Spend, and then spend more

A messianic view of politics defines our age and creates a tendency to associate anything good that happens in the economy with a president we like and anything bad in the economy with a president we do not like. The language has become universal—“President [so and so] created 200,000 jobs this month”—and it is accepted as if it is a remotely cogent sentiment.

My job as an economist, one who has strong political beliefs and values, is to analyze economic policy and conditions and, where appropriate, connect such things with the policy environment that may be relevant. However, it is also to identify areas in the economy—good or bad—that may not be primarily catalyzed by political activity. As my economic worldview largely revolves around the human person, the nature of man as a rational but sinful being, and the image-bearing nature of mankind that uniquely possesses the ability to create and produce, I tend to believe that the political environment is vastly overrated in understanding economic activity. Public policy affects incentives, and incentives drive human behavior, and yet this tendency to believe that all of us get out of bed every day and work or don’t work or take risks or don’t take risks solely based on what a President Joe Biden or a President Donald Trump has said or done strikes me as, well, idolatrous.

I offer this brief assessment of the Biden presidency’s performance in matters of the economy with a decidedly non-messianic view. I do not believe any president is “in charge of” the economy, and I do not believe he should be. Even as one deeply fond of the Reaganite political legacy as I am, I recognize that President Ronald Reagan receives a bit more credit than he deserves at times, and President Jimmy Carter gets a bit more blame than he deserves. Nevertheless, policy does matter, legislation does matter, executive orders do matter, and a president’s choice of personnel does matter. With these limiting guidelines in mind, I offer the following assessment of the recently concluded Biden presidency.

First and foremost, the real economic growth we have enjoyed from 2021 to 2024 is largely related to the post-COVID reopening and recovery that was inevitable. President Biden deserves neither blame nor credit for the fact that economic activity collapsed in the government-mandated shutdowns of 2020, and that from that low baseline, human beings, lo and behold, began doing normal things after the pandemic. History will record a better-than-recent-trend level of real gross domestic product growth from 2021 to 2024, with the 5.8% rate of 2021 almost entirely explained by the recovery from 2020’s trough. The real growth of 1.9% in 2022 was closer to the post-financial crisis level we have seen, and 2.5% in 2023 and what appears to be 2.7% for 2024 are above postcrisis trends but still well below the post–World War II average our country was long used to.

Politically, what has been most damaging to President Biden (and Vice President Kamala Harris’ failed campaign) is the inflation of 2022 and 2023. I have been objective in pointing out that not all that inflation can be blamed on Biden’s policies, and yet, even in the aftermath of COVID-era supply chain challenges that drove shortages and price spikes, Biden’s decision in 2021 to extend unemployment benefits fueled labor shortages (which drove prices higher). The decision to increase transfer payments in the spring of 2021 added a sugar high of spending that exacerbated price increases at a time when demand was surging in the reopening and supply was limited after a lengthy time of diminished production. Biden will not live that down in the historical record.

The CHIPS Act and the infrastructure bill (disingenuously named the Inflation Reduction Act) are already largely seen as boondoggles and DEI-laced green energy bait-and-switch bills that failed to deliver on promises to the American people. Some elements of the bills will likely prove productive, as is the case with most bad legislation, but the net effects have been limited, poorly understood, and lost in the cloud of special interests that drove both measures.

No part of President Biden’s legacy will be more problematic to the long-term economic well-being of the country than skyrocketing deficit spending. This has been a major issue through the last four presidents, two of whom were Republican, so I offer this critique with bipartisan objectivity. Yet the last four years saw complacency around the skyrocketing debt-to-GDP ratio now defining our country, and this came despite the failure of the Biden administration to spend even more (i.e., the Build Back Better bill).

From deficit spending to student loan forgiveness to corporate welfare, the economic legacy of the Biden administration will point to huge problems and is an underappreciated factor in why the country elected Donald Trump to a second term.