Assessing the Biden Presidency

If public opinion polls are the guide, Joe Biden has been the worst president since Richard Nixon.

Yet New York Times economics writer Peter Coy gives Biden high marks. “Biden’s handling of the economy was good, if not great,” he writes. After all, we have record low unemployment, moderating inflation, and economic growth. What’s not to like?

Here is the problem. Most of the time, presidents have only a marginal impact on the economy. Consequently, they should be judged not on what happened on their watch, but what they did or didn’t do relative to what happened.

Energy. During the presidential campaign, both Joe Biden and Kamala Harris boasted that U.S. oil production was at an all-time high. Yet one of Biden’s first acts as president was the cancellation of the Keystone pipeline, which would have brought oil from Canada to the U.S. He went on to pause new oil and gas leases on federal lands. In the waning days of his administration, he banned offshore drilling on large swaths of U.S. waters.

So yes, U.S. oil production is at an all-time high. But that is not because of Biden. It’s in spite of Biden.

Taxes. The best thing you can say about Biden’s tax policy ideas is that almost none of them were enacted. When Donald Trump became president, the U.S. had one of the highest corporate tax rates in the world. Trump tax reform cut the top rate from 35 percent to 21 percent—resulting in more investment, more output and a larger economy. Biden proposed to cut that tax break in half. Kamala Harris at one point favored eliminating it altogether.

Biden also proposed additional taxes on investment income—including unrealized capital gains. I know of no economic model that predicts the economy will get bigger when you impose taxes on capital.

The Biden plan also proposed a 12.4 percent Social Security tax on all wages above $400,000, and he repeatedly said families who earn less than that amount would be completely unaffected. However, the income threshold isn’t indexed for inflation. So eventually, all families would be paying the tax, even if they had no increase in real income.

Take a 20-year-old couple earning $100,000. With a 2 percent inflation rate and 2 percent productivity growth, that couple would be paying the Biden payroll tax sometime in their 50’s.

Worse than the ideas themselves was Biden’s rhetoric. He repeatedly claimed that the wealthy do not pay their fair share. Yet the U.S. tax system is the most progressive in the world—with the top 1 percent paying 40 percent of all income taxes and the top 10 percent paying almost three fourths.

Biden has repeatedly claimed that Republicans—going all the way back to Ronald Reagan—have only cut taxes for the rich. Yet the reason why we have the world’s most progressive tax system—with the bottom half of the income ladder paying almost no income taxes at all—is because of Republican tax legislation.

Regulation. Another impediment to a strong, vibrant economy is excessive government regulation. The Biden administration weakened the cost-benefit standard that was previously in place—making costly regulations easier to impose.

Without even cou nting Operation Warp Speed (which produced the Covid vaccine), University of Chicago economist Casey Mulligan finds that the Trump administration reduced regulatory costs by almost $11,000 per household in present value. By contrast, the Biden-era regulations created a burden of almost $10,000 per household.

Here again, the economy did well during the Biden years. But not because of Biden’s policies toward business enterprise. It was in spite ofthem.

Unions. Joe Biden boasts that he has been the most pro-union president in U.S. history. There is some truth to that. The Infrastructure Investment and Jobs Act, the Inflation Reduction Act (IRA), and other Biden-era federal policies often require the use of union labor, or require paying a prevailing (union) wage, or include financial incentives to hire union labor on federal projects.

But how does that help the economy as a whole? It doesn’t.

A union is an attempt to monopolize the supply of labor in some sector of the economy. If successful, the union members will enjoy a monopoly wage. Yet those gains appear to be at the expense of wage income for other workers, not at the expense of capital.

When measured correctly, labor’s share of national income has been roughly constant at about 70 percent—for the last century.

Over that period, union membership varies—rising to a third of the workforce in the 1950s and then falling to only 6 percent of private sector workers today. These radical changes in union membership appear to have had no impact at all on labor’s aggregate income.

Inflation. Economists do not agree on why we had excessive inflation during the Biden presidency. I side with monetary economist Scott Sumner, who says that what we have experienced is almost totally a demand side phenomenon.

The government deposited money right into people’s bank accounts. It funded those deposits by borrowing in the credit market, and the Federal Reserve bought most of that debt with newly created money. When people spent their newly acquired funds, they drove up prices.

That said, there is one thing economists are unanimous about: The Biden/Harris explanation of inflation is hogwash. There is no such thing as an economic theory of inflation based on greed. The President and the Vice President of the United States repeatedly told the public something that all economists know isn’t true.

Health Care. On more than one occasion, Biden promised, “I will never cut Medicare.” Yet the IRA cut more than $300 billion out of the Medicare Part D program. As a result, drug insurance premiums for seniors last fall would have doubled right before the November elections had the Democrats not found a dubiously legal end run. They “borrowed” money from the Medicare trust fund and gave it to insurers who agreed not to raise premiums. That election-year gimmick didn’t solve a problem. It merely delayed the problem.

The IRA did put a $35-a-month limit on the price of insulin, and it provided for negotiated prices for 10 drugs for Medicare beneficiaries. But the very same bill delayed for a decade a Trump regulation that would have required pharmacists to pass on manufacturer discounts to patients.

The net result: 10 percent of beneficiaries will experience lower drug costs, in most cases less than $300 a year. The remaining 90 percent will potentially pay more.

Biden can rightfully claim credit for enhanced subsidies in the (Obamacare) exchanges, and that has substantially increased enrollment. But this is the wrong solution for the wrong problem.

We are over-subsidizing the healthy and under-subsidizing the sick. Half the people with individual insurance are paying no premium at all. We are literally giving the insurance away. But the out-of-pocket exposure for someone with high medical expenses is $9,200 a year and twice that for a family.

News coverage. The mainstream media routinely uses the word “lie” to describe even small exaggerations by Donald Trump. Yet I have never seenthat word applied to Joe Biden, despite false statements about how our tax system works, how his own tax plan worked, what causes inflation, and what the IRA did to seniors. Maybe there was a Pinocchio once in a while. But never a “lie.”

Just as they ignored the president’s mental health decline, they ignored his dishonest rhetoric. One can only imagine what the poll numberswould look like had the press coverage been more accurate.