As Rachel Reeves jets off to the US to meet financiers, policymakers and politicians, she has used the opportunity to claim that a Labour government will embrace ‘Bidenomics’—the economic agenda that has been pursued by the current US President.
Having lost control over the House in this year’s midterms, the Biden administration has been mired in another intractable dispute with Republicans over raising the US debt ceiling. In refusing to take a more muscular approach in dealing with the GOP’s obstructionism, Biden has effectively become a lame duck President.
But before the midterms, Bidenomics made a significant impact on the US economy. Biden signalled that his administration would be taking a new macroeconomic approach as soon as he entered office during the Covid-19 pandemic. While Trump’s rescue plan had channelled billions of dollars into the pockets of executives and shareholders—much of it through fraud—Biden sought to ensure that the poorest Americans also benefitted from the state’s largesse.
The 2021 American Rescue Plan was worth nearly $2 trillion and had an immediate impact on poverty and unemployment. The state handed out $1,400 to all adults earning less than $75,000 per year, expanded benefits for those on low incomes and provided extra cash for schools and sub-national governments. It also introduced an evictions moratorium and extended support to families struggling with rent and utilities during the crisis.
The 2022 Inflation Reduction Act was another piece of crisis management legislation aimed at constraining inflation while protecting the planet and the poor. The Act contained provisions to make health insurance more accessible, increase taxes on big businesses while clamping down on tax avoidance, and expand state support for renewable technologies.
Then came the Infrastructure Investment and Jobs Act, which Biden’s team had been planning to introduce since before the pandemic hit. The Act directed around $1 trillion towards updating the US’ chronically underfunded infrastructure—from transport to electricity to water.
Finally, the much smaller CHIPS Act was about supporting US semiconductor manufacturers in the wake of disruptions to the industry that took place during the pandemic.
These Bills undoubtedly had an impact on unemployment and poverty. Together, they probably represent the most progressive suite of macroeconomic legislation in the US for several decades. Though this isn’t saying much.
Much of the money the US state has dished out over the last two years has ended up accruing to large corporations, many of which have seen mega-profits over the course of the last several years of economic and social crisis. And several of Biden’s more radical proposals have been kiboshed by vested interests—particularly those related to tackling climate breakdown.
What’s more, the idea of ‘friendshoring’—the rearranging of supply chains to ensure US corporations aren’t overly reliant on imports from ‘enemy’ nations—is clearly an attempt to set the battle lines for the new Cold War with China.
Reeves has christened her version of Bidenomics ‘securonomics’, signalling that she remains committed to national security and austerity.
Her nods to ‘friendshoring’—and indeed her trip to the US itself—are meant to assure the British establishment that Starmer’s Labour remains committed to Atlanticism. This approach stands in stark contrast to that of Jeremy Corbyn, who earned many powerful enemies for his frequent attacks on US imperialism.
The idea that, as she put it, ‘globalisation is dead’ will also be used to justify Labour’s harsh immigration policies, which have more to do with fighting a culture war than ensuring the country’s long-term prosperity.
But the main reason Reeves is invoking Biden’s economic agenda is to assuage any doubts held by executives and shareholders that a Labour government will be ‘anti-business’.
In a world in which Britain is a declining power, and in which British businesses are struggling to compete, Reeves knows that the best way to win over British capitalists is to promise them more corporate welfare. Ironically, the Conservatives’ myopic ideological commitment to austerity has prevented them from coming to the same realisation.
As Biden has shown, there’s no reason why state support aimed at propping up domestic corporations can’t also help people and planet. But we have every reason to believe that Labour’s version of Bidenomics will be even less progressive than its American counterpart.
A central part of Biden’s economic strategy has been to support the US labour movement. Biden immediately reversed several Trump-era policies designed to weaken US unions and even spoke out in support of workers attempting to unionize at Amazon.
These moves have already started to have an impact. From teamsters to teachers to truckers, the US is currently seeing several high-profile disputes, and public support for unions has reached its highest levels since 1965.
The comparison with Starmer’s Labour is sharp. Starmer has repeatedly refused to support British workers fighting for wage increases in line with inflation. Shockingly, the Labour Party—a party formed by the British labour movement—has not even committed to reversing Margaret Thatcher’s draconian anti-union legislation.
What’s more, Reeves has repeatedly emphasised her affinity for Tory austerity by affirming her commitment to ‘balancing the books’. Despite the fact that austerity is near-universally unpopular, and most people now want to see the government invest more in infrastructure and public services, the Labour Party has chosen to reaffirm the Tory propaganda that the government should never spend more than it earns in taxes.
Needless to say, none of Biden’s legislation—bar perhaps the Inflation Reduction Act—would have passed this test. Without the extra spending seen during Covid, millions more workers would have lost their jobs, fallen into poverty, or been kicked out of their homes.
And it’s not as though Reeves’ commitment to balancing the books relies on increasing tax revenue by raising corporate taxes. She has repeatedly affirmed that, unlike the Biden administration, the Labour Party will not seek to increase taxes on corporations or the wealthy.
The crazy thing about all of this is that Biden’s approach to economic policy essentially represents a return to the kind of corporatist developmentalism that has always been the bread and butter of social democratic parties like the Labour Party. There’s some support for workers—through cash handouts, support for unions and jobs creation—combined with even more support for domestic business.
The idea is to create a détente between capital and labour by smoothing over the battle lines with public cash. As the record of post-war social democratic governments shows, it’s not the most sustainable strategy long-term, but it’s certainly more progressive than the current austerity orthodoxy.
Yet Reeves’ version of Bidenomics strips out even its most basic concessions to workers. If Reeves really wanted to emulate Joe Biden, she’d start by reversing anti-trade union legislation and abandoning her commitment to austerity. Without these elements, Bidenomics is just trade wars and corporate welfare.