Between making the rich wealthier, or spending more than the government can afford, the two presidential candidates have presented starkly opposing economic plans. They are only similar in recognizing the US is more in debt than ever before.
The US national debt is projected to exceed its previous post-World War II record high over the next four-year presidential term, and be double the size of the US economy in 30 years. US debt is currently at $27.2 trillion dollars.
The November 3 Presidential election’s winner will be immediately confronted with the need to put America’s economic affairs in order. For voters across America, the different economic platforms and promises made by President Donald Trump and Presidential hopeful Joe Biden play a significant role in informing their vote.
The Committee for a Responsible Federal Budget, an independent group, compared the pitches made by the two Presidential contenders, suggesting that ‘both plans would substantially add to the debt’, with little difference between them.
The CRFB assesses that Trump’s economic plan would increase debt by $4.95 trillion over ten years, compared to Vice President Biden’s plan, which would increase the public deficit by $5.6 trillion in the same period.
But that doesn’t say much on its own. Each economic plan consists of multiple measures to stimulate the economy, so even an expensive budget that yields a higher GDP (gross domestic product) could be described as a good step.
Instead, economists also look at the amount of total debt compared to the total size of the US economy. The key question is will this budget increase our existing debt, or reduce it? CRFB’s analysis shows that total public debt will rise from being 98 percent of the economy's total GDP to 125 percent by 2030 under Trump. Under Biden, that’s expected to rise to 127 percent.
Trumpenomics consists of a 54-point agenda that promises to do many things. It includes lowering taxes, strengthening the military, increasing spending on aging infrastructure, more spending on military veterans and space travel, cheaper drugs, more school and health care choices, ending foreign wars, and reducing spending on immigrants.
Trump also unveiled the ‘Platinum Plan’ for Black Americans, which promises to treat Antifa and the Ku Klux Klan as terrorist organizations, make Juneteenth a public holiday, and support black economic prosperity by spending more on Black education and small businesses.
Biden on the other hand, promises to increase taxes on the high-income households and companies, alongside increased spending on child care and education, health care, retirement, disability benefits, infrastructure and research. Biden has also committed to lowering drug costs and ending wars abroad.
Making comparisons between their agenda’s is difficult. While Joe Biden presented detailed proposals for taxation and government spending, Trump only posted a bullet list of goals without detailing how he would achieve them.
Biden may do better, but isn’t bringing new ideas
According to Moody’s Analytics, Bidenomics will yield a better US economy. They explain 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."
Moody’s Analytics says that if a Bidenomics recovery is successful, it could possibly create 18.6 million new jobs, and increase household income through tax cuts by an average $4,800 per family. How did they reach that conclusion? Primarily Biden’s emphasis on acting fast, and expectations that Biden will reverse some of the tax cuts Trump gave to big businesses and the wealthy.
But Biden has come under fire for his past record, and is accused of presenting abstract projections to resell the same policies he enacted with Obama that gave the US its weakest recovery since the Great Depression.
More critically, he’s accused of citing pro-Democratic reports from Goldman Sachs and Moody Analytics, instead of addressing how the same policies performed under the Obama-Biden administration.
Biden’s current economic proposal would only amplify policies adopted during the previous Obama administration, for better or worse. How? By raising taxes three times as much as Obama did, spending 2.7 times more and regulating the economy to an unprecedented degree. Proponents of Trumponomics warn that too much pressure on big business, which they argue employs millions in America, could very well see them migrate overseas in favour of cheaper labour, less taxes and costs.
Both economic plans don’t talk much about the Covid-19 pandemic, presumably because it’s difficult to assess the total cost it will have on the US economy, even though recent estimates place it at $16 trillion.
Biden goes after the top 1 percent
While both economic plans have their overlaps, they also have fundamental differences in approach and policy.
Where Biden would increase federal spending to boost the economy beyond what any tax increase could account for, Trump would decrease taxes, effectively lowering government revenue, and instead supporting big business.
Biden’s proposed raised taxes would affect wealthy Americans making more than $400,000, or the top 1.8 percent, while restoring some Republican tax cuts. Biden will also concentrate income and payroll tax on the top 1 percent, which makes nearly $700,000 annually. Under a Biden administration, the 1 percent would pay for nearly 96.7% of his tax changes.
That’s not where his pursuit of the wealthy stops either. Biden’s proposal will raise maximum capital gains taxes from the current 23.8 percent to the same maximum normal income tax of 37 percent. At its heart, Biden’s plan wants to hit the wealthy hard, and leave the middle class and working class Americans alone.
One of his main proposals is to eliminate the ‘step-up’ policy, which lets wealth be inherited without capital gains tax. For the wealthy, the step-up is a big deal.
Trump’s tax approach
Trump takes a very different approach to tax. In his proposal, he opts for cutting taxes, especially on the rich, and reducing almost all non-defence government spending.
One of his policies would chain the capital gains tax rate to inflation, a policy pushed by conservative wealthy families for a long time. In a nutshell, it would save them a lot of money. Trump also wants to offer companies permanent tax cuts, based on previous emergency tax cuts meant to expire in 2025.
Social spending is also set to take a hit under Trump. Medicaid will require work as a condition, which will limit the amount of low-income households that can benefit from it. Spending on food stamps and assistance to needy families programs will also see reduced spending.
Both proposals are not legally binding however, and only constitute campaign trail promises. For the United State’s next president, reality may force different priorities and considerations.