President Joe Biden has a unique and challenging task: Managing the nation's economic recovery after a global pandemic that caused unemployment to surge to levels not seen since the Great Depression. The International Monetary Fund (IMF) predicts global growth will be 3.6% in 2023. That's down from a rate of 6.1% in 2021. Some of the reasons for the slowdown include ongoing issues stemming from the COVID-19 pandemic, Russia's invasion of Ukraine, and a slowdown in China's economy.
Joe Biden was inaugurated as President of the United States on Jan. 20, 2021.
The economic agendas of the candidates were even more important during the 2020 election than usual. After all, Franklin D. Roosevelt beat Herbert Hoover by a landslide in the 1932 presidential election because he promised "a new deal for the American people."
President Joe Biden attacked former president Donald Trump's handling of the coronavirus efforts and released a seven-point plan of his own, which included:
- A nationwide mask mandate
- More testing
- Ramping up personal protective equipment production
- Establishing a renewable fund for state and local governments
- Investing $25 billion in a vaccine manufacturing and distribution plan
- Fixing the country's relationship with the World Health Organization (WHO)
Before being elected, Biden also called for the next government stimulus and relief package to be larger than $2 trillion and said it should include much more aid for states and come with a higher degree of oversight. The American Rescue Plan was signed into law by President Biden on March 11, 2021, and cost $1.9 trillion, making it one of the largest economic rescue plans in U.S. history.
Trump signed four bills designed to offer relief to the American economy. The first bill, the Coronavirus Preparedness and Response Supplemental Appropriations Act, was signed on March 6, 2020, and allocated $8.3 billion to fund various efforts. The Families First Coronavirus Response Act was signed on March 18. On March 27, 2020, Trump signed the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act. The fourth package, nicknamed Phase 3.5, was signed on April 24 and basically refunds programs created in the CARES Act with $484 billion.
Here we compare the economic policies of former President Trump and President Joe Biden. Trump provided few details for his plans for the economy during his second term outside of his 2021 budget proposal, released in February 2020 before the pandemic's impact was fully known, and a second-term agenda with general goals and priorities.
- Both Trump and Biden wanted infrastructure bills worth more than $1 trillion.
- Republicans did not want infrastructure spending in coronavirus stimulus bills; Democrats do.
- Biden's plan focused on climate change as well.
Trump, who campaigned on the promise of rebuilding America, sought an infrastructure bill. There appeared to be bipartisan support for such a bill. He claimed he wanted a big and bold $2 trillion plan, as part of the next congressional coronavirus relief package.
When asked how the U.S. would fund another massive package, he cited the low borrowing rates. He did not provide details of his plan. His agenda mentioned winning the 5G race and establishing a national high-speed wireless internet network.
Joe Biden released a 10-year, $1.3 trillion infrastructure plan as part of his election campaign. He said his plan will move the U.S. to net-zero greenhouse gas emissions and create jobs to expand the middle class. Some of the facets of the plan were:
- $400 billion for a new federal program for clean energy research and innovation
- $100 billion to modernize schools
- $50 billion on repairing roads, bridges, and highways in his first year in office
- $20 billion on rural broadband infrastructure
- $10 billion for transit projects that serve high-poverty areas with limited transportation options
He said his plan will be paid for by "reversing the excesses of the Trump tax cuts for corporations; reducing incentives for tax havens, evasion, and outsourcing; ensuring corporations pay their fair share; closing other loopholes in our tax code that reward wealth, not work; and ending subsidies for fossil fuels."
- Trump wanted to extend the 2017 tax overhaul for individuals.
- Biden planned to roll back tax cuts and apply a payroll tax to those making more than $400,000.
- 75% of Biden's tax hike will be borne by the top 1%.
In the February 2020 budget proposal, the Trump administration assumed the individual income tax provisions included in the massive Tax Cuts and Jobs Act (TCJA) and set to expire in 2025 would be extended. Between 2025 and 2030, these tax cuts would cost the federal government $1.5 trillion, according to the Committee for a Responsible Federal Budget.
The budget also proposed repealing renewable energy tax credits, offering tax credits for then-education secretary Betsy DeVos' Education Freedom Scholarship program, and raising the Internal Revenue Service (IRS) budget by about $15 billion over a decade.
Trump's agenda mentioned Made in America tax credits for companies and expanding the Opportunity Zones program to boost investment in economically distressed communities. The former president also called for permanent payroll tax cuts.
Throughout his campaign, Biden promised that he would limit any tax hikes to people earning above $400,000, and remains committed to his pledge that individuals making under that figure won't have their taxes increased.
Biden proposed to raise the top income tax rate back to 39.6% from 37% and the top corporate income tax rate to 28% from 21%. His plans also included taxing capital gains and dividends at ordinary rates for those with annual incomes of more than $1 million and imposing a 15% minimum tax on the book income of large companies. The tax rate on profits earned by foreign subsidiaries of U.S. firms would be doubled to 21%.
According to the Tax Policy Center, Biden's tax proposals could increase revenue by $4 trillion between 2021 and 2030. It is estimated that 93% of the tax increases would be borne by taxpayers in the top 20% of households by income. The top 1% of households would pay three-quarters of the tax hike.
- Trump's budget proposed spending cuts to Medicare and Medicaid.
- Biden is opposed to Medicare for All but wants to create a public option.
- Biden wanted to lower the Medicare eligibility age to 60.
In the 2021 budget proposal, the Trump administration proposed deep health care spending cuts over the next decade, especially to Medicaid ($900 billion) and Medicare ($450 billion). It requested $94.5 billion for the Department of Health and Human Services, a 10% decrease from the 2020 enacted level.
His agenda, however, mentioned protecting Social Security and Medicare besides lowering health care insurance premiums and ending surprise billing. Trump repeatedly promised to bring down drug prices, without significant results.
Biden didn't miss an opportunity to mention he was next to former President Obama when the Affordable Care Act (ACA) was signed into law and vowed to protect and expand it. He said he would eliminate the 400% income cap on tax credit eligibility and lower the limit on the cost of coverage to 8.5% of income.
Instead of the Medicare for All plan suggested by his progressive rivals, Biden said he wanted to create a similar public health insurance option. He also wanted to lower the eligibility age for Medicare to 60 from 65.
More than an estimated 97% of Americans are covered under this plan, which is expected to cost $750 billion over a decade. It will be paid for through revenue from his capital gains reform. The cost estimation, however, was provided by the campaign in 2020, before expanding Medicare access to younger people was suggested.
- Trump didn't dial back the China trade war rhetoric during his presidency.
- U.S. trade deficit fell for the first time in six years in 2019.
- Biden wanted a coalition with international allies to pressure China.
The trade war with China was the centerpiece of Trump's trade policy during his first term. He promised to put America first in all dealings with countries and penalize those the U.S. has a high trade deficit with or he believed are unfairly taxing American companies overseas.
Angering Beijing while the overburdened U.S. health care system depends on China for medical supplies was a risk. Chinese medical supplies account for 48% of all personal protective equipment imports in the U.S.
The U.S. monthly international trade deficit was $39.9 billion in February 2020, the lowest since September 2016. Contributing to this was the impact of COVID-19 on Chinese manufacturing. On an annual basis, the deficit fell for the first time in six years in 2019 to $616.8 billion.
As he described in his article for Foreign Affairs titled "Why America Must Lead Again," Biden plans to help America's position in the global economy by investing at home in innovation and the middle classes first.
He promised to do this before entering any new trade agreements. He also said the best way to confront China on intellectual property and technology transfers is by forming a coalition with allies and partners, not through unilateral tariffs.
Jobs and Wages
- For both Trump and Biden, creating jobs through infrastructure investments should be a priority.
- Trump planned to continue the "Buy American, Hire American" immigration agenda.
- Biden wanted to raise the minimum wage to $15, but Trump was against it.
The U.S. economy created 6.6 million jobs during the first three years after Trump took office. This was good but not particularly impressive when we look at Labor Department data and consider the state of the economy when he took office. While economic immigration programs became stricter under his tenure, he stopped short of big rule changes like revoking the right of spouses of H-1B visa holders to work.
Millions of jobs were erased amid the COVID-19 crisis and may take a while to return. Trump's idea to spur job creation was through a $2 trillion infrastructure bill. He floated the idea of the government buying four or five years' worth of plane tickets to help the industry with cash. He also put a freeze on new green cards to protect American workers, asking his administration to review guest worker programs. The freeze was initially in place for 60 days until June 2020 and was later extended until Dec. 31, 2020.
Trump also wanted to boost manufacturing in the U.S. and aimed to bring back one million manufacturing jobs from China. He recommended:
- No federal contracts for companies that outsource to the country
- Tax credits for companies that bring jobs back to the U.S.
- 100% expensing deductions for essential industries that return manufacturing to the U.S.
Trump said in the past he would like to see some increase in the federal minimum wage but would prefer to leave it up to states. The left-leaning Economic Policy Institute said the National Labor Relations Board under Trump "advanced an anti-worker, anti-union, corporate agenda that has undermined workers’ ability to form unions and engage in collective bargaining."
Biden said he wanted to create millions of middle-class jobs through his infrastructure plan. The plan involved building renewable energy infrastructure, anchor institutions, and climate resiliency industries. It includes increasing funding for such programs as the New Markets Tax Credit, the Community Development Financial Institutions (CDFI), and the Economic Development Administration, an agency within the U.S. Department of Commerce.
His plan to help the manufacturing sector included quadrupling funding for the Manufacturing Extension Partnership and providing tax credits for communities that experienced mass layoffs or the closure of a major government institution.
Biden also wanted to increase the federal minimum wage to $15 and believes labor leaders should be involved in new trade deal negotiations. Due to the health crisis, he proposed getting all 50 states to adopt short-time compensation programs that are fully and permanently funded by the federal government.
The plan also included reforms to the temporary visa programs to make sure the government is not disincentivizing recruiting workers from the U.S. Plus, he planned to increase employment-based green cards from 140,000 each year.
- Trump believes climate change is a hoax.
- Biden wanted net-zero emissions by 2050—not soon enough, say critics.
- Trump pulled America out of the Paris climate agreement, while Biden rejoined.
Trump doesn't believe in climate change and is a strong supporter of the fossil fuels industry. As president, he rolled back environmental rules, planned to lease millions of acres of public land for drilling, and began the long process to exit the Paris climate agreement. His agenda vaguely mentioned cleaning up our planet's oceans and maintaining access to clean air and drinking water.
Climate change is mentioned in many of his plans, especially infrastructure and trade. But critics say his plan wasn't ambitious enough.
The requirements for his proposed plan include federal spending of $2 trillion over his first term in an attempt to put the U.S. on the path to achieving a 100% clean energy economy with net-zero emissions no later than 2050. Biden said it will be paid for by reversing Trump-era corporate tax cuts and ending subsidies for fossil fuels among other things.
Here's some of what's in it:
- Rejoin the Paris Climate Agreement, make climate change part of foreign policy, enact trade negotiations, and demand a worldwide ban on fossil fuel subsidies
- A carbon pollution-free power sector by 2035
- Upgrade and modernize U.S. buildings and infrastructure
- Zero-emissions public transportation options for all cities by 2030
- $400 billion investment in climate innovation and research
- Tax incentives and credits
- 500,000 new EV public charging outlets and use federal procurement to increase demand for American-made, American-sourced clean vehicles
- Methane pollution limits
- No ban on fracking, but he does plan to ban new permits for oil and gas drilling on federal land and offshore
- Trump wanted to scrap loan subsidies and forgiveness for public service.
- Trump planned to create a single income-driven repayment program.
- Biden proposed forgiving student debt for poorer grads.
The Trump administration's 2021 budget proposal requested $66.6 billion for the Department of Education, a $5.6 billion or 7.8% decrease from 2020. It proposed eliminating the Public Service Loan Forgiveness and subsidized loan programs.
Trump also intended to replace the four income-driven repayment programs with a single one that capped monthly payments at 12.5%. It forgave undergraduate loans after 15 years instead of 20 years and raised the period for graduate loan repayment to 30 years from 25 years.
Joe Biden made his student debt plan more generous. This included the immediate cancelation of a minimum of $10,000 of student debt per person, as was originally suggested by Senator Elizabeth Warren.
Biden proposed forgiving all undergraduate, tuition-related federal student debt for low-income and middle-class individuals (earning up to $125,000) who attended public colleges and universities, private historically Black colleges and universities (HBCUs), and private, underfunded minority-serving institutions. This will be funded by repealing the high-income "excess business losses" tax cut in the CARES Act.
As of August 2022, the following changes were enacted by the Biden administration;
- A pause on federal student loan repayment until Dec. 31, 2022, because of the COVID-19 pandemic. This was first put into place by Trump in March 2020.
- Up to $20,000 in federal student loan cancelation for those with Pell Grants held with the Department of Education and up to $10,000 for those with non-Pell Grants.
- Proposals to change the Public Student Loan Forgiveness program and the repayment program.