Jared Bernstein on the Next Stage of Bidenomics

Episode Summary

Executive Summary: The episode examines the White House’s effort to declare early success for “Bidenomics,” framing it as a long-term industrial strategy built on public investment, workforce development, competition policy, and fairer taxation. CEA chair Jared Bernstein argues the approach is already boosting factory construction, jobs, and wages while avoiding the pitfalls of trickle-down economics. The hosts press on trade tensions, labor costs, and whether the strategy will deliver durable gains.

Main Topics: Why the White House declared victory now (Priority: 5/5): The hosts discuss why Bidenomics was publicly highlighted this week and whether the administration is timing its messaging to favorable economic conditions and visible policy wins. Industrial policy and public investment (Priority: 5/5): Bernstein argues the CHIPS Act, IRA, and infrastructure law represent a deliberate long-term industrial strategy meant to crowd in private investment and expand domestic production. Worker empowerment and wage gains (Priority: 5/5): A central theme is that Bidenomics aims to raise worker bargaining power, support training, and deliver real wage growth while keeping labor markets tight. Trade policy and international spillovers (Priority: 4/5): The conversation addresses criticism from Europe and questions about whether U.S. industrial policy reduces trade flows; Bernstein says the goal is cooperation plus domestic jobs, not autarky. Competition and anti-monopoly enforcement (Priority: 4/5): Bernstein links Bidenomics to anti-monopoly efforts such as cracking down on junk fees, overdraft charges, non-competes, and using the FTC to promote competition. What comes next: housing, care, and tax policy (Priority: 4/5): The final segment focuses on the administration’s broader agenda, including childcare, elder care, housing supply, deficit reduction, IRS enforcement, and higher taxes on high earners.

Key Arguments: Bidenomics should be judged over a long horizon; it is designed to reshape productive capacity, not just respond to daily market swings. Public investment is meant to catalyze private capital, especially in sectors with market failures like semiconductors, clean energy, and batteries. The current manufacturing buildout reflects policy success: investment is concentrated in sectors incentivized by recent legislation. Industrial policy has always existed; Biden’s version is more transparent and aims to favor productivity rather than connected interests. The administration wants lower cost curves and higher wages at the same time, using increased supply and a tight labor market to support both. Worker bargaining power is improving as unemployment stays low, leading to real wage gains and a larger labor share of income. Trade policy under Bidenomics is not autarky; the administration wants robust trade flows while preserving domestic jobs and production. Competition policy is essential to prevent concentration and ensure smaller firms and workers benefit, not just dominant incumbents. The broader agenda includes childcare, broadband, housing supply, deficit reduction, IRS funding, and higher taxes on incomes above $400,000. Biden’s core economic test is whether growth reaches the middle class, not just GDP or stock prices.

Data Points: Podcast report length: Five minutes or less - Promotion for Bloomberg’s Stock Movers report at the start of the episode Date of recording: Friday, June 30, 2023 - Hosts note the recording date while discussing the week’s economic mood shift Real manufacturing facility construction growth under Biden: Up 100% since the president took office - Bernstein cites Treasury analysis comparing current manufacturing facility construction to the prior administration Real manufacturing facility construction growth in prior administration: 2% real growth - Bernstein contrasts Biden-era manufacturing construction with the prior administration Unemployment rate threshold: Below 4.5% and below 4% for 18 months - Used to argue workers have regained bargaining power in a tight labor market Real wage gains overall: Up 1% since last June - Bernstein cites year-over-year real wage gains as inflation eases Real wage gains for production/non-supervisory workers: Up 1.5% since last June - Presented as evidence that blue-collar workers are seeing stronger gains than the overall workforce Wage gain advantage for production workers: 50 bps more than overall - Bernstein emphasizes stronger gains for non-managers Overdraft fee savings: $5.5 billion per year - Bernstein references administration action against overdraft fees Tax burden reference: 8% effective tax rate - Bernstein says some wealthy people pay an 8% effective tax rate, which he calls unfair Income threshold for no tax increase/no audits: Under $400,000 - Bernstein says the president’s tax agenda protects people below this threshold Labor share of income: Returning toward historical average - Bernstein says higher labor share can help pay for higher real wages without being inflationary

Pivotal Quotes: "Bidenomics takes both a near-term and a very long-term view." — Jared Bernstein: He explains why the administration is emphasizing long-run industrial strategy rather than day-to-day economic volatility "We don't look at Americans as consumers 100% full stop. We recognize that they and their communities are also working people." — Jared Bernstein: He describes the administration’s trade stance as balancing lower prices with domestic jobs and community stability "This is what we're going to work on... the idea that the economy was growing and the middle class was falling behind is unacceptable to him." — Jared Bernstein: Bernstein recounts Biden’s long-standing focus on middle-class income stagnation

Implications: The episode suggests Bidenomics is being positioned as a durable governing philosophy: invest, train, compete, and redistribute gains more fairly. For workers and industries, the test will be whether new factories, wages, and supply chains translate into sustained middle-class growth without renewed inflation or excessive concentration.