Bidenomics made real

As historian Heather Cox Richardson has noted:

In 2004 a senior advisor to President George W. Bush famously told journalist Ron Suskind that people like Suskind lived in “the reality-based community.” They believed people could find solutions to problems through careful study of discernible reality. But, the aide continued, Suskind’s worldview was obsolete. “That’s not the way the world really works anymore,” the aide said. “We are an empire now, and when we act, we create our own reality. And while you’re studying that reality— judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.” 

We appear to be in a moment when the reality-based community is challenging the ability of the MAGA Republicans to create their own reality. 

Central to the worldview of MAGA Republicans is that Democrats are socialists who have destroyed the American economy. Trump calls Harris a “radical-left. Marxist, communist, fascist” and insists the economy is failing. 

In Pittsburgh, Pennsylvania, today, Harris laid out her three-pillar plan for an “opportunity economy.” She explained that she would lower costs by cutting taxes for the middle class, cutting the red tape that stops housing construction, take on corporate landlords who are hiking rental prices, work with builders and developers to construct 3 million new homes and rentals, and help first-time homebuyers with $25,000 down payment assistance. She also promised to enact a federal ban on corporate price gouging on groceries and to cap prescription drug prices by negotiating with pharmaceutical companies. 

Harris said she plans to invest in innovation by raising the deduction for startup businesses from its current $5,000 to $50,000 and providing low- or no-interest loans to small businesses that want to expand. Her goal is to open the way for 25 million new small businesses in her first four years, noting that small businesses create nearly 50% of private sector jobs in the U.S. 

Harris plans to create manufacturing jobs of the future by investing in biomanufacturing and aerospace, remaining “dominant in AI, quantum computing, blockchain, and other emerging technologies, and expand[ing] our lead in clean energy innovation and manufacturing.” She vowed to see that the next generation of breakthroughs—“from advanced batteries to geothermal to advanced nuclear—are not just invented, but built here in America by American workers.” Investing in these industries means strengthening factory towns, retooling existing factories, hiring locally, and working with unions. She vowed to make jobs available for skilled workers without college degrees and to cut red tape to reform permitting for innovation.

“I am a capitalist,” she said. “I believe in free and fair markets. I believe in consistent and transparent rules of the road to create a stable business environment. And I know the power of American innovation.” She said she would be pragmatic in her approach to the economy, seeking practical solutions to problems and taking good ideas from wherever they come. 

“Kamala Harris, Reagan Democrat!” conservative pundit Bill Kristol posted on social media after her speech. 

For his part, Trump has promised an across-the-board tariff of 10% to 20% that billionaire Mark Cuban on the Fox News Channel called “insane” and Quin Hillyer of the Washington Examiner warned “would almost certainly cause immense price hikes domestically, goad other countries into retaliating, and perhaps set off an international trade war” that could “wreck the economy.” Cuban then told Jake Tapper of CNN that Trump’s promise to impose 10% price controls on credit card interest rates and price caps is “Socialism 101.” 

Yesterday, more than 400 economists and high-ranking U.S. policymakers endorsed Harris, and today, the members of former South Carolina governor Nikki Haley’s presidential leadership teams in Michigan, Iowa, and Vermont announced they would be supporting Harris, in part because of Trump’s economic policies.

While Trump insisted yet again today that “the economy is doing really, really badly,” the stock market closed at a record high today for the fourth day in a row. 

The main advantage Donald Trump has over Kamala Harris is the perception many voters have that the economy isn’t doing well and that they were better off under Trump. It’s amazing the tricks memory can play.

Four years ago under Trump the USA was in the grips of a pandemic which was handled so badly that up to 500,000 people died unnecessarily and much of the economy had to be shut down. The federal deficit ballooned, and the independent Budget office predicted that the economy wouldn’t begin to recover until 2025. Supply-chains disrupted by the pandemic were slow to recover and short term shortages led to inflation shooting up to an eventual peak of 9% in June 2022 – as it did throughout the world…

The classic neo-liberal response to such a crisis would have been to implement austerity for the poor and tax breaks for the rich. This would have exacerbated economic decline, dramatically increased unemployment, and squeeze wages all in the hope that some of that wealth would “tickle down” and eventually bootstrap the rest of the economy.

Nobel Prize winning economist Paul Krugman calls trickle down economics one of the voodoo ideas of his profession, one killed so often by real world experience but always rearing its ugly head again. He doesn’t say so, but perhaps it is because so many faculties and think tanks are funded by the mega rich who benefit from it.

Instead, Biden was elected and implemented several major spending plans to boost infrastructure regeneration and the green economy. He targeted incentives at small business start-ups to keep the economy from falling into a major recession. As a direct result, the economy has grown every quarter since the pandemic and is currently growing at a healthy 3% p.a., with full employment, and wages growing by between 4 and 15% p.a. over the past 4 years.

Inequality in the USA, as measured by the internationally recognised GINI index had been trending sharply upwards since 1990 but has actually dropped sharply since Biden came to power. So it cannot be claimed that the recover has failed to favour the less well off.

By now inflation is back down to 2.5%, below the long-term average rate 3.3%, and showing every sign of trending lower, so much so the Fed has just reduced its Interest rate by a larger than expected 0.5%. This will have the effect of reducing mortgage and borrowing costs and boosting investment and consumer spending and the economy generally still further.

“It’s the economy Stupid” Bill Clinton famously said, but what does it matter if the economy is doing well when many still believe it isn’t? Ironically much of this “green investment” ended up in red states which have doubled down on their support for Trump.

The irony of the US Federal system is that almost all the poorer states that benefit most from Federal transfers and investment plans vote Republican and against such investment, sometimes even refusing Federal emergency aid for storms such as Helene until it is too late.

So the question is: Will Trump succeed in persuading a plurality of the electorate that his hellscape vision of a US economy in free fall is actually correct? All the polls appear to suggest that the election is still too close to call…

Although Harris’ lead has remained constant at around 2.5 to 3%, her margins in the battleground states are now down to the bare minimum.

If these rather narrow margins hold through to the election, the electoral map will look like this:

But it doesn’t take a genius to work out that if Harris loses Pennsylvania’s 19 electoral college votes, (where she is just 0.7% ahead) she loses the election. That said, she could still win by winning North Carolina’s 16 votes (where she is just 0.6% behind). North Carolina would be a prime candidate for an upset because also on the ticket for election to Governor is the Republican lieutenant governor of North Carolina, Mark Robinson, who has expressed pro-Nazi, homophobic, and pro-slave owning views.

The closest possible result will be a 270-268 win in the electoral college for Harris if she wins Pennsylvania but loses both Nevada and North Carolina, but Nevada has been trending slowly in her direction, perhaps helped by her Spanish language skills.

Opinion polls have called the vice Presidential debate between Vance and Walz  a tie, and it seems unlikely to have swayed many undecided voters one way or the other. We will see soon enough if there is any movement in the polls, but the consensus across the political spectrum appears to be that the debate is unlikely to move the dial.

So barring an October surprise, the election remains on a knife edge, and it all depends on which side can mobilise their vote more effectively. My money is still on Harris, whose popularity continues to rise, but there is almost zero margin for error in that prognostication.

Frank Schnittger is the author of Sovereignty 2040, a future history of how Irish re-unification might work out. He has worked in business in Dublin and London and, on a voluntary basis, for charities in community development, education, restorative justice and addiction services.