Middle Out Economics

“The days of trickle-down economics are over”

The Pitch: Economic Update for March 14th, 2024




The consensus among journalists, pundits, and the public is that President Joe Biden delivered a lively and powerful State of the Union address last Thursday night. In this case, I happen to agree with popular opinion—the President’s speech was well-written and delivered energetically. He came across as a happy warrior fighting for the American people. 

Still, coverage of the State of the Union focused too much on the staging and reading of the speech, and not enough on the substance of what President Biden said—too much aesthetic critique and not enough policy analysis. So it’s worthwhile to take a few minutes to look at the text of the speech and consider it through an economic lens.

“I want to talk about the future of possibilities that we can build together,” President Biden said near the beginning of the speech, calling it “a future where the days of trickle-down economics are over and the wealthy and the biggest corporations no longer get all the tax breaks.” 

That’s a continuation of last year’s attack on the trickle-down paradigm that has dominated American economic policy through both Republican and Democratic administrations for the past 40-plus years, and Biden’s argument has gotten sharper and more persuasive over the past year. “I grew up in a home where trickle-down economics didn’t put much on my dad’s kitchen table,” Biden explained, and he immediately offered an alternative to trickle-down economics: “That’s why I’m determined to turn things around so the middle class does well. When they do well, the poor have a way up and the wealthy still do very well. We all do well.”

What does that look like in practice? Biden listed several accomplishments aimed at improving outcomes for the middle class, including capping the price of insulin at $35 a month—previously, some patients were paying up to $400 a month—and fighting to lower prescription drug costs for all Americans. He cited his CHIPS Act semiconductor manufacturing legislation which created “tens of thousands of jobs, many of those jobs paying $100,000 a year and don’t require a college degree,” and his infrastructure package which is funding 46,000 projects around the nation.  

And Biden made the case that thanks to his middle-out policies, “our economy is literally the envy of the world,” citing an impressive list of accomplishments:

Fifteen million new jobs [created] in just three years—a record. Unemployment at 50-year lows. A record 16 million Americans are starting small businesses, and each one is a literal act of hope, with historic job growth and small-business growth for Black and Hispanics and Asian Americans. Eight hundred thousand new manufacturing jobs in America and counting…More people have health insurance today than ever before. The racial wealth gap is the smallest it’s been in 20 years. Wages keep going up. Inflation keeps coming down. Inflation has dropped from 9 percent to 3 percent — the lowest in the world and trending lower.

It’s not enough to talk about the past. Biden also discussed several policies that would directly cut costs and grow paychecks for Americans. He urged Congress to pass pending legislation that would “build and renovate 2 million affordable homes.” He vowed to “expand high-quality tutoring and summer learning,” in addition to making other investments in public education and job training. He called on Congress to restore the Child Tax Credit that helped families pull the American economy out of its pandemic-era doldrums and push it to its current strongest-in-the-world status. 

And he asked the American people at home: “Does anybody really think the tax code is fair? Do you really think the wealthy and big corporations need another $2 trillion tax break?” Answering his own question, Biden continued, “I sure don’t. I’m going to keep fighting like hell to make it fair. Under my plan, nobody earning less than $400,000 a year will pay an additional penny in federal taxes.”

“The way to make the tax code fair,” Biden explained, “is to make big corporations and the very wealthy begin to pay their share. Remember, in 2020, 55 of the biggest companies in America made $40 billion and paid zero in federal income tax. Zero.” He also proposed a 25% minimum tax for billionaires that would raise half a trillion dollars in revenue over the next decade. Biden then framed his proposal directly in opposition to then-President Trump’s $2 trillion tax cuts for the wealthiest Americans and corporations, marking a clear difference in tax policy for the November elections.  

Biden also pointed out that his Administration is cutting junk fees and combating the rampant greedflation that is still inflating prices for the American people. “My administration has proposed rules to make cable, travel, utilities, and online ticket sellers tell you the total price up front so there are no surprises,” he said.

A little further down, I’ll discuss the budget that President Biden proposed immediately following the State of the Union, which lays out some of these policies in greater detail and offers some significant avenues to address the economic problems that still linger in the wake of the pandemic. But I also wanted to highlight the rhetorical flourish with which Biden summed up his understanding of how the economy works, because it was one of the most full-throated and concise explanations of middle-out economics that I’ve ever seen: “I came to office determined to get us through one of the toughest periods in the nation’s history. We have. It doesn’t make the news, but in a thousand cities and towns, the American people are writing the greatest comeback story never told,” Biden said.

“So, let’s tell the story here and now,” he continued. “America’s comeback is building a future of American possibilities—building an economy from the middle out and the bottom up, not the top down, investing in all Americans to make sure everyone has a fair shot and we leave no one behind.”

Biden continued, “the pandemic no longer controls our lives. The vaccines that saved us from COVID are now being used to beat cancer. Turning setback into comeback: that’s what America does,” he said. And the way to make that transformation is to bet big on the capabilities of the American people, ensuring that families have the economic power and freedom to build a better future for themselves—and, through them, for everyone. 

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