The legacy of Bidenomics

Amidst Trump’s escalating trade war and the massive global economic uncertainty it has unleashed, looking back at the Biden administration’s economic policy record feels like peering into the distant past. However, it’s worth examining the political-economic experiment that was “Bidenomics” to begin evaluating its successes and failures and drawing lessons for the future. Among other things, it represented a novel industrial-political approach to addressing urgent challenges of our time: reducing greenhouse gas emissions, curbing inequalities, reviving strategic sectors of the economy and ensuring competitiveness in industries of the future. It comprised not only four major pieces of legislation, whose spending and tax breaks together amounted to over $1.6 trillion, but also the beginnings of a new economic doctrine to replace the previous free market paradigm. (The gradual crystallization of these new economic ideas have been variously referred to as a “new economics”, a “new centrism” or a “new consensus”.)

This article outlines several preliminary conclusions to be drawn from this experiment in economic policymaking. The nitty-gritty of the laws and the principal ideas and motivations behind them have been explored elsewhere, including in Elisabeth Winter and my article for the BKHS Magazine #4 “For a Just Democracy!” on the relationship between industrial policy and democracy.

A failed political project

It must be stated quite clearly at the outset: As a strategy to help the Democrats retain the White House and lock in a new, broader political coalition, Bidenomics failed. The theory was that its four big domestic spending laws, together with its “foreign policy for the middle class”, would deliver such clear and tangible benefits to Americans in the form of jobs, investments, higher wages and a cleaner environment that this would attract a swathe of new voters to the Democratic Party, viewing it as the party that could really get things done. An important part of this strategy was designing the laws such that most of their funding would go to more conservative parts of the country. A whopping 80 per cent of new clean energy investments occurred in Republican congressional districts.

In the end, however, voters – whether progressive or conservative – weren’t convinced. The Democrats lost the election largely as result of negative perceptions of the economy, despite the fact that, according to standard macroeconomic indicators, the economy was remarkably strong. The US enjoyed record-low unemployment, a tamed inflation rate and a faster GDP growth rate than most other advanced economies. But even though Biden’s economic policies were steadily pumping billions of dollars into projects around the country, more than half of voters knew “not much” or “nothing at all” about three out of the four major pieces of legislation; for those who did know about the laws, less than 3 in 10 voters said these had a positive impact on their lives. 

This represents a stinging indictment of the entire political strategy behind Bidenomics, and it raises a whole set of questions both about why there was such a disconnect between positive indicators of the economy and voters’ perceived economic situations (about which there has been an ongoing debate), but also why Bidenomics and all its spending failed to provide unmistakable benefits to voters. Whether it came down to a failure of the administration to effectively communicate its successes, the fact that it targeted the wrong sectors of the economy for support, or that the policies’ positive impacts began to kick in too late, the ongoing task for proponents of industrial policy and more active and effective state is to determine how a robust industrial-political agenda can deliver more concrete benefits to voters and become part of a winning political strategy. 

Early successes

When looking at the real economic and environmental impacts of the four pieces of legislation, however, the picture looks more positive. Attempts at a more comprehensive evaluation have begun to be made; for current purposes, however, it suffices to highlight a few key areas where Bidenomics has been met with initial success.

First, one of the administration’s core goals was to revive American manufacturing, especially in strategically important sectors and technologies of the future. Looking at aggregate spending on new manufacturing, this has certainly started to happen, with analysts regularly referencing a veritable “manufacturing boom”. In absolute terms, total construction spending on manufacturing increased 81 per cent between August 2022, the month many of the laws were passed, and January 2025. Not only is total manufacturing spending up, but new investments are primarily going toward clean energy and technology, exactly the sectors targeted by the Inflation Reduction Act (IRA). In 2023 and 2024, companies announced $95 billion in new investments in clean energy and vehicle technology, which was more than four times the $23 billion invested over the previous two years. Much of the new investments went to building out the electric vehicle supply chain, notably in the production of batteries. Solar manufacturing, too, has gotten a big boost from the IRA. Like in other sectors, these new investments have led to the creation of new jobs, with estimates putting the number of clean jobs created at over 400,000. 

Second, as a result of the IRA and its clean investments and tax incentives, US carbon emissions have been forecast to decline 33-44 per cent below 2005 levels by 2035. This is an 8.5 per cent greater reduction than the pre-IRA emissions pathway. While it wasn’t enough to meet Biden’s goal of a 50 per cent emissions reduction, the IRA’s industrial-political approach is already being cited as a possible complement to other climate policy tools like carbon pricing, including in Europe. 

Third, in the realm of national security, a core priority of the administration was reviving the American semiconductor industry, whose share of global production capacity has decreased from 37 per cent in 1990 to just 12 per cent today. To do so, it relied on the CHIPS Act and its $52 billion in spending on chip manufacturing and research. Here, too, the efforts are starting to bear fruit. For example, in January, the production of chips was up 10.78 per cent compared to one year ago. In addition, early production figures show TSMC’s new plant in Arizona is outperforming Taiwan facilities in its yields by 4 per cent, demonstrating that the production of advanced semiconductors in the United States is indeed viable.

The legacy of Bidenomics

This is not to say that the Biden administration’s economic and industrial policies were uniformly positive. In fact, there were several highly publicized failures, such as its $42 billion initiative to expand rural broadband that has yet to connect a single household or its $7.5 billion plan to build electric vehicle chargers having yielded just 47 chargers in 15 states. 

But by far the greatest threat to the future of the laws is the current Trump administration, which has been freezing spending across the federal government, especially in the area of climate policy, and slashing government employees essential to the successful implementation of the laws. In addition, Trump’s new trade war is already pushing companies to delay or cancel construction projects, as the completely unpredictable investment environment has paralysed businesses in their long-term decision-making. 

While Bidenomics as a bold experiment in industrial-political policymaking and attempt at crafting the outlines of a new economic ideology ended in November 2024, it will continue to have broad and lasting repercussions. Domestically, Democrats have rightly seen the potential of industrial policy and are already starting to attack the Trump administration for pursuing a tariff policy not backed up by an industrial strategy. Internationally, the European Commission in February just presented its Clean Industrial Deal, a set of measures clearly influenced by the IRA. For proponents of this “new economics” – which gives the state a vastly greater role in the shaping of the economy – the current task lies in drawing the most important lessons from Bidenomics to make industrial policy faster, more efficient and more politically effective.