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 U.S. economic output will drop 4.3% this year after 2.2% GDP growth last year. The expectation is that when the virus containment measures are lifted and the virus is defeated, the economy will rebound sharply.
Joe Biden was inaugurated as President of the United States on Jan. 20, 2021.
However, uncertainty related to the nature of the virus and the long wait for a vaccine or therapy have reduced the chances of a "V-shaped" recovery. The U.S. should be prepared for 18 months of rolling lockdowns as parts of the economy open and close, said Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari.
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 to date and released a seven-point plan of his own, which includes 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, and fixing the country's relationship with the World Health Organization (WHO). Biden has also called for the next government stimulus and relief package to be larger than $2 trillion and has said it should include much more aid for states and come with a higher degree of oversight.
Trump had 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. For a more detailed look at Biden's plan, see Joe Biden's Economic Plan: Save the Middle Class to Save America. Trump provided few details for his plans for the economy during his second term outside of his 2021 budget proposal, released in Feb. 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 did
- Biden's plan focuses 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 recently said he wanted a $2 trillion "very big and bold" 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 for 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. The spending includes $400 billion on 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, and $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 2017 tax overhaul for individuals.
- Biden will 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 top 1%.
In the Feb. 2020 budget proposal, the Trump administration assumed the individual income tax provisions included in the massive Tax Cuts and Jobs Act 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 had also called for permanent payroll tax cuts.
Biden wants to raise the top income tax rate back to 39.6% from 37% and the top corporate income tax rate to 28% from 21%. If elected, he will apply Social Security taxes to earnings above $400,000, tax capital gains and dividends at ordinary rates for those with annual incomes of more than $1 million and impose 15% minimum tax on book income of large companies. The tax rate on profits earned by foreign subsidiaries of U.S. firms will be doubled to 21%.
According to the Tax Policy Center, Biden's tax proposals will increase revenue by $4 trillion between 2021 and 2030. It 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 wants to lower the Medicare eligibility age to 60.
In the 2021 budget proposal, the Trump administration proposed deep healthcare spending cuts over the next decade, especially to Medicaid ($900 billion) and Medicare ($450 billion). It requests $94.5 billion for the Department of Health and Human Services, a 10% decrease from the 2020 enacted level. His agenda, however, mentions protecting Social Security and Medicare besides lowering health care insurance premiums, and ending surprise billing. Trump has repeatedly promised to bring down drug prices, but we haven't seen significant results so far.
Biden doesn't miss an opportunity to mention he was next to former President Obama when the Affordable Care Act was signed into law and has vowed to protect and expand it. He says he will 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 Medicare for All as suggested by his more progressive rivals, Biden wants to create a public health insurance option like it. He also wants to lower the eligibility age for Medicare to 60 from 65.
His campaign has said his plan will insure more than an estimated 97% of Americans and 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 last year, before expanding Medicare access to younger people was suggested.
- Trump has not dialed back hte China trade war rhetoric yet.
- U.S trade deficit fell for the first time in six years in 2019.
- Biden wants a coalition with international allies to pressure China.
The trade war with China has been 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 believes are unfairly taxing American companies overseas. There is no sign he plans on changing his strategy, but experts say he has to be careful about angering Beijing while the overburdened U.S. healthcare system depends on China for medical supplies. It accounts for 48% of all personal protective equipment imports in the U.S.
The U.S. monthly international trade deficit was $39.9 billion Feb. 2020, the lowest since Sept. 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 promises to do this before entering any new trade agreements. He also says 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
- Both candidates want to create jobs through infrastructure investments.
- Trump likely to continue "Buy American, Hire American" immigration agenda.
- Biden wants to raise the minimum wage to $15, Trump does not.
The U.S. economy created 6.6 million jobs during the first three years after Trump took office. This is 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 have become stricter under his tenure, he has stopped short of big rule changes like revoking the right of spouses of H-1B visa holders to work.
Millions of jobs have been erased amid the COVID-19 crisis and they may take a while to return. Trump's idea to spur job creation is through a $2 trillion infrastructure bill. He has floated the idea of the government buying four or five years' worth of plane tickets to help the industry with cash. He has also stopped the issuance of new green cards for 60 days (May and June 2020) to protect American workers during this time and has asked his administration to review guest worker programs.
Trump also wants to boost manufacturing in the U.S. and aims to bring back 1 million manufacturing jobs from China. He recommends no federal contracts for companies that outsource to the country, tax credits for companies that bring jobs back to the U.S., and 100% expensing deductions for essential industries that return manufacturing to the U.S.
Trump has 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 has said the National Labor Relations Board under Trump has "advanced an anti-worker, anti-union, corporate agenda that has undermined workers’ ability to form unions and engage in collective bargaining."
He wants to create "millions of middle-class jobs" through his infrastructure plan. This involves 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.
To help manufacturing he plans to quadruple funding for the Manufacturing Extension Partnership and provide tax credits for investing in communities that experienced mass layoffs or the closure of a major government institution.
He wants 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 has proposed getting all 50 states to adopt short-time compensation programs that are fully and permanently funded by the federal government.
Biden also wants to reform the temporary visa programs to make sure the government is not disincentivizing recruiting workers from the U.S. Plus, he plans to increase employment-based green cards from 140,000 each year.
- Trump believes climate change is a "hoax."
- Biden wants net-zero emissions by 2050—not soon enough, say critics.
- Trump pulling America out of Paris climate agreement, Biden will rejoin.
He doesn't believe in climate change and is a strong supporter of the fossil fuels industry. As president he rolled back environmental rules, plans to lease millions of acres of public land for drilling, and has begun the long process to exit the Paris climate agreement. His agenda vaguely mentions "cleaning up our planet's oceans" and maintaining access to clean air and drinking water.
Biden: Climate change is mentioned in many of his plans, especially infrastructure and trade, but critics say his plan isn't ambitious enough. His climate plan will require federal spending of $2 trillion over his first term and aims to put the U.S. on the path to achieve a 100% clean energy economy with net-zero emissions no later than 2050. He says it will be paid for by reversing "the excesses" of the Trump tax cuts for corporations 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, trade negotiations, 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/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 wants to scrap loan subsidies and forgiveness for public service
- Trump wants to create a single income-driven repayment program
- Biden proposes forgiving student debt for poorer grads
Trump: The Trump administration's 2021 budget proposal requests $66.6 billion for the Department of Education, a $5.6 billion or 7.8% decrease from 2020. It proposes eliminating the Public Service Loan Forgiveness and subsidized loans programs. Trump also wants to replace the four income-driven repayment programs with a single one that caps monthly payments at 12.5%. It forgives undergraduate loans after 15 years instead of 20 years and raises the period for graduate loans repayment to 30 years from 25 years.
The Center for American Progress says Trump's proposal would cut more than $2 billion in spending next year alone in student financial aid, the Federal Work-Study Program, and other forms of support.
Biden: Joe Biden made his student debt plan more generous. He now wants to immediately cancel a minimum of $10,000 of student debt per person, as was originally suggested by Senator Elizabeth Warren. Biden proposes forgiving all undergraduate, tuition-related federal student debt for low-income and middle class individuals (earning up to $125,000) who have attended public colleges and universities, private historically Black colleges and universities, and private, underfunded minority-serving institutions. This will be funded by repealing the high-income "excess business losses" tax cut in the CARES Act.