Trump or Biden, two very different economic projects

On the one hand, Joe Biden is betting on the middle class and the climate transition. It increases taxes for the rich and increases spending on housing, health and education. On the other hand, Donald Trump is cutting budgets and taxes, but is launching a highway construction program to revive activity.

“Not surprisingly, Biden and Trump have radically different ideas about the federal government’s involvement in the US economy. Therefore, choosing between them on November 3 will mainly mean choosing between a larger or a smaller federal government ”, analyzes a study by the insurer Allianz and the credit insurer Euler Hermes.

→ ANALYSIS. At the second Trump-Biden debate, two visions that everything opposes

In the aftermath of the last televised debate between the two candidates, it is particularly interesting to delve into this study. It encrypts their programs, attempts to predict the impact of their measures on the US economy and highlights their respective priorities.

Increase or decrease spending?

She thus calculates that the election of Joe Biden should result in an increase in federal spending of the order of 640 billion dollars per year (540 billion euros), while that of Donald Trump would result in a decrease of 300 billion (253 billion euros).

The current tenant of the White House announces, if re-elected, major cuts to the budget for health, education, and social programs. And even a decrease in the defense budget from 2025. The only exception: a vast plan to revive the economy of 1,275 billion dollars (1,078 billion euros). It will be largely dedicated to the construction of infrastructure.

Trump wants to lose weight in the state

Donald Trump intends to impose a slimming treatment on the central state, while on the contrary, Joe Biden is increasing the action of the public sphere to put it at the service of the protection of the most vulnerable and take into account the climate transition ( a concern absent from Trump).

The new spending of the Democratic candidate would indeed go in priority to an ambitious plan to “A clean energy revolution and environmental justice” (nearly 200 billion dollars per year, or 167 billion euros), to health (165 billion dollars, or 140 billion euros) in order to “Build Obamacare” and of “End the opioid crisis”, and education (with a hundred billion a year to renovate schools and reduce student debt).

The United States is growing in debt

Either way, however, US debt is expected to continue to rise sharply. Allianz indeed forecasts a debt that would reach 159% of GDP in 2030 if Joe Biden was elected and 151% of GDP if it was Donald Trump. US public debt this year stands at 98% of GDP.

The similarity of the trajectories is explained because Donald Trump plans to reduce not only expenses but also revenues, with a tax reduction of 140 billion dollars per year (118 billion euros). His first term has already been marked by tax cuts.

Joe Biden, on the contrary, plans to increase taxes by 370 billion dollars per year (313 billion euros), in order to finance part of his new spending. These increases would be concentrated on the wealthiest part of the population and on businesses.

Low growth in both scenarios

Finally, in both cases, the impact on growth will be more or less the same in the medium term. The election of Joe Biden would have a more favorable effect over the next three years. But from 2024, the two trajectories meet.

Allianz estimates that the average growth in the United States, for the next ten years, should be 1.4% if Joe Biden is elected and 1.25% if Donald Trump is elected. The insurer’s economic research team also estimates that inflation, in both cases, should remain subdued over the period, around the 2% target.


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