In an address to the Economic Club of New York, Lael Brainard, the director of the National Economic Council and President Biden’s top economic adviser, expressed her belief that the benefits of so-called “trickle-down” economics are not as significant as they are often portrayed. Brainard argued that the strategy of implementing tax cuts for wealthy investors and large corporations does not effectively stimulate overall economic growth.
According to Brainard, the consequences of these policies are a widening economic inequality in the United States and a stagnation in vital investments in infrastructure and industries. As an alternative, she highlighted President Biden’s approach of developing the economy from the “middle out” and “bottom up,” which she believes has proven to be more successful.
To achieve broad and sustained economic growth, Brainard emphasized the necessity of making sustained public investments in the nation’s economic future, ensuring opportunities for American workers to enter the middle class, and diversifying supply chains.
Despite acknowledging the possibility of a recession, Brainard expressed confidence in the current state of the U.S. economy. She pointed out that the labor market is more balanced than it was six months ago, and inflation is decreasing. In fact, the June reading of the consumer price index indicated a decline in the annual pace of price growth for the twelfth consecutive month. Core inflation, which excludes food and energy prices, also showed signs of slowing down.
Brainard concluded her speech by asserting that the current economy is delivering positive outcomes for America’s middle class by creating good jobs and contributing to real income gains, particularly for workers whose earnings have previously fallen behind.
In summary, Brainard challenges the conventional wisdom surrounding trickle-down economics, advocating for a more inclusive and comprehensive approach that supports long-term economic prosperity.
Economic Policy and Inflation Reduction
Annual core CPI inflation has been declining and is projected to further decrease as rents slow down. In order to combat inflation, it is important for corporations to reduce their markups, according to Brainard. She suggests that if customers become more price-sensitive and firms compete more intensely, the markups associated with price spirals can be unwound.
Biden’s Economic Agenda
Brainard attributes recent economic gains to Biden’s economic policy. The president’s agenda going forward will focus on three pillars:
- Public investments in infrastructure, semiconductors, and clean energy.
- Workforce education.
- Maintaining competition and lowering costs.
The administration is proud of its achievements so far in infrastructure and semiconductors, and expects to see expanded employment in these areas. However, there is still work to be done in providing education and training opportunities for American workers to secure high-quality jobs.
Competition and Consumer Protection
Brainard emphasizes the importance of competition in capitalism, even though the Federal Trade Commission recently failed to block Microsoft’s acquisition of Activision Blizzard. The administration is committed to leveling the playing field for lower- and middle-class Americans by lowering the cost of hearing aids and holding companies accountable for “junk fees.”
Future Growth and Middle-Class Support
Brainard assures that in the coming weeks and months, the administration will continue to work diligently to foster growth that benefits the middle class. This will be achieved through smart public investments, worker empowerment, and initiatives to lower the cost of living.
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