This week in Trumponomics
With only weeks before the November election, investors are looking into Biden’s economic plans and what they could mean for the economy, to weigh them against Trump’s proposed plans. Yahoo Finance's Rick Newman joins The Final Round to discuss how Biden’s economic plans might help the economy as well as give this week’s Trumpometer reading.
Video transcript
Welcome back to "The Final Round" here on Yahoo Finance. It's time for Trumponomics. But this week, we're doing a little bit differently instead of focusing on President Trump. We're going to talk about his opponent in the 2020 election, Joe Biden.
And Rick, we have some details about Biden's economic plan. We know he's going to focus a little bit more on the middle class. He wants to repeal Trump's tax cuts, focusing on manufacturing jobs. But what do you think about Biden's plans, and could it possibly, I guess, translate to better economic growth here in the US?
RICK NEWMAN: Yeah well, I mean we've known about Biden's economic plans for a while. And there are a lot of them. The question is would these be good for the economy, bad for the economy? Neutral? Who knows.
Well, we're starting to get some analysis on that from the forecasting firms that do this kind of thing. So this week, "Oxford Economics" put out an analysis of the Biden plan. And they don't give it a letter grade. But I think you could say they grade it around a B or a B plus.
So just a, you know, a few takeaways here. So Biden would do a lot of more spending on things like expanded health care, expanded primary and secondary education, affordable housing, infrastructure.
He wants to institute a big Buy America program through the government. And he has a lot of tax increases that would pay for a lot of that spending. So it's kind of hard to sort out would this be better or worse?
Well, "Oxford Economics" says if something similar to the Biden plan were able to pass Congress in '21, in 2021 it would raise GDP growth from what they expect to be 3.7% with no changes, up to 5.8%. It would create about two million additional jobs during his first term.
And by the end of his term in 2024, the unemployment rate would be all the way down to 3%. And this would come with no meaningful increase in the budget deficit, because we'd have more people working, and more people paying taxes to help cover all that spending.
So this is fairly similar to some other analysis we've seen. And I think we've talked before on Yahoo Finance about the Penn Wharton budget model. They find that in the long term, if Biden's plan were to go into effect, it would raise GDP by a little, and it would actually improve the national debt by a little.
So better than nothing. Of course, there's a big question here if Biden were to win, could he get his whole agenda or even part of his agenda passed? That's a different question. But so far, his economic agenda is getting pretty good marks from the experts who do this kind of thing for a living.
- And going forward, the big question is how is Biden going to convince American voters of this? Because I think the one area where Trump has been leading, at least in some of the polls, and we know we also see the polls with a grain of salt. But in some of the polls, that is the one advantage that Trump seems to still have at this point.
RICK NEWMAN: Right, on his handling of the economy, some polls show a slight edge over Biden. That has narrowed in recent weeks, because look. We're still slogging through a recession. And Trump actually has not articulated much of an economic plan of his own for a second term. I mean, he's actually got just a couple of agendas, continue into phase two of the trade deal with China.
But of course, China would have to go along with that. He's got a couple of health care items. And he wants to reduce or completely kill the payroll tax, which funds Social Security and Medicare, I should point out.
So I think that means the challenge for Biden is he needs to improve his messaging, and do some better branding for his economic plan, given that he is actually getting decent marks from economists who ought to be neutral on this kind of thing. That you know, it's a messaging thing for Biden.
- So Rick, real quick, what's the grade?
RICK NEWMAN: Yeah, so it's not the Biden-ometer yet. It's still the Trump-ometer. And this is, you know, so the Trump-ometer is kind of neutral on this. We're going with mediocre this week.
Because look if we could get something going that looks like Biden's plan, according to these economists it would actually be good for the economy. It would create more jobs than we would have otherwise, and give us a little bit higher economic growth, which we obviously need. And also get us to the other side of the coronavirus recession, recovering those losses faster, than if we just sort of stand in place, the way we are now.
- Well mediocre, that's certainly higher than we've seen for a long time.
RICK NEWMAN: It was our third-- it is the Trump-ometer's third highest rating. So that is about as good as it has gotten during the last, what? Six months or so since we began the coronavirus.
- Since I've been doing it, at least. That's the highest score by far.
