Bidenomics Failed the First Time

Claims that he’ll spur growth ignore that his policies are a repeat of the stagnant Obama years

By Phil Gramm and Mike Solon. Excerpts:

"Mr. Biden plans to raise taxes by three times as much as President Obama did, increase spending by 2.7 times as much, and regulate the economy at levels never before seen in America."

"In early 2010 after the recession had ended, the Obama-Biden administration projected a 3.7% average increase in gross domestic product over the next seven years. The Congressional Budget Office projected 3.3% growth for the same period, while the Federal Reserve predicted growth between 3.5% and 4% through 2014. Instead, growth for the remainder of the Obama-Biden administration tanked to an 80-year low of 2.2% as its policies kicked in. Repeatedly during the 2010-16 recovery, the CBO was forced to slash its projections."

"when President Trump changed policies the clouds of stagnation lifted. Census data says 2019 median household income hit an all-time high, and grew more than six times as much as average annual growth during seven years of the Obama-era recovery. The poverty rate fell more in the first two years under Mr. Trump than in all seven “recovery years” combined under Obama-Biden. Median earnings for men rose 11% more from 2017 through 2019 under Mr. Trump’s policies than during the previous seven years. Incredibly, earnings for women rose 42% more in 2019 alone than in seven years during the entire Obama-Biden recovery."

"The economist Jason Furman, an architect of the Obama-Biden economy and proponent of Mr. Biden’s agenda, claimed in these pages that Mr. Biden’s tax hikes would be “broadly consistent with the tax systems under the successful economies of Presidents Clinton and Obama.” Successful? GDP growth averaged 3.9% under Mr. Clinton but only 1.6% under Mr. Obama. Real median household income rose $7,658 under Mr. Clinton but less than half that under Mr. Obama. The poverty rate fell 24% under Mr. Clinton but less than 4% under Mr. Obama."

"After Mr. Clinton raised taxes and tried to nationalize health care, voters rejected his policies in 1994 by electing a Republican Congress, and Mr. Clinton changed policies: cutting spending, balancing the budget, reforming welfare, reducing taxes and restraining regulations. Mr. Obama was also checked by voters in 2010, by the election of a Republican House, after he raised taxes, nationalized individual health insurance and smothered the economy in regulation. Yet his administration changed nothing and doubled down on taxes, regulations and debt. Does Mr. Biden’s agenda sound more like the second Clinton term or the Obama-Biden program on steroids?

Mr. Furman claims Mr. Trump’s 2017 tax cut had, by 2019, “limited revenues to 16% of gross domestic product. That’s the lowest share in half a century, with the exception of recessions and the following years.” Yet Mr. Furman failed to note that the “following years” he was referring to were the eight years of his own Obama-Biden administration, when revenues averaged only 16.1% of GDP—less than the 16.3% the CBO reported for 2019. As a share of GDP, the 2019 revenues that followed Mr. Trump’s tax cut exceeded the average Obama tax-hike-enhanced revenue levels of 2009-16. How is that possible? Obama-Biden lost more from slower growth than they gained from higher taxes. By embracing tax rates over growth rates, the Obama-Biden administration generated less income for American workers and the government."