The Dashboard

Introduction

The United States is facing one of the most challenging economic periods in recent history, with inflation reaching levels not seen in decades and millions of Americans struggling to make ends meet. Many have pointed fingers at the Biden/Harris administration, arguing that their policies are directly responsible for the economic downturn. Critics often counter this claim by saying, “The president doesn’t control the economy!” However, a closer examination of the facts reveals that presidential policies and leadership can, and do, have a significant impact on economic conditions. In this post, we will explore how the decisions made by the Biden/Harris administration have contributed to the current economic crisis and debunk the myth that the president is powerless when it comes to the economy.

The Role of Presidential Leadership in Economic Health

Understanding Presidential Influence on the Economy

The president of the United States, as the leader of the executive branch, plays a crucial role in shaping the country’s economic policy. While it’s true that the economy is influenced by a wide range of factors, including global markets, technological changes, and consumer behavior, the policies enacted by the president and their administration can either exacerbate or mitigate economic challenges.

Presidents have the power to influence the economy through various means, including:

• Fiscal Policy: The president, along with Congress, is responsible for determining government spending and taxation. These decisions directly impact economic growth, inflation, and employment.
• Regulatory Policy: The president can implement regulations that affect businesses, industries, and consumers. These regulations can either stimulate economic activity or create burdens that slow down growth.
• Monetary Policy Influence: While the Federal Reserve operates independently, the president’s appointments to key positions within the Fed can influence monetary policy, which in turn affects inflation and interest rates.
• Foreign Policy and Trade: The president’s approach to foreign relations and trade agreements can impact the economy by affecting supply chains, trade deficits, and domestic industries.

Given these powers, it’s clear that the president’s decisions can have far-reaching consequences for the economy. The argument that “the president doesn’t control the economy” overlooks the significant influence that presidential policies can exert on economic conditions.

The Biden/Harris Administration’s Economic Policies

Massive Government Spending and Its Consequences

One of the most significant actions taken by the Biden administration has been the implementation of large-scale government spending programs. While some of this spending was aimed at providing relief during the COVID-19 pandemic, critics argue that the scale and scope of these expenditures have contributed to inflationary pressures.

• American Rescue Plan: Enacted in March 2021, this $1.9 trillion stimulus package aimed to provide economic relief to individuals, businesses, and local governments. While it succeeded in injecting money into the economy, many economists warned that the sheer size of the package could lead to inflation. By increasing demand without a corresponding increase in supply, the American Rescue Plan contributed to rising prices across various sectors.
• Infrastructure Investment and Jobs Act: This $1.2 trillion infrastructure bill, signed into law in November 2021, was intended to modernize the nation’s infrastructure. While infrastructure investment is generally seen as beneficial in the long term, the short-term impact of such massive spending can drive up prices, especially in sectors like construction and materials.
• Build Back Better Agenda: Although this bill was not fully passed, the proposed spending levels raised concerns about further inflationary pressures. The focus on expanding social programs and investing in green energy initiatives, while laudable in some respects, could have further strained the economy by increasing government debt and crowding out private investment.

The result of these spending programs has been a significant increase in the money supply, which, combined with supply chain disruptions and labor shortages, has led to the highest inflation rates in decades.

Regulatory Overreach and Its Impact on Businesses

The Biden administration has also been criticized for its regulatory policies, which many argue have stifled economic growth and contributed to the current economic malaise. Key areas of concern include:

• Energy Sector Regulations: The administration’s focus on transitioning to green energy has led to increased regulations on the fossil fuel industry. The cancellation of the Keystone XL pipeline, restrictions on oil and gas leasing on federal lands, and other regulatory actions have contributed to higher energy prices. These higher costs ripple through the economy, affecting transportation, manufacturing, and consumer goods prices.
• Labor Market Interventions: The push for higher minimum wages and expanded labor protections, while well-intentioned, has led to increased costs for businesses. In some cases, businesses have responded by reducing their workforce or passing the costs on to consumers through higher prices.
• Financial Sector Regulation: Increased scrutiny and regulation of the financial industry, particularly in areas like lending and investment, have made it more difficult for businesses to access capital. This has stifled innovation and growth, further exacerbating economic challenges.

These regulatory actions, combined with the administration’s broader economic agenda, have created an environment of uncertainty and increased costs for businesses, contributing to slower growth and higher inflation.

Foreign Policy Missteps and Their Economic Ramifications

The Biden administration’s foreign policy decisions have also had a significant impact on the economy. Key areas of concern include:

• Energy Dependence: The administration’s approach to energy policy has led to increased dependence on foreign oil, particularly from countries with unstable or hostile governments. This dependence has made the U.S. economy more vulnerable to global energy price fluctuations, contributing to higher fuel costs and inflation.
• Supply Chain Disruptions: The COVID-19 pandemic exposed vulnerabilities in global supply chains, and the administration’s response has been criticized as insufficient. Delays in addressing supply chain bottlenecks, combined with trade policies that have strained relationships with key trading partners, have led to shortages and higher prices for goods.
• Trade Policy Uncertainty: The administration’s approach to trade, particularly with China, has been marked by uncertainty and a lack of clear strategy. This has created challenges for businesses that rely on global trade, leading to increased costs and reduced competitiveness.

These foreign policy decisions have had direct and indirect impacts on the economy, contributing to the inflationary pressures and economic challenges that Americans are facing today.

Debunking the Myth: “The President Doesn’t Control the Economy”

The Limits and Extent of Presidential Power

While it’s true that the president does not have absolute control over the economy, the argument that “the president doesn’t control the economy” is misleading. The president’s policies, decisions, and leadership play a crucial role in shaping the economic landscape.

• Fiscal Policy Influence: The president, through budget proposals and influence over Congress, can shape fiscal policy, which directly impacts economic growth, inflation, and employment.
• Regulatory Authority: The president has significant power to implement and enforce regulations that affect businesses, industries, and consumers. These regulations can either promote economic growth or hinder it.
• Economic Leadership: The president’s leadership style and decisions set the tone for the broader economic environment. Confidence in the administration’s ability to manage the economy can influence consumer and business behavior, affecting spending, investment, and economic growth.

To claim that the president has no control over the economy is to ignore the substantial influence that presidential policies and leadership have on economic outcomes.

Historical Examples of Presidential Impact on the Economy

History provides numerous examples of how presidential decisions have had significant impacts on the economy:

• Franklin D. Roosevelt and the New Deal: During the Great Depression, FDR’s New Deal policies played a crucial role in stabilizing the economy and restoring confidence in the American financial system.
• Ronald Reagan and Economic Deregulation: Reagan’s policies of tax cuts, deregulation, and increased defense spending contributed to a period of economic growth in the 1980s, known as the “Reaganomics” era.
• Barack Obama and the Recovery from the Great Recession: The Obama administration’s response to the 2008 financial crisis, including the implementation of the American Recovery and Reinvestment Act, helped stabilize the economy and promote recovery.

These examples demonstrate that presidential policies can have a profound impact on the economy, either positively or negatively. The Biden/Harris administration’s policies are no exception, and their impact on the current economic situation should not be underestimated.

The Path Forward: What Needs to Change

Reining in Government Spending

One of the most critical steps that the Biden/Harris administration could take to address the current economic challenges is to rein in government spending. While stimulus measures were necessary during the height of the COVID-19 pandemic, continued large-scale spending risks further exacerbating inflation and increasing the national debt.

Focusing on targeted, efficient spending that stimulates growth without overburdening the economy is essential. This could include investments in infrastructure, education, and innovation, while avoiding unnecessary expansions of government programs that add to the deficit.

Reducing Regulatory Burdens

Another key area for improvement is regulatory policy. The administration should focus on creating a regulatory environment that promotes business growth and innovation while protecting consumers and the environment. This means avoiding overly burdensome regulations that stifle economic activity and finding a balance between necessary oversight and economic freedom.

In particular, revisiting energy policy to promote a more balanced approach that includes both renewable energy development and responsible use of domestic fossil fuels could help reduce energy costs and inflationary pressures.

Strengthening Foreign Policy and Trade Relationships

Finally, the administration should focus on strengthening foreign policy and trade relationships. By promoting stability and reducing uncertainty in global trade, the U.S. can ensure a more reliable supply chain and reduce the risks of price fluctuations. This includes developing clear strategies for dealing with key trading partners like China and reducing dependence on foreign energy sources.

Conclusion

The economic challenges facing the United States today are complex and multifaceted, but the role of the Biden/Harris administration in contributing to these problems cannot be ignored. Through a combination of excessive government spending, burdensome regulations, and foreign policy missteps, the administration’s policies have exacerbated inflation and created significant economic hardship for millions of Americans.

While it is true that the president does not have absolute control over the economy, the influence of presidential policies and leadership is substantial. The decisions made by the Biden/Harris administration have had real and measurable impacts on the economy, and understanding this influence is crucial for those seeking to navigate the current economic landscape.