Two Divergent Directions for the US Economy
Domestic Manufacturing
US domestic manufacturing has been in a slump since the 1970’s due to the failure of the big 3 automakers and big steel to update plants, designs, and equipment to compete effectively with car and steel manufacturing in Asia. Our energy, transportation and other systems need to move towards zero emission renewable energy to slow the rise in global warming due to fossil fuels.
Cars
· Biden supports domestic electric vehicles through tax credits and support for electric charging stations and EV manufacturing
· Trump would repeal them
· Biden imposes tariffs and other barriers to Chinese cars
· Trump would impose high tariffs on all foreign made cars
Steel
· Biden would bar the sale of US Steel to Japan’s Nippon Steel
· Trump imposed high tariffs on foreign steel and aluminum
Energy
· Biden supports the expansion of renewables with tax credits and other subsidies
· Trump proposes to repeal the support for renewable energy and invest in and promote fossil fuel production (which reached historic highs under Biden)
Higher Education
US higher education is the best in the world, but it comes at a very high price for students and their families leading to intolerable levels of student debt, particularly burdensome for those students not from the most affluent families. Most other countries with excellent educational systems offer tuition free higher education.
· Biden supports and has implemented student debt forgiveness.
· Trump opposes efforts to forgive student loan debts
Health Care
The US health system is high priced, does not cover all Americans, and has notably poor health outcomes as compared to many other nations. The Affordable Care Act made notable progress in covering the uninsured, protecting the insured from a variety of noxious insurance industry practices such as red lining those with pre-existing conditions and extending coverage for mental health and substance addictions. Some states particularly in the South have not implemented the ACA’s Medicaid expansion leaving their citizens at much higher health and financial risk.
· Biden has worked to increase coverage under the Affordable Care Act by increasing the refundable tax credits available to low, moderate- and middle-income individuals and families. He has also increased financial assistance to those states offering Medicaid expansion coverage to the uninsured.
· Trump wants to repeal the Affordable Care Act.
· Biden has expanded VA benefits for veterans exposed to toxins in Vietnam and the wars of the Middle East.
· Biden has reduced the costs of prescription drugs for seniors on Medicare.
· Trump has proposed to cut the Medicare program’s spending, but in unspecified manners. https://www.cnn.com/2024/03/11/politics/trump-entitlements-social-security-medicare/index.html
· Biden wants to restore access to abortions nationwide; Trump wants to leave it to each state.
Housing
Since the 70’s we have not been building enough housing to keep up with our nation’s population growth. The results are widespread shortages and unaffordable housing either to buy or to rent. The shortages are exacerbated by the high interest rates for mortgages resulting from the actions of the Federal Reserve to stem inflation. Some Governors and state legislatures and local officials are taking action; others are not.
· Biden’s administration has financed 1.7 million new housing units and called for more office to home conversions with the now empty office buildings.
· Trump calls for lower energy prices and interest rates to stimulate the housing market and also seeks to cut HUD and Community Development funding that helps pay for more affordable housing.
Labor
Labor unions are now growing in many parts of the nation, in part to address the widening disparities between stagnant wages for workers and soaring CEO compensation, a phenomenon that has been a unique and troubling feature of the US labor market since the late 70’s.
· Biden has achieved historic job creation and low unemployment, far exceeding his predecessors. He was particularly supportive of the auto workers during their strikes and has passed the infrastructure bill, the CHIPs Act and strong financial support for the transition to an economy that reduces climate warming. Wages have increased significantly more than inflation once the Biden reform measures passed Congress. https://www.brookings.edu/articles/has-pay-kept-up-with-inflation/#:~:text=Further%2C%20using%20PCE%20inflation%2C%20there,shows%20gains%20in%20real%20pay.
· During Trump’s tenure contrary to his self-promotion and popular perception, real compensation declined for all workers, including blue collar manufacturing workers. https://theconversation.com/real-pay-data-show-trumps-blue-collar-boom-is-more-of-a-bust-for-us-workers-in-3-charts-131264
Taxes
We in the US are a low tax nation as compared to other developed nations. https://www.oecd.org/tax/revenue-statistics-united-states.pdf The US federal tax system, while progressive in nature, has many regressive elements that hit low, moderate and middle income Americans far harder than the high income Americans. https://www.americanprogress.org/article/5-little-known-facts-about-taxes-and-inequality-in-america/#:~:text=Low%2Dincome%20Americans%20face%20higher,more%20pay%20just%201.9%20percent. Taxes for higher income Americans have been substantially cut by Presidents Reagan, Bush, and Trump. The Trump tax cuts for individuals expire in 2025.
· Biden proposes to increase taxes on the highest income Americans and corporations. He proposes to reduce taxes for low, moderate and middle income Americans increased refundable tax credits for low, moderate, and middle income working families. He proposes to retain Trump’s tax cuts for Americans with incomes of less than $400,000 annually. He proposes a compromise on the corporate income tax rates at 28%; it was cut from 35% to 21% under Trump. He proposes that billionaires pay a minimum federal tax of 25%.
· Trump proposes to continue the Trump tax breaks for higher income Americans and corporations that he passed in 2017.
Tariffs and trade
Tariffs are sales taxes on foreign made goods that US customers and businesses purchase. The US has historically been a strong proponent of free trade and has had extensive trade pacts with neighbors such as Canada and Mexico and was negotiating new ones with the EU and its Trans Pacific partners. That has all changed, and we are entering a new era of protectionism, not limited to such emerging industries, such as EVs.
Trade barriers and tariffs are inflationary and quite harmful to US consumers while benefiting US manufacturers which have lost their competitive edge (like steel) or are nascent (like EVs).
· Under Trump, tariffs were widely imposed on friends and allies as well as China, our biggest trading partner, which started a trade war and then required a bail out of American farmers. NAFTA was renegotiated and updated under Trump.
· Biden has repealed many of the Trump tariffs on friends and allies but left them in place for China and imposed new ones on Chinese steel, EVs, solar cells, semi-conductors and artificial intelligence.
· Trump proposes new tariffs of 10% on all foreign made goods and a 100% tariff on all imported cars.
Resource: https://www.businessinsider.com/what-us-economy-would-look-like-with-trump-biden-presidency-2024-5