Biden says his economic agenda is working. The public is skeptical.
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WASHINGTON — President Joe Biden argued on Tuesday that his economic plan is working despite predictions of a recession by economists, a looming battle over paying the nation’s debt, and a nation that feels like it’s on shaky economic footing.
The economy played a prominent role in Biden’s State of the Union address with a message largely targeted at lower and middle-income Americans as he made the case for boosting manufacturing jobs and buying more products made in America. He proposed raising taxes on corporations and the wealthiest Americans to help fund programs to lower health care and child care costs.
“For decades too many people have been left behind and treated like they’re invisible. Maybe that’s you watching from home,” Biden said. “Remember the jobs that went away? You remember them, don’t you? The folks at home remember that. You wondered whether the path even existed anymore for your children to get ahead without having to move away. Well, I get that. That’s why we’re building an economy where no one’s left behind. Jobs are coming back. Pride is coming back.”
Biden was making the case for his administration’s handling of the economy to a largely skeptical audience. After being battered by decades-high inflation for more than a year, consumer sentiment remains low by historic norms and two-thirds of consumers said they expected an economic downturn during this year, according to the University of Michigan’s latest consumer sentiment survey.
In a separate poll by Gallup released Monday, more than two-thirds of respondents said they expect inflation to rise and nearly half said they expect the market will fall in the first half of 2023, and three out of four were planning on interest rates continuing to rise. Voters have placed that economic pessimism on Biden with 61% saying in an NBC News poll from last month that they disapproved of Biden’s handling of the economy.
“You have in one sense a labor market that’s fairly strong and steady, we certainly see strong consumer spending, which is another measure of sentiment, and yet clearly the high prices have been something that has really been a gale force wind that a lot of consumers have had to contend with for over a year,” said Joe Davis, global chief economist for the investment firm Vanguard.
Biden laid out the progress he said his administration has made with the passage of laws intended to spur investment in semiconductor and clean energy technology manufacturing and rebuild the nation’s infrastructure.
“Let’s look at the results,” Biden said. “We’re not finished yet by any stretch of the imagination but the unemployment rate is at 3.4% a 50 year low, near record unemployment for Black and Hispanic workers. We’ve already created, with your help, 800,000 good paying manufacturing jobs, the fastest growth in 40 years.”
Biden called on Congress to do more to lower costs for Americans by capping the price of insulin, restoring the child tax credit and improving access to affordable housing.
To pay for those efforts, Biden proposed closing tax loopholes and increasing taxes on the wealthiest Americans as well as corporations, including quadrupling the tax on corporate stock buybacks that companies use to bolster their stock prices.
“I’m a capitalist, but pay your fair share,” Biden said. “I think a lot of you at home agree with me and many people that you know, the tax system is not fair. It is not fair.”
Biden acknowledged the price pressures Americans have been under, but sought to highlight the progress that has been made so far with lowering inflation.
We’re better positioned than any country on Earth right now, but we have more to do,” Biden said. “But here at home inflation is coming down, here at home gas prices are down $1.50 from their peak, food inflation is coming down, not fast enough but coming down. Inflation has fallen every month for the last six months while take home pay has gone up.”
Ahead of the speech, outgoing White House economic advisor Brian Deese said Biden was aiming in the remarks to convey that while there is more work to be done, the progress made so far should leave Americans feeling optimistic about the path forward for the economy.
“The president uniquely understands that we have a lot more work to do when it comes to the economy,” Deese said during the White House press briefing Monday. “And that even as we’ve seen real progress and inflation coming down, over the last six months in particular, we have more work to do to bring prices down, lower costs, and create some breathing room, as he says, for American families.”
Biden stands little chance of getting any of his economic policy proposals through a divided Congress as Republicans have sought to pin the blame on him for inflation and the nation’s rising debt.
Economists have said a number of factors have contributed to inflation over the past two years including Russia’s invasion of Ukraine, supply chain disruptions from the pandemic, low interest rates and shifts in consumer spending. Several economic studies have also found that the Covid stimulus bill pushed by Biden in his first year in office also contributed to inflation, though they are divided over just how much.
Republicans have been threatening to block legislation to raise the nation’s debt ceiling, a move needed for the federal government to continue paying its bills, unless Democrats agree to budget cuts to lower the deficit.
Biden said his budget for the upcoming fiscal year would cut the deficit by another $2 trillion in part by raising taxes on those making more than $400,000 and corporations.
When Biden accused Republicans of threatening to cut Medicare and Social Security as a way to reduce government spending he was met with booms from Republicans. Biden seized on the moment to take the prospect of those cuts off the table in negotiations.
“As we all apparently agree, Social Security and Medicare is off the books now,” Biden said. “Alright, we’ve got unanimity.”
This article was originally published on NBCNews.com