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Tags: biden | trump | u.s. economy | 2024 election | china | taxes

Neither Biden or Trump Offer Solid Economic Policies

Neither Biden or Trump Offer Solid Economic Policies
U.S. President Joe Biden, left, and former President Donald Trump (AP)

Peter Morici By Wednesday, 21 February 2024 08:49 AM EST Current | Bio | Archive

Progressives and many moderates are aghast that former President Donald Trump could recapture the White House, and many would prefer that President Joe Biden step aside for a younger candidate.

His economic program is problematic, and Mr. Trump does not offer much better.

Both men wrongly eschew the old Washington Consensus that prosperity is best served by fiscal prudence, monetary discipline and free trade.

$13T in New Debt

Trump’s tax cuts, Biden’s subsidies for industrial policy and their combined pandemic relief racked up $13 trillion in new debt from 2017 to 2023.

The Federal Reserve enabled much of this by printing money to soak up new Treasuries. This ultimately resulted in terrible inflation that the Fed struggles to bring down to 2%.

Like Mr. Trump, Mr. Biden has kept tariffs on China and America out of the Trans-Pacific Partnership, and he eschews new free trade agreements.

Going forward, however, Mr. Biden is more surgical and has sought collaboration with allies to limit Chinese access to cutting-edge technology. He will likely block imports of most Chinese EVs and components, but his aversion to the Trans-Pacific Partnership (TPP) cedes advantages to China in many of the world’s fastest growing markets—the Indo-Pacific nations.

Mr. Trump’s proposed 60% tariff on Chinese imports could reduce bilateral trade to near zero and handicap U.S. competitiveness in third-country markets by likely limiting access to Chinese battery technology and other low cost materials.

Targeting Europe as well and threatening NATO, Mr. Trump can hardly expect with certainty continued European cooperation, for example on limiting Chinese access to chipmaking technology.

Mr. Biden presides over a flood of new immigrants that overwhelm cities and limit their capacity to maintain police protection and basic services like garbage collection.

His industrial policies to promote EVs, semiconductors and green energy are not particularly popular beyond their direct beneficiaries.

26% Approval for Bidenomics

A Bloomberg/Morning Consult poll found that only 26% of voters in seven swing states thought Bidenomics was good for the economy, and recent voter approval polls of his economic policies indicate not much change.

EVs are piling up at new car lots—drivers want hybrids and gas-powered vehicles. Big ticket offshore wind power projects have been canceled owing to rising costs and environmental concerns. We should be uneasy about the increasing vulnerability of winter electricity supplies as the grid becomes more dependent on solar and wind.

For his part, Mr. Trump has indicated he wants to extend the 2017 tax cuts that will expire in 2025 and further cut corporate taxes. But those would swell the federal deficit, which is already projected to average 5.5% of GDP over the next 5 years and pressure the Fed to print more money and create more inflation to keep interest rates from crowding out private investment.

Mr. Trump’s saving grace—or simple good luck—is that the Trump-Biden big federal deficits, easy money induced inflation didn’t arrive until after he left office (more on that in a future column). And he leads Mr. Biden in Michigan, Neveda, Arizona, North Carolina and Georgia and is virtually tied in Pennsylvania and Wisconsin.

But facing 91 felony charges in three states and Washington, DC, why does he outpoll other experienced Republicans?

Fury at the Establishment

Simply, they represent “the establishment.” And more and more Americans—even moderate Americans, which include more Blacks and Hispanics than progressive elites like to admit—may not view the legal system as wholly fair, the major political parties as working to their benefit or media, which habitually trashes Mr. Trump, as objective and reliable.

Americans would be receptive to a third candidate, but to offer an improvement, he or she would have to articulate a program to harness federal deficits by consolidating entitlements and rationalizing Defense Department personnel and procurement to accomplish greater efficiencies. And spell out concrete actions to curb immigration and ease burdens on cities that are within the powers of a sitting president or that could obtained through legislation.

For now, Mr. Trump is still selling himself as a disruptive outsider and the mainstream media misreads what he represents.

They correctly fear a second Trump Administration may try to actualize his authoritarian impulses and that he is bent on revenge. But what Trump understands, and Mr. Biden has recently learned, is that the federal bureaucracy can pose obstacles. For example, the inhouse revolt at the State Department against Mr. Biden’s policy towards Israel in Gaza.

Mr. Trump’s proposals are impractical without 60 votes in the Senate but still threatening to many moderate Americans—for example, weakening civil service tenure, establishing anti-woke national teacher certification and a national online alternative to public universities.

Another candidate is needed—perhaps from a third party—who will allay fears and steer a moderate course defined by more responsible federal budget, trade policies and immigration. Someone who will inspire unity, not inflame our divisions.

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

© 2024 Newsmax Finance. All rights reserved.

Progressives and many moderates are aghast that former President Donald Trump could recapture the White House, and many would prefer that President Joe Biden step aside for a younger candidate. His economic program is problematic, and Mr. Trump does not offer much...
biden, trump, u.s. economy, 2024 election, china, taxes
Wednesday, 21 February 2024 08:49 AM
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