If the past few months have demonstrated anything, it’s that social justice issues drive popular politics. They have become the centralized issue of this election and while I agree that they are without a doubt an extremely important factor, it has also become evident that a significant amount of people do not know the nuances of either candidate's plans outside of these issues. The most important of these are their respective economic policies. A lot of people who support Donald Trump state that he will mention how he plans on bringing back jobs or reduce taxes without being able to prove how effective his ideas are, and just as many people who support Biden will focus strictly on his impact or stance in social issues without having much of an idea about what his impact will be on the economy. The reality of the matter is that the condition of the economy will be one of, if not the most important measure of success at the end of the next four years. Social justice issues can fluctuate between different parties and people indefinitely, but without a strong economy, the same Americans whose human rights are being discussed will be out of jobs due to the empty, predatory promises of whichever candidate takes the White House.
With that in mind, let's examine exactly what Joe Biden and Donald Trump have planned.
“We cannot have free and open trade if some countries exploit the system at the expense of others. We support free trade but it needs to be fair and it needs to be reciprocal.” - Donald Trump at Davos
Over the past four years, Donald Trump’s experience as a businessman has clearly influenced his policies. He has oriented around the idea of bolstering the domestic economy and larger corporations in order to produce jobs for the average middle class citizen. He also has publicly criticized the outsourcing of jobs more than any president in recent years, aiming to bring manufacturing jobs back to American workers. With these priorities, his policies have featured corporate and individual tax cuts, trade protectionism through tariffs, and targeting the Affordable Care Act.
Trump's denouncement of outsourcing has been most evident in America’s trade relationship with China. Trump has aggressively advocated for the use of tariffs in order to reduce our budget deficit and bring back domestic manufacturing which has seen a dramatically steep decline in the last 20 or so years. In 2017, on top of a $336 billion trade deficit with China, the US also lost anywhere from $225 billion to $600 billion annually from intellectual property theft indicating that China’s involvement in IP theft is a considerably serious issue. Trump as a result has heightened tensions with China over his presidency with tariffs and retaliatory tariffs, a recent escalation being the attempted ban on WeChat and Tik Tok due to the claim that they allow for an invasion of privacy of American users. Trump’s policies, while completely reasonable in intention considering that China is easily the biggest current threat to America economically, have yet to see any considerable results in terms of increases in domestic manufacturing or success within the trade war. While the number of US manufacturing jobs increased up until 2019, COVID wiped out a significant amount of them and even prior to the pandemic, the rate of increase was not noticeably larger than that of the manufacturing sector under former president Barack Obama. Trump’s tariffs are instead, resulting in retaliation from China and causing US imports to now have higher tariffs placed on them there, while American companies such as Tesla have sued the government for the increased costs they face in manufacturing due to the tariffs. Trump’s view and rhetoric on outsourcing is something that many Americans understandably share in an attempt to bring jobs back to citizens; however, the execution of such policies over the last four years has not proven to be entirely successful, and whether he would be able to do anything considerably different in the next four is up for debate. However, outsourcing does seem to be an issue that Trump has more of a stronghold over in comparison to Joe Biden, which will be discussed later.
Secondly, the tax cuts under Trump have been touted as a catalyst for a booming economy over the last three years but have also come with a serious disparity between how much wealthy and middle class citizens benefitted. The Tax Cuts and Job Act has been the largest overhaul of the tax code in the last 30 years. Most significantly, it reduced the corporate tax rate from 35% to 20%, as well as instating a $10,000 limit on how much in state and local taxes can be deducted from an individual’s federal income taxes. It’s evident that large corporations and the wealthy have benefited significantly from the tax cuts, considering that the act targets tax cuts for corporations, as well as eliminating estate taxes- which previously only applied to people with incomes of $11 million or more. Trump’s argument in defense of these cuts is that the $1.5 trillion in deficits over the next 10 years (from the tax overhaul) will be compensated for by the economic growth that corporations provide. Prior to the pandemic, Trump’s economy seemed to reflect his goals of the tax cuts with most economists agreeing that the economy in terms of unemployment rate and quality of life had been in impressive condition regardless of whether or not they believed his tax promises in the long term. So while the tax plan might seem as though wealthy people benefit more, it is important to regard the idea that the overall improvement in middle class unemployment before the pandemic was a noticeable accomplishment on his part.
The last aspect of Trump’s economic policy has been the Affordable Care Act. Now that the individual mandate, most prominently contested for its unconstitutionality, has been eliminated, his current stance is no longer clear. In recent events, Trump has signed an executive action to protect people with preexisting conditions, as well as promising that senior Americans will receive $200 to put towards prescription drugs in a series of executive actions to protect citizens from unexpected medical costs. The logistics and funding of this $200 plan have not been released by the White House, and this plan is currently the only indication of any substantive Trump healthcare plan. This is an issue that many should take notice of with the Trump administration: while they have discussed and established ideas of what aspects of healthcare they want to remove they seem to have no clear idea of what healthcare formats they want to implement in place of Obama’s policies in order to grant the same protection that Americans were getting before 2016.
“I don’t think 500 billionaires are the reason why we’re in trouble. I hope my grandkids grow up to be -- don’t listen to their parents, who all decided to do something, run the World Food Program, run the -- another will be attorney general, another one run a social organization for at-risk youth, you know.” - Joe Biden at a Brookings Institute Event in 2019
Over the course of his campaign, Joe Biden has been smeared with labels ranging from “communist” to “socialist” to “another Bernie Sanders”, yet his policies themselves don’t paint that picture by any means. At face value, Biden’s policies clearly emphasize reducing the struggle faced by the American middle class. Biden has stated multiple times that the middle class is falling behind significantly while the number of billionaires and rich people in America continue to grow and earn more. The issue with his policies lie therein with how they would impact people’s taxes and the budget deficit/national debt.
Since around 2010 (post recession), both the middle class and upper class median household incomes have gone up. However, the disparity between the level of increase both groups are experiencing is significant. According to The PEW Research Center the median middle class income, “increased by 6% between 2010 and 2016—from $74,015 in 2010 to $78,442” while the upper class median income increased from “$172,152 to $187,872, an overall gain of 9%,” indicating a significant disparity in growth. Furthermore, while the median household income didn’t change from 2017 to 2018, the “number of people without health insurance increased from 7.9%, or 25.6 million, in 2017 to 8.5%, or 27.5 million, in 2018,”. 2.1 million people became uninsured for healthcare within a single year. These statistics are only a minute window into the middle class losing more and more ground to America’s top 1%.
Biden’s plan to address this can be split into impacts on 3 groups of Americans: those making above $400k annually, large corporations, and the rest of the public.
The first of Biden’s policies for the 400k plus group is to implement a 12.4% social security payroll tax that would be evenly split between employees and employers. Next, the individual income tax for people making more than 400k a year would be reverted to the pre-Trump tax cut, to 39.6%. Under Donald Trump this number had been brought down to 37% through the Tax Cuts and Jobs Act. He would also significantly reduce itemized and business income deductions for anyone making above 400k annually. Essentially, if one is making above $400,000 annually, there is no doubt that under Joe Biden, their annual after-tax income would decrease a decent amount as estimates state that most people in this income group will see a 6.5% decrease in this income measure.
Large corporations would also be slapped with an increase in the corporate tax rate, from 21% to 28%. Biden has proposed a minimum tax on any corporations making profits of $100 million or more and double the tax rate on foreign subsidiaries of US firms. These policies would hike up taxes and lower profits for any corporation or firm making large profits will see a significant increase in taxation and lower profits. However, Biden does introduce benefits that would apply to certain large corporations and many small businesses. He plans to reduce the tax liability of businesses experiencing layoffs or large closures by establishing a Manufacturing Communities Tax Credit, which he would expand to small businesses if they adopt workplace retirement savings plans. Biden also proposes many renewable energy related tax credits that would reward carbon capture, use and storage. He targets outsourcing among large corporations by imposing a new 10% additional tax on corporations that outsource manufacturing and service jobs and by establishing a 10% tax credit for “Made in America” activities in order to encourage manufacturing and production in America instead through reestablishing closing/closed facilities, or restarting manufacturing employment here. The validity of this policy however, is unclear because tariffs under Trump were a more direct way to allow US companies to decide how much they wanted to produce in respective foreign countries rather than implementing a tax on all outsourced manufacturing services.
While Biden’s economic policy would slightly negatively impact the $400,000+ group of Americans, a sliver of the population doing extremely well, those making less would benefit greatly through his policies. He is planning on expanding the Earned Income Tax Credit for childless workers above the age of 65 and providing renewable energy tax credits to all individuals. He wants to expand the Child and Dependent Care Tax Credit to $8,000 in qualified expenses (originally $3,000) and $16,000 if multiple dependents exist. He also plans on increasing the Child Tax Credit to $3,000 for any children 17 or less and giving $600 bonus credit for kids under 6. Biden would also reestablish the First Time Homebuyers Tax Credit which had been created during the Great Recession. This would provide up to $15,000 for first time homebuyers. His healthcare plan would involve expanding the ACA to cover 97% of Americans and would cost the country $750 billion across 10 years. Additionally, the implementation of his environmental policies on larger corporations could result in significant job growth and availability in the renewable energy sector thus lowering unemployment.
Although Joe Biden’s policies would negatively affect those making above $400k annually, this group is less than 1% of Americans, making it questionable whether this impact would harm the average middle class person at all. The effect of these policies on large corporations is something that remains to be seen because while he does increase their taxes, he does so in order to target outsourcing and promote renewable energy- arguably laudable goals to have. Furthermore, he has specified a need to increase the minimum wage to $15 which is a heavily questioned idea however, it promotes the logic that there is no point in a decreasing unemployment rate if all of the people being employed are barely making enough money to live on. Increasing minimum wage would allow for even those making the lowest salaries in the country to have somewhat more of a safety net to provide themselves with basic living needs. Raising the federal minimum wage also stimulates consumer spending and reduces employee turnover. However, while the minimum wage raise has its benefits, implementation could also result in an increase in prices among sectors of the market and it could result in more layoffs as employers have limited money to spend on salaries. Like the issues with other benefits he is planning on directing at the American lower and middle class, the main question that lies with Biden’s plan is what all of the changes he wants to implement will do to national levels of economic productivity. Many predict that the Biden tax plan would reduce GDP on a long term scale, while the effects of increasing corporate taxes on the state of economic productivity can have mixed results in combination with his other policies.
Both candidates have immensely different ideas of what would benefit the American economy and its citizens the most. President Trump shows a clear interest in improving domestic industries and the economy as a whole, perceiving that increased productivity as translating into better job opportunities for all Americans. Former Vice President Joe Biden focuses on taxing on the 1% of higher earning groups to benefit the average American. Although an individual’s financial situation would skew their support for either plan, voters must gauge their values with their ideal of overall economic health to determine which economic perspective is optimal for America.