Economic Futures: Biden vs. Trump
President Joe Biden and former President Donald Trump have presented sharply divergent economic plans as they compete for the presidency in November.
Trump aims to expand his 2017 tax cuts, significantly restrict illegal immigration, impose tariffs on all U.S. imports, and undo many of Biden’s clean energy initiatives. Biden, on the other hand, plans to extend some Trump tax cuts, primarily for middle-income earners, implement targeted tariffs on Chinese imports, and enforce stricter but more measured immigration policies.
Tariffs
Trump’s Tariff Plan
Trump’s strategy involves doubling down on the trade war he initiated during his first term. He proposes a 10% tariff on all U.S. imports, a move aimed at protecting American manufacturing workers and reducing the trade deficit. However, analysts suggest these tariffs would likely increase inflation and fail to significantly cut the trade gap.
Biden’s Tariff Plan
Biden has maintained most of Trump’s initial tariffs and introduced specific increases, such as a 100% levy on Chinese electric vehicles and solar panels. His approach is designed to help U.S. companies compete with Chinese firms benefiting from government subsidies. Analysts believe Biden’s targeted tariffs would have a minimal impact on overall economic growth.
Impact of Tariffs
Trump’s tariffs could raise inflation by nearly three-quarters of a percentage point next year, according to Moody’s. This would harm households and manufacturers reliant on imported materials, potentially resulting in 2.1 million fewer jobs and a 1.7% smaller economy by 2028. Conversely, Biden’s tariffs would have a less significant impact on inflation and employment.
Taxes
Trump’s Tax Plan
Trump aims to work with a Republican Congress to extend the Tax Cut and Jobs Act (TCJA) for all income levels, potentially reducing the corporate tax rate further. While this could spur business investment, it would also increase the national debt and long-term interest rates.
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Biden’s Tax Plan
Biden proposes extending lower personal income tax rates only for individuals earning less than $400,000 annually. He seeks to raise the corporate tax rate from 21% to 28%, though this may face opposition in Congress. This approach aims to reduce the deficit and control inflation.
Impact of Taxes
Extending Trump’s tax cuts could lead to more business investment but also higher inflation. By 2028, this might result in 450,000 more jobs compared to Biden’s plan. However, the larger deficit and higher interest rates could negatively impact economic growth. Biden’s plan, by targeting tax relief to lower-income households, is expected to boost economic activity more efficiently.
Immigration
Trump’s Immigration Plan
Trump has vowed to deport millions of undocumented immigrants and reinstate restrictive policies like the “remain in Mexico” program and Title 42. These measures could be implemented through executive actions without needing congressional approval.
Biden’s Immigration Plan
Biden aims to toughen border enforcement but also seeks to increase the number of refugees admitted to the U.S. and protect undocumented spouses of U.S. citizens from deportation. His approach balances stricter enforcement with humanitarian policies.
Impact of Immigration Policies
Trump’s stringent immigration policies could significantly reduce labor force growth, leading to higher wages and inflation. By 2028, his policies might result in 1.5 million fewer jobs and a smaller economy. Biden’s plan would maintain higher levels of immigration, supporting labor force growth and moderating wage-driven inflation.
Clean Energy and Social Services
Trump’s Stance on Clean Energy
Trump would likely roll back the Inflation Reduction Act’s clean energy provisions, which could slightly reduce the budget deficit but also slow economic growth and job creation in the renewable energy sector.
Biden’s Social Service Proposals
Biden is advocating for various social programs, including affordable childcare, free college tuition, expanded healthcare, and lower drug prices. However, these initiatives face challenges in a divided Congress.
Conclusion
The economic plans of Biden and Trump reflect their broader policy philosophies. Biden focuses on targeted tax relief, moderate immigration reform, and social services expansion. Trump emphasizes broad tax cuts, stringent immigration measures, and trade protectionism. As voters consider their choices, the economic implications of these divergent plans will be a central issue.