Biden backs workers, but is economy working for everyone?

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As President Joe Biden highlights the benefits of his Inflation Reduction Act (IRA), he faces critics who claim his approach to the economy leaves people behind.

Last week, Biden toured the western states of Arizona, New Mexico and Utah to promote the unprecedented investments in clean energy that the IRA provided. As he makes his pitch to 2024 voters, he also admitted he should’ve used a different name for the bill.

“It has nothing to do with inflation,” Biden said at a New Mexico fundraiser, PBS Newshour reported. “It has to do with the $368 billion, the single-largest investment in climate change anywhere in the world, anywhere. No one has ever, ever spent that. And it’s beginning to take hold.”

On the surface, it does appear Biden has much to celebrate. Inflation has gone down from a 40-year high to just over 3 percent. Unemployment is low, with Black unemployment the lowest in modern history. And the IRA has inspired corporations to invest in manufacturing, which would bring more jobs.

“Let’s say you make 30 or 40k a year. Those are the folks overall that have seen the largest wage gains under President Biden over the last two years,” National Economic Council Deputy Director Bharat Ramamurti told The Black Wall Street Times. “If you look at wage inequality, it has narrowed significantly just over the last two years.”

Yet, not everyone shares the White House’s enthusiasm on the economy. A recent report showed American credit card debt had soared to a record $1 trillion as of August. Along with student loan debt, entire generations remain saddled with an economic shackle that impacts their daily lives.

Deputy Director Ramamurti believes the issue is being overblown by media.

“I think whenever theres a new numerical milestone I understand why it generates attention, but it’s important to think about the denominator. The population is growing and the economy is growing,” he said.

Political scholar calls Fed interest rates “class warfare”

Meanwhile, the Federal Reserve–the central banking system for the U.
S.–has raised interest rates nearly a dozen times over the last year in an effort to lower inflation across the economy. The idea is to lessen consumer spending and wage growth so that companies can return to offering normal prices on products. There’s just one inconvenient catch: raising interest rates often causes companies to lay off employees.

The Fed plan has appeared to be at odds with Biden’s effort to keep unemployment at historic lows.

Jared Clemons is a Postdoctoral fellow at Princeton University’s Center for the study of Democratic Politics and an assistant professor at Temple University. He’s written several articles on the intersections of politics and race. He’s also a self-described socialist.

The Fed’s effort to raise unemployment in order to lower inflation is class warfare, according to Clemons.

The Fed is considering raising interest rates one more time before the end of the year to level out the economy.

“Inflation remains elevated” and the Fed “remains highly attentive to inflation risks,” officials stated in July.

The Fed raised interest rates 11 times since March 2022.

In an interview with The Black Wall Street Times, Clemons criticized the Federal Reserve’s economic policy.

“And yes, it is very much contradictory to what the Biden Administration is saying.” But he doesn’t see Biden admitting that publicly.

When The Black Wall Street Times questioned Deputy Director Ramamurti on this topic, he said the White House respects the independence of the Fed.

“I’m not gonna say whether we agree or disagree. The president has appointment people to the Fed and trusted them to look at the data and make the best decision they can,” Ramamurti responded.

“We actually created millions of jobs during that time and unemployment has stayed low.”

Both Deputy Director Ramamurti and Professor Clemons acknowledged that the Covid pandemic, Russia’s invasion of Ukraine and supply chain disruptions have contributed to the incredibly high inflation rate–an inflation rate that is now down to 3.2%.

But for the most marginalized Americans, especially low-income and homeless Americans, a low inflation rate doesn’t do much to put food on the table or gas in the car.

In a recent Brookings Institution report, Brookings Institution suggested increasing Black American well-being specifically would require making the number of Black-owned employer businesses an equitable share of the population.

“Employer businesses are part of the built environment, shaping local economic conditions and thus contributing to the opportunities, vibrancy, and infrastructure of a place,” Brookings reported in July.

US moved from a industry-based economy to an “extraction-based” economy

Major changes to the economy appeared in the last several decades, beginning with the years of Ronald Reagan’s presidency in the 1980s. Since then, tax breaks for the wealthy and corporations have risen while public spending on social programs has fallen. In a process referred to as Neoliberalism, capital markets have become deregulated, which has led to less protections for consumers.

While consumer spending is up, Clemons says much of that spending is at the top income levels.

“A lot of the spending is clustered at the top. So, part of the reason I think you see this growing homelessness issue is because even though GDP is rising it’s really being carried by the people at the top,” Clemons said.

He believes the U.S. is beginning to look like other developing nations, in which you have a small wealthy class, a shrinking middle class, and a large class of poverty.

Clemons, a “proud socialist” who earned a Ph.D from Duke University, says the economy isn’t built for everyday Americans, but for Wall Street and the wealthy.

“Once you understand how the economy works you realize that it really does everybody harm by having an economy that’s immensely unequal like this,” Clemons said. “All capitalism is is a society in which we produce commodities and sell them and make a profit so a handful of people don’t have to labor.”

As that process goes on, Clemons says, there’s only so many commodities that the U.S. can produce and sell.

“Ultimately the United States has decided over the last 30 or 40 years we’re not gonna produce anything. We’re just going to depend on low-wage labor” in other countries.

Ending the paycheck-to-paycheck cycle

Notably, as part of his Bidenomics plan, Biden has made ramping up production in the U.S. a priority.

“Now, I think Biden is starting to understand maybe it wasn’t a good idea to pretty much de-industrialize,” Clemons said.

Deputy Director Ramamurti agrees.

“That’s been a central goal of the president, to make sure we are investing more in American production, American manufacturing. We’ve gained 800,000 manufacturing jobs since the president took office,” he said.

Yet Clemons believes Biden should take a transformative approach.

“Because the United States doesn’t make anything, its economy is predicated on what we call services, which is really just extractive. Over time he said he’s seen the U.S. “sucking resources” from a low-wage labor force instead of directly investing in people and home-grown production.

“I think really why I’m a socialist is because you can see how this is progressing and the only way to reverse that trend is by essentially putting breaks on allowing these mega-national corporations in being extractive in this way,” Clemons said.

“Intervene, regulate them and tax them so that we can spread things more evenly so people aren’t just living paycheck to paycheck.”