraints due to the pandemic, loose monetary policy, and Trump-era stimulus bills. But then, when the economy started to recover, the 2021 US bailout came out, which made inflation even worse.

According to economists, it was too big and could add 2 to 4 percentage points to inflation. On top of the trillions of dollars in aid spending by the previous administration, the US bailout was excessive, in part because it gave generous benefits to families who didn’t need them — middle- and upper-middle-class families making six figures. received the checks. It may have been politically popular at the time, but the inflation it caused hits harder on low-income earners, who are more price-sensitive and will suffer more in any recession caused by anti-inflation efforts.

Nor is Biden responsible for the high energy prices that began to rise when we emerged from the pandemic, and then rose even more due to the war in Ukraine. But his rhetoric against oil companies — suspending leases on public land, pledging to divest from fossil fuels and calling for oil companies to pay more for capital — has reduced their incentives to invest in new production. He also rejected Canada’s Keystone XL pipeline, which was slated for completion in early 2023. All of this adds up to fewer energy sources and less resilience to international price shocks.

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Biden’s next, and arguably best, legislative achievement was the $550 billion ($872 billion) 2021 infrastructure bill. And there are aspects that are good for the economy: improving ports and roads, building resilience to climate change, and expanding access to high-speed Internet are all wins. But how these goals will be met is a major source of concern. For example, the bill would ensure that as many jobs as possible would go to union workers. In principle, there is nothing wrong with hiring unionized workers. But when government projects give unions a monopoly, it drives up costs and delays timelines by years. A more competitive labor bidding process would increase the chances that projects will go well and not cost taxpayers additional money.

In general, little, if any, attention was paid to cost control. The bill also includes plenty of money for politically favorable projects, such as his administration’s fascination with passenger rail and electric cars.

Investments in the economy can pay off, but like any investment, they must be targeted and not too expensive, otherwise they only add to the deficit without creating much growth. And more debt makes the economy less sustainable because higher interest rates mean there’s less room for spending in the future when we really need it.