ALLENTOWN, Pa. — When President Joe Biden touches down in the Queen City this Friday, he's expected to pitch the American public on his signature economic policies.
By traditional standards, Biden has achieved every politician's economic dream, said Ahmed Rahman, an associate professor of economics at Lehigh University. Wages are up. Unemployment is low. Gas prices are falling, and the stock market is performing well.
But while inflation has dropped, prices remain stubbornly high. Even though most individuals recognize they're doing well, they remain skeptical of Bidenomics when prices remain stubbornly high.
"That's not something you can just brush off with statistics or some highfalutin theory," Rahman said.
Bidenomics is more than a catchy marketing ploy, he said. The president's economic approach is a break from the trickle-down policies most presidents have favored since former President Ronald Reagan.
Reaganomics looked to bolster the economy by keeping the government out of it — limiting regulations and direct spending. At the same time, the government provided tax cuts for the wealthy under the belief it would lead to spending that would leach into the rest of the economy, lifting lower spending brackets, Rahman said.
By contrast, Biden has used trillions of taxpayer dollars to put the government's thumb on the scale as a way of steering policy. And instead of cutting taxes for the rich, Biden boosted spending by cutting taxes on the middle class. The move kept the economy humming even at the peak of the pandemic, Rahman said.
"The Biden administration is embracing this idea that central authority can really play an important role in a way that has been missing from past administrations," Rahman said.
"The amount of heavy lifting this administration has done, it far surpasses maybe even FDR."Ahmed Rahman, associate professor of economics at Lehigh University
Bidenomics has specifically focused on industrial policy, he said, with massive investments in public infrastructure and manufacturing. The CHIPS and Science Act, for example, set aside $280 billion to attract semiconductor manufacturers back to American soil. The administration has also invested heavily to move away from fossil fuels in favor of alternative energy. Much of that spending still hasn't taken place, so the jury remains out on how effective those efforts will be, Rahman said.
"The amount of heavy lifting this administration has done, it far surpasses maybe even FDR," Rahman said, referencing the New Deal policies that defined the 1930s.
Rahman expressed some skepticism about the approach. Even though supporting American manufacturing may play well with voters, especially in a manufacturing hub like the Lehigh Valley, it may not create the effect the average American would expect, Rahman said. While past generations may have expected to work one job at a plant alongside their fathers and sons, huge segments of the population work more white-collar jobs.
"A lot of the focus of Bidenomics is that he's focused on an industry that is kind of shrinking," Rahman said of the manufacturing sector.
But the bigger problem for the president is how Bidenomics has become entangled with inflation, Rahman said. Higher inflation may have been unavoidable due to the supply chain problems of the pandemic, Rahman said. And while every president is credited or blamed with the economy during their tenure, it's often the result of factors beyond their control, he said.
But the surge in government spending at a time when workers and goods were in short supply added fuel to the fire. While the Federal Reserve has managed to raise interest rates to curb inflation, consumers are still experiencing sticker shock.
"I know inflation has gone down a lot, but when I go to the grocery store, I see prices that are 10 percent, 15 percent higher than what I was paying just a few years ago," Rahman said. "That seems to be mixed up in Bidenomics in ways that have not been helpful in selling his political agenda."
