We asked three economists: What is the so-called "Bidenomics", is it working, and do voters feel the difference?

Ever since President Joe Biden confirmed his intention to seek re-election, his advisors have rallied around the concept of “Bidenomics” as a cornerstone for justifying a second term. However, when you try to pin them down for a precise definition, Bidenomics turns out to be a somewhat elusive and nebulous notion — more of a slogan to attract young voters to an octogenarian candidate than a detailed program of actions and decisions. According to the simplest explanation supplied by the White House, all positive economic developments can be attributed to the workings of Bidenomics.

But there seems to be a gap between what Bidenomics actually does and what the administration hopes it is perceived as doing. While the White House has touted such achievements as record-low poverty rates and the fastest job creation in recent American history, these claims have not only been rejected by Republicans but also faced skepticism on social media, with critics charging that the administration fails to present concrete data.

In June 2023, President Biden said of his eponymous economic doctrine that it is “about growing the economy from the middle out and the bottom up, not the top down. It’s an economic vision where we make smart investments in America, educate and empower American workers, and promote competition to lower costs and support small businesses.”

These propositions would sound agreeable to most people, but they are undeniably vague. And Americans are very much of two minds about how the economy is doing; a new CBS News poll finds that 46 percent describe the job market as "good," but 65 percent describe the economy overall as "bad." Biden has his work cut out for him in selling Bidenomics.

To try to distinguish the administration’s portrayal of Bidenomics from the actual economic effects of its policies, Mishpacha spoke with three prominent economists, who each offered his own interpretation of the official figures: Benjamin Friedman, Harvard University professor of political economy; Laurence Kotlikoff, professor of economics at Boston University; and Douglas Holtz-Eakin, president of the American Action Forum and former chief economic policy advisor to Senator John McCain.

We selected five areas for investigation by our panel of economists.

1.Inflation and Interest Rates

The latest Consumer Price Index figures showed a 3.1 percent increase, much lower than last year’s highs, which reached over 9 percent. The White House hailed this as evidence of “Bidenomics at work.” However, many Americans are still feeling the bite in their pocketbooks. The question for our panel: How has the Biden administration handled inflation?

Douglas Holtz-Eakin: “Inflation started in 2021. And what we witnessed is the impact of excessive fiscal stimulus and monetary stimulus. The fiscal stimulus was easy to see — that’s the American Rescue Plan, nearly $2 trillion that the president signed into law, enacted at a time when the economy was growing at 6.3 percent and nearing full employment. That was simply too large and caused a lot of damage. It’s true that in 2020, stimulus was necessary due to the pandemic, and that was appropriate. But that was in March 2020. The major problem that caused inflation was doing it again in 2021. That’s the mistake.”

Benjamin Friedman: “Much credit, one way or the other, for policies against inflation goes to the central bank [the Federal Reserve], which is relatively independent. The chair of the Federal Reserve, to begin with, is Jay Powell, who was appointed by Trump. Now, having said that, I give the Federal Reserve reasonably good marks. I think a fair criticism is that the Federal Reserve waited too long to start moving toward a tighter monetary policy. They began at the beginning of 2022, and since then, they have raised interest rates quite aggressively. But I think it’s a fair criticism that they waited too long. Overall, their performance has been pretty good, although waiting was a real error.”

Laurence Kotlikoff: “I think the Fed has been pretty good, basically, in not overreacting to inflation. Seventy percent of the inflation is due to bottlenecks and shortages, not due to some entities getting their prices out of line. But the wage decline is not a good thing. It’s necessary for someone to initiate a conversation and get everyone on the same page with respect to setting prices. So they were on average at 3 percent. And then next year, it will go down to 2 percent. And after that, it will go to 1 percent. And you have to tell employers, ‘Look, you guys had to cut the wages of the workers. Now you need to bring them back up.’ I’m not talking about price controls here; rather, it’s about engaging with businesses and elucidating that refraining from salary increases and postponing price hikes would prove detrimental for their competitive standing. If the government conveys this message effectively, businesses would voluntarily embrace such measures. That’s the kind of common, intelligent conversation that would set Biden apart from Trump or any competitor. That would be like saying, ‘I actually understand something about the economy,’ and it would open up a discussion. But I don’t see him discussing economics even at a college level.”