Stephen Collins: In Biden’s US, it’s no longer ‘the economy, stupid’

In the wake of Fine Gael’s disappointing election result in 2016 the then US vice-president, Joe Biden, commiserated with Enda Kenny, saying that if an American politician had performed as well as the Taoiseach in turning his country’s economy around he would have won 80 per cent of the vote.

Well, from the perspective of 2023 it looks as if Biden got it completely wrong, and American voters are every bit as “ungrateful” as their Irish counterparts when it comes to giving those in power credit for economic achievements.

Like Kenny, Biden has performed far better than most domestic pundits, friend and foe, predicted when he took office. The US economy is in rude good health, with unemployment at a record low, inflation tamed and the wages of ordinary workers rising for the first time in decades.

Yet for all that Biden is facing an uphill battle to win a second term, if the polls are any guide. It seems that the oft-quoted claim “it’s the economy stupid,” made by Bill Clinton’s adviser James Carville, is no longer true, if it ever was.

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[ Bidenomics: the economic model on which the US president will seek re-election ]

[ Biden touts 'Bidenomics' as he defends economic record ]

In a recent article in the business magazine, Fortune, two leading academics Jeffrey Sonnenfeld and Steve Tian pointed out that the US economy is now doing what many experts had deemed to be impossible: generating strong growth and record employment amid plummeting inflation.

“And just as importantly, thanks to Bidenomics, the fruits of economic prosperity are inclusive and broad-based, amid a renaissance in American manufacturing, investment, and productivity.”

They pointed to some of the US headline economic statistics released early this month. At 3 per cent, inflation is now at its lowest since the pandemic, down from its peak of nearly 10 per cent last year, while unemployment is at a 50-year low.

“The last time this nation saw such good employment news, LBJ was the president and Bonanza was the top show on TV. In almost every large sector, real wages are now growing faster than pre-pandemic with record workforce participation, amid millions of new and returning workers – partially thanks to the workforce training, education, and childcare policies that are core pillars of Bidenomics,” say academics.

It is hard to argue with the fact that Bidenomics is proving to be the most transformative public investment programme since the New Deal devised by Roosevelt in the 1930

They say the strength of the US economic recovery is also reflected in the performance of the private sector, with many large companies beating their expectations by a healthy margin, and many chief executives raising financial guidance for the rest of the year due to the stronger-than-expected economy.

Trump’s election in 2016 was widely attributed to the fact that he spoke to concerns of middle America, where people felt excluded from the benefits of globalisation. These were portrayed as mainly benefiting the rich elite. Yet once in office Trump cut taxes for the rich and did little for working-class Americans who live in the so-called “rust belt” towns and cities of the country’s heartland.

By contrast, the ambitious and interventionist economic policies being pursued by the Biden presidency have actually benefited ordinary Americans. The oddly named Inflation Reduction Act is actually a large public investment programme with an emphasis on fighting climate change by providing a range of incentives for sustainable energy.

Another prong of the strategy is a systematic effort to restrict the export of key technologies to China to promote the creation of industrial jobs in the US and ensure that the country does not become over dependent on supply chains from its rival global superpower.

It is hard to argue with the fact that Bidenomics is proving to be the most transformative public investment programme since the New Deal devised by Roosevelt in the 1930s. However, there is little indication that the transformation of the US economy is having much of an impact on the political arena.

Biden is struggling with historically low approval rating for a US president while Trump, despite his indictment on an array of prosecution charges, appears to be in an impregnable position to win the Republican nomination and is in with a real chance of regaining the presidency.

This raises fundamental questions about why there is such discontent with a president who by any metric is so much more competent and personally admirable than his likely opponent.

A similar tendency is evident in this country. “Keep the recovery going”, was the Fine Gael message that bombed in 2016 in spite of the clear evidence that economic recovery was well under way. The recovery has since turned into an unprecedented Irish economic boom but it seems that a majority of voters are even more unimpressed with the governing party now than they were in 2016.

By most yardsticks the Irish electorate has never had it so good, as the surge in population testifies, but try telling that to the voters, many of whom have been convinced that they are living in a failed state.

Harold Macmillan famously won a British general election on the slogan “you have never had it so good” but it appears that in today’s politics on both sides of the Atlantic people want to believe they have never had it so bad.