US President Biden is breaking with decades-old foundations of US economic policy: a paradigm shift.

US President Biden is breaking with decades-old foundations of US economic policy: a paradigm shift.

According to a report from www.capital.de, US President Joe Biden has initiated a paradigm shift in US economic policy with his trillion-dollar economic stimulus and investment programs. Economist Max Krahé notes that Biden is breaking with the decades-old foundations of US economic policy. This is demonstrated by three features of “Bidenomics”: First, the reckoning with neoliberalism and the declaration that these policies have failed. Secondly, the claim to shape things politically and to push back the market as the main actor. Third, reversing the relationship between financial and economic policy by formulating political goals and then adapting financial planning to them.

The impact of Bidenomics can be seen in four pieces of legislation: the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, the CHIPS Act, and the Inflation Reduction Act. These laws provide several trillion US dollars to achieve social, climate, security and distribution policy goals. There is no cap on some subsidies in the Inflation Reduction Act. The total costs cannot yet be predicted.

The implementation of “Bidenomics” entails risks such as over-subsidization and increasing debt burdens. However, the Biden administration weighs the risk of technology imports, climate change and social impoverishment from deindustrialization higher than the budget risk.

According to financial expert Krahé, the change in direction in US economic policy is not just temporary, as the Republicans are unlikely to reverse the new laws if they return to power. In addition, the Inflation Reduction Act is also advantageous for structurally weak regions with Republican voting behavior, which means that the law should remain in effect even if there is a change of power.

To evaluate the success of “Bidenomics,” Krahé suggests looking at investment trends and income distribution. It will take several years to assess whether the laws are working and whether investments in renewable energy lead to a reduction in emissions.

Overall, the paradigm shift in US economic policy under President Biden represents a new course that calls into question the previous foundations of US economic policy and can have far-reaching effects on the market and the financial sector.

Source: https://www.capital.de/wirtschaft-politik/bidenomics-ein-paradigmenwechsel-in-der-us-wirtschaftspolitik-analyse