Election Year 2020: Bidenmomics vs Trumponomics
posted by Marsha Vande Berg on October 14, 2020 - 6:27pm
The striking differences between the plans for the US economy of President Donald Trump and his challenger, former vice president Joe Biden, are being pushed off center stage by the theatrics of a willful, unpredictable White House incumbent in the midst of a suddenly very challenging campaign.
Despite the fact voters regard the economy as singularly important in their decision-making, new polls suggest Trump’s personal antics may be throttling his chances at success in winning a second term. A recent poll by the Wall Street Journal/NBC – a bipartisan effort political circles regard as the gold standard in polling - gives Biden a 53% to 39% lead over Trump.
The pulse point was taken immediately following the caustic exchange between Trump and Biden, initially billed as the first in a series of televised presidential debates. Events since have kept the spotlight on the sharp differences between the two contenders but with regard to style. Trump exercises power on whim. Biden, on the other hand, is a seasoned politician with a pragmatic approach to power.
Since the so-called debate on Sept. 29, Trump’s waffling in his response to a debate challenge to disavow white supremacy has gone viral. More recently, he abruptly left the hospital three days after being diagnosed with COVID-19 and with dramatic bravado, tore his mask from his face while standing on the White House balcony and told Americans not to let COVID-19 scare them.
The unintended consequence of these events has been to ramp up the decibel level on the noise about Trumpian style and in the process drown out discussion of legitimate issues, notably the two candidates’ differences when it comes to handling the domestic economy.
Meanwhile, the economy is making every effort to claw its way back from the sharpest downturn in recent memory. Meanwhile the pandemic’s fatality count continues to increase as Americans as well as others worldwide brace for the possibility of a second wave during the winter months.
Inescapable however is that whomever voters choose when they go to the polls on November 3 will face putting America’s economic house in order as his first order of business. To try to understand what that path might look like – under a Trump redux or a Biden presidency – it is helpful to consider the economic proposals each campaign has posted on respective websites.
Two reputable organizations have done just that: Moody’s Analytics has done a comprehensive analysis based on its own numbers crunching following models used by the Federal Reserve and Congressional Budget Office. Another analysis comes from the independent, bipartisan Committee for a Responsible Federal Budget. Their emphasis highlights the impact of the competing plans on the deficit and the national public debt.
In its report dated Oct. 7, the Committee suggests that “both plans would add substantially to the debt” but in numbers that are a whisker difference from each other.
Trump’s proposals for a second term would add $4.95 trillion to the debt through 2030. The Biden plan would contribute to a $5.6 trillion deficit over the same decade-long period. Each candidate’s one-time spending on infrastructure, for example, is similarly in the same ballpark. The Trump plan would cost $2.45 trillion and the Biden plan, $2.35 trillion.
National public debt would increase to 125% of GDP by 2030 under Trump , and 128% under Biden. Bottom line, says the Committee report, Americans are facing a “new normal” when it comes to budget deficits and public debt.
Moody’s Analytics in its report dated Sept. 23 also underscores the deepening fiscal challenges awaiting the next president. Nevertheless, their numbers crunching leads them to conclude that Bidenomics and not Trumponomics will result in the stronger US economy.
Why? “Largely because of Biden’s substantially more expansive fiscal policies, the economy would return to full employment more quickly coming out of the pandemic than under Trump – in the second half of 2022 under Biden compared with the first half of 2024 under Trump.”
A Bidenomics recovery has potential to spur creation of as many as 18.6 million jobs and an after tax income boost of $4,800 per average household. The emphasis is on speed and a bet that size of federal spending will be offset by a partial rollback of the Trump tax cuts for business and the well-to-do and a benign interest rate environment at least until full employment returns.
The choice between the two could not be clearer, the report concludes.
In short, Trump redux would mean continuation of the first term, which has been designed to help the private sector and the economy’s supply side. His underlying philosophy: The private sector alone and not government is the source of jobs, higher productivity and greater wealth.
By contrast, Biden will draw on his experience stewarding the Obama administration’s economic reforms post 2008-09 and then put his own stamp on the economy’s recovery. He will advocate economic reforms that reallocate resources and in the process address longstanding, divisive economic and by extension social inequalities in access to healthcare, education and job opportunities.
In short, Biden’s plan intends to be the American economy’s energizer bunny – reallocating federal monies to spur growth by leveling the playing field between the haves and the have-nots and building green infrastructure and greater broadband access - all leading to more jobs, higher incomes for the middle class and a stronger economy.
If that means kicking the can of deficit spending and debt down the road, so be it. It’s about winning a war and worrying about how to pay for it later.
The following is a thumbnail sketch of the differences between the two economic plans. Source: The Macroeconomic Consequences: Trump vs. Biden, Moody’s Analytics.
President Trump, Republican
Note: Details about President Trump’s economic agenda for a second term are sketchy but a review of his public comments and 2021 fiscal budget suggest that he will continue to favor the private sector. The economy would realize a meaningful recovery by the end of 2024. Key points: He builds on his first-term initiatives, including an as yet unrealized trillion-dollar infrastructure proposal and a “health reform vision” plank in his budget proposal.
• $1.9 trillion in tax cuts via the permanent extension of 2017 corporate and individual tax cuts; indexing capital gains to inflation; and extending 100% corporate expensing of capital outlays.
• Broad cuts in non-defense programs, notably healthcare, social safety net programs; and federal employee health and retirement benefits.
Former Vice President Joe Biden’s economic program would contribute to recovery by mid-2022. The impact of tax increases would be offset largely by partial rollback of 2017 tax cuts together with curtailment of Trump’s policies on foreign trade and immigration. GDP would increases would largely be offset by Reversal of Trump’s policies on foreign trade and immigration; at end of term, 2024, GDP would be 4.5% larger under Biden than Trump;, 7.4 million more jobs; budget deficits: Biden’s policies cost $2.5 trillion during four years; Trump add few hundred billion. Add similar amount to deficit over ten years.
Democrat Joe Biden
Key features: Economic recovery by 2022 with turnaround on high unemployment; creation of millions of new jobs; expansion of social welfare; and trillion dollar green infrastructure program.
• $4.1 million in tax hikes with the lion’s share from a partial rollback of 2017 corporate tax cuts
Government spending/over four and 10 years
• Total: $3.9 trillion; $7.3 trillion
• Infrastructure: $2.3 trillion; $2.4 trillion
• Education: $636 billion; $1.9 trillion
• Social Safety Net: $368 billion; $1.5 trillion
• Healthcare: $605 billion; $1.5 trillion