In the midst of Donald Trump's escalating trade war and the massive global economic uncertainty it has triggered, a look back at the economic policy record of the previous administration under Joe Biden feels like a glimpse into the distant past. However, it is worth taking a closer look at the "Bidenomics" economic policy experiment in order to assess its successes and failures and draw lessons for the future. It was ultimately a novel industrial policy approach to tackling some of the most pressing challenges of our time: reducing greenhouse gas emissions, reducing inequalities, revitalising strategic sectors of the economy and ensuring competitiveness in future technologies. Bidenomics not only included four major pieces of legislation totalling over USD 1.6 quadrillion in spending and tax relief, but also the beginnings of a new economic doctrine to replace the prevailing market-liberal paradigm in the US. The crystallisation of a new economic approach was referred to as "new economics", "new centrism" or "new consensus".
While the focus here is on the most important results of Biden's economic policy experiment, the specifics of the laws and their underlying motivations are examinedelsewhere. The connection between industrial policy and democracy was discussed by BKHS experts Elisabeth Winter and Matthew Delmastro in their article for BKHS Magazine #4 "For a Just Democracy!".
Failed as a political project
It must be made very clear right from the start: As a Democratic strategy to secure the White House and build a new, broader political coalition, Bidenomics has failed. The theory was that the four major pieces of industrial policy legislation, along with Biden's "foreign policy for the middle class", would bring such clear and tangible benefits to Americans in the form of jobs, investment, higher wages and a cleaner environment that the Democratic Party could win over large numbers of new voters. Part of this strategy was to structure the legislation so that the bulk of this financial spending would go to more conservative parts of the country. In fact, 80 per cent of new green energy investments were made in Republican congressional districts.
In the end, however, voters - whether left-wing or conservative - were notoriously unconvinced. Democrats lost the election largely due to negative perceptions of the economy, even though the economy was remarkably strong according to the usual macroeconomic indicators. The US had record low unemployment, subdued inflation and faster GDP growth than most other advanced economies. But even though Biden's economic policies funded projects across the country with billions of dollars, more than half of voters knew "not much" or "nothing at all" about three of the four most important laws. Of those who did know about the laws, fewer than three in ten said they had a positive impact on their lives.
This is a damning judgement on the entire political strategy behind Bidenomics and raises a whole host of questions. Why was there such a disconnect between the positive economic indicators and the economic situation as perceived by the electorate (which is the subject of an ongoing intense debate )? Why did Bidenomics and its huge investments not clearly benefit voters? Three factors are currently being debated to explain this: The government failed to communicate its successes effectively; the government promoted the wrong sectors of the economy; or the positive effects of the policy kicked in too late. Regardless of which of these three factors ultimately decided the election, the following now applies to those in favour of a new industrial policy: To strengthen the role of the state as an active and effective shaper of a new industrial policy, they need to figure out how a robust industrial policy agenda can deliver more concrete benefits to voters in order to be politically successful.
Initial successes measurable
Looking at the actual economic and environmental impact of the four major Bidenomics laws, however, the picture is more positive. Attempts at a more comprehensive assessment have already been made; here we will highlight selected areas in which Bidenomics has achieved initial success.
Firstly, one of the core objectives of the Biden administration was to revitalise American industry, particularly in strategically important sectors and future technologies. Looking at overall spending on new production facilities, this has undoubtedly begun. Analysts regularly speak of a veritable "production boom". In absolute terms, total construction spending for the manufacturing sector increased by 81 per cent between August 2022, the month in which many of the laws were passed, and January 2025. In addition, new investment flowed primarily into the green energy and technology sectors - precisely the sectors targeted by the Inflation Reduction Act (IRA). In 2023 and 2024, companies announced new investments totalling USD 95 billion in green energy and vehicle technology, more than four times the USD 23 billion invested in the previous two years. Both battery manufacturing and solar production have received a major boost from the IRA. As in other sectors, these new investments have led to the creation of new jobs, with more than 400,000 "green" jobs estimated to have been created.
Second, greenhouse gas emissions in the U.S. are projected to fall 33-44 percent below 2005 levels by 2035 as a result of the IRA and its green investments and tax incentives. This is an 8.5 per cent higher reduction compared to the expected emissions trajectory before the IRA. While this was not enough to meet Biden's 50 per cent emissions reduction target, the IRA's industrial policy approach is already being cited in other regions, such as Europe, as a possible complement to other instruments such as carbon pricing.
Third, in the area of national security, one of the administration's top priorities was to revitalise the U.S. semiconductor industry, whose share of global manufacturing capacity has fallen from 37 percent in 1990 to just 12 percent today. To this end, the Biden administration implemented the so-called CHIPS Act and thus ensured that USD 52 billion was spent on chip production and research. Here, too, this policy is already beginning to bear fruit. In January, chip production increased by 10.78 per cent compared to the same month last year. In addition, initial production figures show that the success rate for the production of usable chips at TSMC's new plant in Arizona is 4 per cent higher than at the Taiwanese plants. This shows that the efficient production of state-of-the-art semiconductors in the USA is promising.
The legacy of Bidenomics
This is not to say that the Biden administration's economic and industrial policy record is entirely positive. In fact, there have been several widely publicised failures, such as the USD 42 billion initiative to expand broadband in rural areas, to which not a single household has yet been connected, or the USD 7.5 billion plan to build charging stations for electric vehicles, which has resulted in just 47 charging stations in 15 states.
However, the legacy of Bidenomics is currently under particular threat from the current Trump administration, which has frozen spending across government, particularly in the area of climate policy, and is massively cutting government agencies that are essential to the successful implementation of the legislation. In addition, Trump's new trade war is forcing companies to postpone or cancel construction projects as the resulting uncertainties inhibit entrepreneurs from making investment decisions.
Even though Bidenomics ended as an industrial policy experiment in November 2024, it will have far-reaching and lasting effects. Domestically, Democrats have rightly recognised the potential of industrial policy and are already attacking the Trump administration for pursuing a tariff policy that is not underpinned by an industrial strategy. At the international level, the European Commission presented its Clean Industrial Deal in February, a package of measures that was clearly influenced by the IRA. For those in favour of this kind of "new economics", which gives the state a more active role in shaping the economy, the task now is to draw the most important lessons from Bidenomics to make industrial policy faster, more efficient and more politically effective.
