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Joe Biden has been outspoken about his plans to create a more equitable economy since the start of his presidential campaign, but with the mounting national debt and inflation rates much higher than expected, it’s safe to say that he isn’t doing enough.
The majority of Americans are struggling to make ends meet while Wall Street banks reap all the rewards from Biden’s new economic agenda.
In this article, we will explore how Biden’s proposed economic policies, called Bidenomics, have failed most Americans on multiple levels and investigate what can be done to rectify these mistakes before more damage is done.
What is Bidenomics?
At its core, Bidenomics is an economic vision centered around three key pillars: Making smart public investments in America, empowering and educating workers, and advancing racial equity. Bidenomics is based on the idea that the economy should work for everyone, not just those at the top.
Bidenomics is a bottom-up economic growth approach focusing on the middle class and working families.
The philosophy behind Bidenomics is that by investing in the middle class, you can create a stronger and more resilient economy that benefits everyone.
Middle Out vs Trickle Down
One of the key ideas behind Bidenomics is “middle-out” economics.
This approach starkly contrasts the “trickle-down” economics of the past, which focused on tax cuts for the wealthy in the hopes that the benefits would eventually trickle down to everyone else.
Another important aspect of Bidenomics is the focus on aggregate demand.
The Biden administration believes that by investing in infrastructure, education, and healthcare, you can create more demand for goods and services, creating more jobs and stimulating economic growth.
Now that you have a basic understanding, let’s dive into the disconnect between the plan and what is happening around the country.
The Poorest Americans Are Spending Like it’s a Recession
A new report out today highlighted how Dollar General Stores, who cater to low income people, is noticing these people have changed their spending habits.
What’s worse is that Dollar General also noted that it’s middle class consumers are also changing their spending habits too, due to the uncertainty in the economy.
Out of Control National Debt
President Biden likes to tout he has reduced the deficit, but it is days away from reaching a record high $33 trillion.
What impact does this have on the average American?
As the government continues to print money, it makes inflation go up.
This is why the last two inflation reports show an upticks in the CPI.
When inflation is high, it impacts every part of a person’s financial life.
Wages Not Keeping Up with Inflation
One major issue with the economic plan is that the wages people earn are not keeping up with the pace of inflation.
So while people were more than happy to receive pay raises from their current employer or when changing jobs, the increase did not cover the rise in prices of the things they were buying.
In the end, they are still stuck trying to make ends meet. What’s worse is that while overall inflation looks to be cooling, the things you buy every day is still experiencing rising prices or prices that remain stubbornly high.
Higher Interest Rates Hurting Housing
Another issue is that to combat high inflation, the Federal Reserve is rapidly raising interest rates.
Higher interest rates mean borrowing money for a home is more costly, putting home ownership out of reach of many Americans.
Tied into this issue is the skyrocketing price of housing.
This is due to several factors, including private investment firms purchasing single-family homes and putting them on the market as rentals.
But the bigger issue is that home builders have cut back on adding new inventory to the market because of economic uncertainty, mainly fears of a recession.
Plus, many Americans don’t want to sell when they have a mortgage rate of 4% or less, only to take out a new loan at 7%.
Because of a lack of houses for sale, prices rise, making owning unattainable to most.
Higher Rates Hurt Small Businesses Too
Higher interest rates don’t only hurt the housing market, they hurt small businesses too.
These businesses are the backbone of the economy.
When it costs them a lot more to borrow, they innovate and hire less.
Slowing Job Market
As a side effect of higher interest rates, job growth slows down.
This can be a good thing, as it can help to lower inflation.
But in the current economic climate, this will not happen (we’ll talk about why shortly).
With fewer jobs, those out of work remain unemployed or take a lower-paying job.
Student Loan Payments
President Biden promised student debt relief.
Instead of going through Congress and trying to get something worked out that would be legal, he decided to go another route, which ended up being unconstitutional.
Now those struggling financially will get hit with the resumption of monthly payments.
This will hurt the economy as there will be less money spent on goods and services, which can help grow the economy.
Higher Gas Prices
Have you noticed gas prices have quietly crept back up again?
The only thing that saved the administration from disaster was releasing the Strategic Reserve to bring prices down temporarily.
But this can’t be done indefinitely.
So not only are people dealing with higher prices on everyday items, but now they have to deal with increased costs at the pump too.
Sadly, prices will most likely not lower significantly because of the decision to limit gas production domestically.
Skyrocketing Insurance Premiums
Another reason why many Americans are not buying Bidenomics is rising insurance premiums.
Both home and auto premiums are skyrocketing due to the higher costs of cars and houses.
It doesn’t take a math major to understand that if lumber triples in price, an insurance company will have to raise rates to cover themselves if they have a claim on rebuilding a house.
Not Reversing Trump Tax Cuts
Remember when the 2017 tax cuts went into effect and everyone on the left claimed they only benefited the wealthy?
Yet in President Biden plans to extend the tax cuts after all.
Touting The Future Benefits
The main message from President Biden is that his economic policies are working and that to feel the full impact, all we need is time.
The problem is they aren’t working, and many fear that, in time, things will get worse, not better.
This is because the government continues to spend without thought.
Inflation will not come down as long as the government keeps pumping money into the system.
It doesn’t matter how high interest rates go or how slow the job market becomes.
When you continue to add gas to a fire, that fire keeps burning.
Don’t Forget About Clean Energy
Electric bills will rise with the Green New Deal, which would cost trillions of dollars (government spending) and significantly impact households.
Eventually, you will have to buy an electric car and might even need to consume less beef.
Americans Not Buying What The President Is Selling
As I mentioned, only 34% approve of how the President is handling the economy, and 85% say that the economy is in poor shape.
The economic plan is not working, and many wonder if it will turn out for the better in the future.
While things need to change so everyone can enjoy a better future, this option is not the solution.
People Are Giving Up on The Future
With all the craziness in the world, it’s no wonder people are losing hope.
Here are the biggest reasons why people are worried about the future, not hopeful.
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If you thought the global pandemic in 2020 was bad, buckle up.
A majority of business leaders and cyber leaders believe a catastrophic cyber event is likely in the next two years.
What does this mean for you, and should you believe it?
Here are the answers to your questions.
Dark Clouds Looming
There is a lot of negativity in the world right now.
Here are the main reasons people say why they are losing hope for the future.
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Here are the best ways you can get free money without having to work for it.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.