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Nouriel Roubini
NEW YORK – Joe Biden has always held a wide lead in polls over President Donald Trump before the November election. But despite Trump’s failed response to the COVID-19 pandemic, a failure that has left the economy much weaker than it would have been otherwise, has maintained a marginal advantage on the question of which candidate would be. better for the US economy. Thanks to Trump, a country with just 4% of the world’s population now accounts for more than 20% of total COVID-19 deaths – an absolutely disgraceful result, given America’s advanced (yet expensive) healthcare system.
The presumption that Republicans are better than Democrats in economic management is a long-standing myth that must be debunked. In our 1997 book, Political cycles and macroeconomics, the late (and great) Alberto Alesina and I show that Democratic administrations tend to preside over faster growth, lower unemployment, and stronger equity markets than Republican presidents.
In fact, American recessions almost always occur under Republican administrations, a pattern that has persisted since our book appeared. The recessions of 1970, 1980-82, 1990, 2001, 2008-09, and now 2020 occurred when a Republican was in the White House (with the exception of the double-dip recession of 1980-82, which began under Jimmy Carter but continued under Ronald Reagan). Likewise, the Great Recession of 2008-09 was triggered by the financial crisis of 2007-08, which also occurred during the surveillance of the Republican Party.
This trend is not random: lax regulatory policies lead to financial crises and recessions. And to make matters worse, Republicans consistently pursue reckless fiscal policies, spending as much as Democrats do, but refusing to raise taxes to make up for the resulting budget deficit.
Due to such mismanagement under the presidency of George W. Bush, President Barack Obama and Vice President Biden inherited the worst recession since the Great Depression. In early 2009, the US unemployment rate surpassed 10%, growth was in free fall, the budget deficit had already exceeded $ 1.2 trillion, and the stock market fell nearly 60%. Yet by the end of Obama’s second term in early 2017, all of those indicators had vastly improved.
In fact, even before the COVID-19 recession, US employment and GDP growth, as well as the performance of the stock market, were better under Obama than under Trump. Just as Trump inherited millions from his father, only to squander them on business failures, he also inherited a strong economy from his predecessor, only to ruin it in a single period.
The rally in stock prices last August coincided with a tightening of Biden’s leadership in the polls, suggesting markets are not nervous about a Biden presidency or the prospects for a Democratic sweep of Congress. The reason is simple: A Biden administration is unlikely to pursue radical economic policies. Biden may be surrounded by progressive advisers, but they are all completely in the mainstream. Furthermore, his election to the vice presidency, US Senator Kamala Harris of California, is a proven moderate, and most of the Democratic senators who would be sitting in a new Congress are more centrist than the left wing of his party.
Yes, a Biden administration could raise marginal tax rates on corporations and the top 1% of households, which Trump and Congressional Republicans cut simply to give wealthy donors and corporations a $ 1.5 trillion endowment. Dollars. But a higher tax rate would result in only a modest impact on corporate profits. And any cost to the economy would be more than offset by closing the loopholes that allow tax evasion and the transfer of profits and production abroad, and with the policies proposed by Biden “Made in America” to bring more jobs, profits and production home.
Furthermore, while Trump and his fellow Republicans haven’t even bothered to formulate a political platform for this election, Biden has proposed a set of fiscal policies designed to boost economic growth. If Democrats take control of both houses of Congress and the White House, a Biden administration would seek increased fiscal stimulus targeting households, workers, and small businesses in need, as well as spending and investments in job-creating infrastructure in the US. green economy. . They would not invest in billionaire tax cuts, but rather in worker education and retraining, and in proactive innovation and industrial policies to ensure future competitiveness. Private companies would no longer be terrorized by the president with Twitter tantrums.
Democrats are also calling for higher minimum wages to boost labor income and consumption, along with more sensible regulations to reduce carbon dioxide emissions. They would push for policies to restore some bargaining power to workers and to protect savers from predatory financial institutions. And they would take a much more sensible approach to trade, immigration, and foreign policy, repairing America’s alliances and partnerships and pursuing a policy of “cooperation” rather than lose-lose contention. face to face China. All of these measures would be good for jobs, growth and markets.
Although Trump ran as a populist, he is an aspiring plutocrat, a pluto-populist, and that is how he has ruled. His economic policies have been disastrous for American workers and long-term economic competitiveness. Trade and immigration policies that were announced as measures to restore jobs in the United States have had the opposite effect. The “deaths of desperation” that disproportionately afflict white manual workers and precarious workers have not fallen under Trump; With more than 70,000 drug overdose deaths in 2019, this American carnage continues. If America wants to fill the high-value jobs of the future, it will need to train its workforce, not embrace self-destructive protectionism and xenophobia.
The choice for American voters who are concerned about America’s economic prospects couldn’t be clearer. Biden, who has long capitalized on workers’ concerns, is the only presidential candidate in recent history without an Ivy League record. He’s more likely than anyone to rebuild the Democratic coalition and win back the support of disgruntled working-class voters. For all Americans who care about their future and that of their children, the right choice this November could not be clearer.
Nouriel Roubini, professor of economics at New York University’s Stern School of Business, is the host of NourielToday.com.
Copyright: Syndicate Project, 2020.
www.project-syndicate.org
