President Joe Biden has said he ran for office “to restore the soul of the nation, rebuild the middle class, and unite the country.” With 2024 looming, it’s time to take stock of other promises he has made while campaigning and in office. This Washington Examiner series, Oath of Office, will investigate whether Biden has kept up his end of the bargain. Part Two will examine his pledge to restore the economy from the pandemic recession.
When President Joe Biden entered office, the unemployment rate was still much higher than before the pandemic, and uncertainty reigned. Here is how the economy has fared as 2024 approaches.
During the 2020 elections, Biden promised to restore the economy from its pandemic disruption-induced slump and create millions of jobs. While major parts of the economy have bounced back and the labor market is strong, fulfilling the promise in part, people are now grappling with the worst bout of inflation in generations, undercutting some of the gains the economy has made.
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Right now, Biden is getting very low marks on the economy. The White House has tried to focus on all of the positive aspects of the economy, branding them “Bidenomics,” but factors like inflation have overshadowed those, resulting in wide discontent.
Inflation
The economic elephant in the room is inflation. It has torn through nearly every aspect of the economy and caused hardship for workers and families struggling to make ends meet. When Biden was on the campaign trail, inflation was not much of a thought at all, so this is one element of the economy that voters have been able to link, correctly or incorrectly, specifically to his tenure in office.
Inflation, as gauged by the consumer price index, clocked in at 3.1% in November. That is higher than the Federal Reserve’s 2% long-run goal, although a much more manageable rate than when price growth was topping out at about 9% in June of last year.
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How much is Biden to blame? It’s hard to say. Republicans have pointed to the rash of pandemic-era relief that Biden and Democrats pushed through in early 2021, known as the American Rescue Plan, as being inflationary, although there were also tranches of coronavirus stimulus under former President Donald Trump that would have added to the glut of excess cash and demand among consumers.
Also to blame is the Fed. During the pandemic, the central bank kept interest rates at near zero for a historic length of time. Those cuts spurred demand and caused an explosion of economic output that pushed inflation higher. The Biden administration has said that it respects the Fed’s authority to set interest rates, so Biden isn’t to blame there, although he notably reappointed Fed Chairman Jerome Powell, who led the Fed during the pandemic when rates were slashed.
Wages have also not kept pace because of inflation, according to Brian Riedl, a budget expert at the right-leaning Manhattan Institute.
“Worker pay is still down under President Biden as measured by median real compensation,” Riedl told the Washington Examiner. “Pay has not kept up to inflation.”
Jobs
In December 2020, shortly after winning his election, Biden vowed to add millions of jobs back to the economy and bring the labor market back to health from the pandemic.
“We’ll create millions of good-paying American jobs and get the job market back on the path to full employment,” Biden said. “This will raise income, reduce drug prices, advance racial equity across the economy, and restore the backbone of this country, the middle class.”
And on its face, Biden has followed through on that promise. Millions of jobs have been added since he was sworn into office. From January 2021 through this past month, the economy added over 14 million jobs on a seasonally adjusted basis.
Biden has also claimed record job growth, comparing the jobs added to his predecessors. And the sheer degree of job growth has surpassed Trump and former Presidents Barack Obama, George W. Bush, and Bill Clinton.
But the important context is that when Biden entered office, the economy was still millions of jobs short of where it was before the pandemic and the mass shutdowns of businesses. Most of those jobs that Biden has touted adding to the economy were merely positions lost and then regained during reopening, so it would be more accurate to frame a big chunk of Biden’s headline 14 million employment figure as job recovery rather than job growth.
The unemployment rate has also recovered to pre-pandemic levels. Unemployment was running at 3.5% on the eve of the pandemic. Unemployment has fluctuated between 3.4% and 3.9% over the past year or so, down from 6.3% when Biden was sworn in.
“It’s not hard to temporarily reduce the unemployment rate to really low levels if you don’t care about the long-term effects of overheating the economy, which is what happened,” Riedl said.
Taxes
On the campaign trail, Biden swore that he would not increase taxes for those earning less than $400,000 annually. Biden had attempted some major tax changes, including raising the corporate tax rate to 28% from 21%, increasing the top marginal rate for high earners, and nearly doubling the capital gains tax, but those proposals were blocked by Congress. He was, however, able to enact a corporate minimum income tax as part of the 2022 Inflation Reduction Act.
William McBride, vice president of federal tax policy at the Tax Foundation, said that while there hasn’t been a direct levy on those earning less than $400,000, the burden of different taxes on businesses can be passed through indirectly to the middle class. McBride also noted that Biden kept in place several tariffs implemented under Trump and said the economic effects of those are passed along to the consumers as well.
“Thinking about who ultimately pays the burden of those tariffs, that’s by most accounts, that largely falls on U.S. consumers. That’s independent of income, of course,” he told the Washington Examiner.
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Recession?
So far, the United States has avoided a recession as the Fed keeps interest rates at their highest level since 2006. Biden and figures in his administration, such as Treasury Secretary Janet Yellen, have expressed confidence that they’ll achieve a “soft landing” — that is, inflation will return to a heavy level while a recession is avoided.
Still, some forecasters are still predicting at least a mild recession next year, a scenario that doesn’t bode well for Biden during an election year, particularly when his economic approval ratings are already so low.
