Bidenomics Is Good Marketing, Confused Policy

President Joe Biden and his team insist that “Bidenomics” — a term they’ve embraced — is more than a mere bundle of policy initiatives. They say it’s a coherent, comprehensive and transformational program that marks a clear break not just with conservative “trickle down” orthodoxy but also with the decidedly smaller ambitions of previous Democratic administrations.

Ambition is admirable, and so are the administration’s goals. But delivering the intended results won’t be easy. Execution is everything — and this is where overweening aspiration can prove a liability.

Despite the compromises needed to get its plans through Congress, the administration’s initiatives have been huge and far-reaching. They encompass generous income support during and after the pandemic, massive outlays on clean-energy and other infrastructure, and measures to advance resilience and self-sufficiency. According to the White House, Bidenomics aims to “fundamentally change the economic direction of our country.” As the president might say, it’s a big [expletive deleted] deal.

It’s not just about scale. Core principles tie the parts together. Climate change is an existential threat that needs to be confronted more urgently. Prosperity and national security demand a revival of critical domestic manufacturing. Empowering workers is an essential part of building the economy “from the middle out and the bottom up.” In each of these areas, according to the administration, free markets can’t be relied on and the guiding hand of government is indispensable.

This last point is where Bidenomics is at greatest risk of failing. In confronting challenges such as climate change, sluggish productivity growth and rising inequality, the government’s strategic role is indeed crucial — but its capacity for effective micro-management is far more limited than the president seems to think. In the simplest terms, success depends on recruiting not supplanting market forces.

Take climate change. Using carbon pricing to confront consumers and producers with the costs of emissions, then letting them find efficient ways of adapting, is more likely to succeed than placing taxpayer-supported bets on particular suppliers or technologies. Yet the Inflation Reduction Act enacted or expanded 22 separate tax credits intended to encompass a huge array of green-energy initiatives, with eligibility requirements specified in exacting detail (and padded with unrelated preferences, such as domestic-content provisions). Follow-up regulations will grant the administration even more control over business activity in relevant industries.