Saturday, June 22, 2024 | 06:33 WIB

Bidenomics – What is this?

Jakarta, IO – A new term is lately becoming popular in the US: “Biden-omics”, but what is it all about? How does it look? Now, while we try to keep watch on the news, we can only make a guestimate. 

Maybe the relatively easy-to-say way is by describing what this is not likely to mean. We recall that in the early 80s we heard the term “Reaganomics” not long after former Hollywood B-class actor, and two-term California Governor, Ronald Reagan became the 40th US President. Combined with Thatcherism, Reaganomics basically meant trusting in the mantra of the working of the market, as classical economists proposed. And this was practiced in combination with tax cuts, to stimulate production, and became known as “supply-side economics,” an economic policy posited on the conviction that the best government is the one with the least intervention. 

As I said, the easy way to describe Biden-omics is to say it is not like Reaganomics. If Reagan preached less Government intervention and fewer subsidies, Biden is for subsidies and smart intervention. Maybe in economic jargon Biden-omics is closer to Keynesian theory, as Reaganomics is to classical. 

Further Assessment 

When we follow the economic policy of the Biden Administration, we observe how he proposed to raise the debt limit, to increase spending on infrastructure and to deal with climate change implications, raising the minimum wage and similar policies. And very recently President Biden proposed to provide student loan forgiveness, up to USD 20,000, etc. As a university professor for so many years, I personally feel very sad about the US Supreme Court decision to strike down the Biden plan for student loan forgiveness.

With the argument that it is not the authority of the executive branch to provide student loan forgiveness, the Supreme Court struck down the plan by a 6 to 3 vote. Even more shamefully, the three siding with President Biden were all female Justices: Kegan, Sotomayor and Ketanji Jackson. The other justices included those not willing to report their receiving gratuities such as luxurious foreign travels for free and even schooling fees for family members and a free rent house for a mother. This is just too much, to say the least. I guess when one gets the privilege of a lifetime appointment, after some time one could lose his or her common sense and might act like an authoritarian ruler. Nothing personal. 

In this attempt to make a comparison I do not mean at all to claim which one is better or worse, so I do not mean to make an evaluation. After all, President Reagan had his own brand, as “The Great Communicator”, exuding optimism at that time when it was badly needed in the US, after the bad epoch suffering from the heavy-handed policy of Fed under Chairman Paul Volcker of raising interest rates several times to calm inflation. It was successful, yet at the cost of rising unemployment. So, the great communicator who voiced optimism about the future lives was much needed, and President Reagan was the answer, with his supply-side economics and tax cuts, and the support of the Iron Lady, UK Prime Minister Margarethe Thatcher. His program was timely for the US then. 

But now, President Biden’s program with infrastructure expenditures and different provisions in an Inflation Reduction Act, and of course the student loan restructuring are also what the US needs badly. He also keeps threatening to tax high-income brackets properly, for those that received benefits from President Trump’s tax cut. For sure the President Biden Administration could take credit for the low level of unemployment rate and low inflation, even though it is still higher than the 2 per cent target of inflation targeted.

President Biden is certainly no great communicator of the President Reagan type, but the quality of his messages is satisfactory. In this modern day, Presidential Candidate DeSantis wants to imitate Reagan in communication, but he fails in this respect: he is unfortunately not known as skilled in public communication. 

Read: Do SOEs fulfil their responsibilities according to Article 33 of the Constitution? (Part 1)

In our Presidential election, we may also observe how the three candidates communicate publicly, comparing their interviews with television anchors. The most recent one has been Presidential Candidate Prabowo Subianto, facing famous television host Najwa. Most people seem to like candidate Prabowo Subianto, appreciating his clear answers and explanations during all the time responding to the usual sharp and pointed questions of Ms. Najwa.

Candidate Prabowo Subianto has always been candid, and full of fresh jokes and smiles that receive warm applause from audiences. We do not know yet how this program will affect his rating in the polls. But more likely the program will elevate candidate Prabowo Subianto into a higher position viz a viz the other two candidates, as it has tended to do so far.