Biden’s manifesto contains a number of promises with major ramifications for the US economy. Firstly, a major increase in infrastructure and clean energy spending, certainly more than is currently planned or proposed by Donald Trump. Secondly, more spending on education, healthcare and the social safety net. Thirdly, a hike in corporate profit taxes, reversing the steep cuts made by Trump in 2017. Fourthly, an increase in personal income taxes, mainly hitting the well-off. In total, analysts at the credit rating agency Moody’s estimate Biden’s plans add up to $4tn of additional spending in the three years to 2024 and $1.4tn of additional taxes over that same period.
The consequences of these policies would largely be positive. Analysts at Moody’s project that a Democratic sweep would result in an annual GDP growth rate of 4.2 per cent in the three years to 2024 and 2.9 per cent a year if they were maintained for the full decade. The same was found by Oxford Economics: “Simulations in our Global Economic Model find that Bidenomics could lift GDP growth by 2 percentage points to over 5 per cent year on year by the end of 2021, while a Trump presidency could constrain growth to less than 2 per cent,” says Oxford Economics’ Gregory Daco. This consensus is largely due to an understanding among economists that large-scale stimulus is appropriate for the US economy at this time.