Biden Budget Lays Out Economic Battle Lines Against Trump

In his budget this week, President Biden set major economic battle lines with former President Donald J. Trump, the presumptive Republican presidential nominee. The proposal offers the nation a glimpse of the divergent directions that pension programs, taxes, trade and energy policies could take depending on the outcome of the November election.

Over the past three years, Mr. Biden has passed major pieces of legislation aimed at strengthening the green energy economy, making investments in infrastructure and strengthening America’s domestic supply chain with subsidies for microchips, solar technology and electric vehicles. Few of these priorities are shared by Mr. Trump, who has promised to cut more taxes and erect new trade barriers if he is re-elected.

The turning point will come when the economy enters the final stretch of what economists now expect to be a ‘soft landing’ after two years of high inflation. However, the prospect of a second Trump administration has added uncertainty to the economic outlook, as businesses and policymakers around the world brace for what could be a dramatic shift in the United States’ economic stewardship.

Here are some of the most striking differences in the two presidential candidates’ economic policies.

Sparring about the social safety net

At first glance, Mr. Biden and Mr. Trump appear to have similar views on the country’s social safety net programs. In 2016, Mr. Trump broke with his fellow Republicans and refused to support cuts to Social Security or Medicare. Mr. Biden has long urged that the programs must be protected and has taken aim at Republicans who have proposed cutting or scaling back the programs.

In his budget proposal on Monday, Mr. Biden reiterated his commitment to preserving the nation’s rights system. He called for new efforts to improve the solvency of Social Security and Medicare, including by making wealthy Americans pay more into the health care program. However, his plans contained few details on how to ensure the long-term sustainability of either program.

Separately on Monday, Mr Trump appeared to suggest he was open to entitlement cuts. He said on CNBC that there is “a lot you can do in terms of rights, in terms of cuts and also in terms of theft and poor management of rights, massively poor management of rights.”

The Trump campaign made it clear that the former president was referring to reducing waste, but the Biden campaign seized on this comment. It fast released an advertisement comparing Mr. Trump’s comments to Mr. Biden’s pledge at the State of the Union to stop anyone who tries to cut Social Security or Medicare or raise the retirement age.

Although Trump never signed cuts to Social Security or Medicare as president, he has flirted with the idea before. Asked about entitlement cuts in a CNBC interview in 2020, he said: “At the right time we will look at that.”

To tax or not to tax?

One of the biggest contrasts between Mr. Biden and Mr. Trump centers on who — if anyone — should pay more taxes.

The president this week proposed more than $5 trillion in tax increases on corporations and the wealthy, including a new 25 percent minimum tax on the richest Americans and an increase in the corporate tax rate from 21 percent to 28 percent.

Mr. Biden combined his proposed tax increases on the wealthy with tax cuts for the middle class. He called for an expansion of the child tax credit, which many Republicans have opposed, which would expand income tax eligibility and provide new tax breaks aimed at making housing more affordable for first-time buyers.

Mr. Trump signed the Tax Cuts and Jobs Act of 2017, which included nearly $2 trillion in tax cuts, much of which benefited corporations and the wealthy. Many of those tax cuts expire in 2025, meaning whoever becomes president will have a major say in whether they are extended or allowed to expire.

Biden wants to roll back much of the 2017 law, except for parts that benefit taxpayers making less than $400,000.

Mr. Trump has provided few details about his tax plans, but suggested at a meeting in February that he envisioned a new round of spending cuts.

“You’re all going to get the biggest tax cuts as we make additional cuts and create a brand new Trump economic boom like you’ve never seen before,” Mr. Trump said.

I spoke to CNBC on MondayMr Trump said it would be “very bad for this country” if Trump’s tax cuts were not extended.

The Friend Shorer vs. the Fare Man

Although Democrats and Republicans have become more polarized in recent years, trade policy is one of the few areas where views appear to have converged.

For all their differences, Mr. Biden has left the trade agenda handed to him largely intact by Mr. Trump. Tariffs on hundreds of billions of dollars of Chinese imports that Mr. Trump has imposed have yet to be reversed, Mr. Biden has stepped up scrutiny of Chinese investment in the United States and U.S. investment in China, and the administration’s industrial policy -Biden has disrupted relations with some European countries.

If re-elected, Biden is likely to continue his policy of deepening trade ties with U.S. allies — a policy called “friendshoring” — and reducing supply chain dependence on adversaries such as China. The Biden administration is expected to complete a review of China’s tariffs in coming months and could cut some duties on consumer products and increase others, further protecting the fast-growing U.S. electric vehicle sector.

Mr. Trump has indicated he is gearing up for a new round of trade wars. The former president and self-proclaimed ‘Tariff Man’ has spoken of imposing a 10 percent tariff on all imports in a second term and a tariff of 60 percent or more on Chinese goods.

Clash on clean energy

The Inflation Reduction Act of 2022 has become Mr. Biden’s signature piece of legislation, and its future — and the trajectory of U.S. climate policy — depends on who wins the election.

Mr. Biden’s economic team is busy rolling out regulations tied to tax and climate legislation to anchor investments in clean energy and the electric vehicle supply chain in the economy. The Biden administration hopes the law will prove sustainable because many of these investments are being made in states led by Republicans.

However, Mr. Trump, who has long derided electric vehicles as too expensive, underpowered and a threat to American jobs, should not be counted on to embrace much of the law if elected.

“We are a nation whose leaders demand all electric cars, despite the fact that they don’t go far, cost too much and whose batteries are produced in China,” Trump said. a meeting in New Hampshire in January.

It is also unlikely that the former president, who withdrew the United States from the Paris climate accord, will prioritize other clean energy investments.

For years, Mr. Trump has argued that solar energy is ineffective and that wind turbines are responsible for the slaughter of birds.