By Vance Ginn
The Economist recently compared Joe Biden’s and Donald Trump’s economic records, concluding Biden wins so far. While the article raises valid points, it excludes key details that make the findings questionable.
Ten months from now, there’s a high likelihood Biden and Trump could go head-to-head again for the presidency, especially after the results from the Iowa caucus. But voters should be informed about the effects of their policies on key issues like immigration, inflation, and wages.
The Economist correctly noted that apprehensions along the southern border were much lower under Trump. They increased by the most in 12 years during the economic expansion of 2019, decreased early in the COVID-19 pandemic when people could be turned away for public health concerns, and rose again during the lockdowns.
While some may see apprehensions rising between Trump and Biden as a loss for Biden, I see it as a loss for both.
This metric is somewhat unreliable, given one person can be caught and counted multiple times, and those caught are a subset of total migrants. The truth is immigration is good for the economy, but government failures create unnecessarily complex barriers against legal immigration, contributing to the humanitarian crisis along the Mexico border today.
Neither President has pushed for what’s needed (market-based immigration reforms) both lose.
Inflation is another hot topic, especially for Biden.
The Economist hands the win to Trump, as inflation was far lower during his presidency. But can we give him the credit?
Remember, Trump pressured the Federal Reserve to reduce its interest rate target and expand its balance sheet, which was inflationary. His deficit spending skyrocketed during the lockdowns and was mostly monetized by the Federal Reserve, contributing to what was always going to be persistent inflation. Biden made this deficit spending and resulting inflation much worse.
Add in the Fed’s many questionable decisions, such as doubling its assets, cutting and maintaining a zero interest rate target for too long, and focusing too much on woke nonsense, and we can see how this was always going to be persistent inflation.
But even the Fed’s latest projections indicate it won’t hit its average inflation target of two percent until at least 2026. Likely, it will cut the current federal funds rate target range of 5.25 percent to 5.5 percent three times this year, keep a bloated balance sheet to finance massive budget deficits, and run record losses. If so, this inflation projection is too rosy.
Some of Trump’s policies helped stabilize prices, including his tax and regulation reductions. But he still allowed egregious spending. Biden has doubled down on red ink that has contributed to the recent 40-year-high inflation rate.
While inflation has been moderating recently under Biden, Trump gets the win. Of course, neither Presidents nor Congress control inflation, as that job is the Fed’s, but its fiscal policies influence it.
When it comes to inflation-adjusted wages, The Economist grants a tie.
Let’s consider real average weekly earnings that include hourly earnings and hours worked per week, adjusted for the chained consumer price index, which adjusts for the substitution bias and has been used for indexing federal tax brackets since the Tax Cuts and Jobs Act of 2017.
Trump’s era witnessed a robust upward trajectory of real earnings, with considerable gains by lower-income earners, thereby reducing income inequality. We must acknowledge a real wage spike in 2020 during Trump’s lockdowns, marked by the loss of 22 million jobs and various challenges. To maintain a fair analysis, I disregard this spike.
A year later, real wages demonstrated a decline under Biden. Extending the timeframe to two years later, real wages remain relatively flat to slightly increased.
To provide a contextual understanding, when we consider the trend under Trump, excluding the 2020 spike, real wages for all private workers or production and nonsupervisory workers fall below those observed during Biden. It’s worth noting, however, that these wages have been higher since 2019, albeit nearly stagnant for all private workers.
Given real earnings, I agree with The Economist that Trump and Biden are tied.
While much more can be said for each President’s policies, continuing to add context when making assessments is crucial.
I give Trump a nuanced “win” overall because his policies supported more flourishing during his first three years until the terrible mistake of the COVID lockdowns, with its huge, long-term costs. I should note that I made a strong case inside the White House for no shutdowns and less government spending but, alas, my efforts, and those by others, lost to Fauci, Birx, and Trump.
Given the improved purchasing power during his presidency, Trump receives better poll ratings than Biden after three years of their presidencies. But this win doesn’t mean that Trump’s record is best regarding these issues, protectionism, and more.
Let’s hope free-market capitalism, the best path to let people prosper, is on display this November, no matter who is on the ballot.
- About the author: Vance Ginn, Ph.D., is founder and president of Ginn Economic Consulting, LLC and an Associate Research Fellow with AIER. He is chief economist at Pelican Institute for Public Policy and senior fellow at Americans for Tax Reform. He previously served as the associate director for economic policy of the White House’s Office of Management and Budget, 2019-20.
- Source: This article was published by AIER