Guest Contribution: “Biden’s Better on Economics”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A longer version appeared at Project Syndicate and the Guardian.

In a few days, Americans will choose a president.  Polling suggests that voters favor former Vice-President Joseph Biden when it comes to social policy, foreign policy, the environment and managing the pandemic, not to mention the question of personal character. But on economics, polls have reported that voters favored President Donald Trump, until recently.

A general impression that the US economy does better under Republicans is long-standing.  The facts do not support it, however.

The historical record: Republicans vs. Democrats

In the 16 complete presidential terms since World War II, the rate of growth of GDP averaged 4.3 percent during Democratic administrations versus 2.5 under Republicans — a remarkable difference of 1.8 percentage points, up to 2016.  (That is from Truman through Obama. If one goes back further, to include Hoover and Roosevelt, the difference in growth rates is even greater.)

Donald Trump’s presidency has now pulled down the Republican score further. Indeed, the average rate of growth during his term to date has actually been negative.

Is the difference due to bad luck?

The qualifier needed in such comparisons is that the president is only one of many influences on what happens to the economy.  Luck of course plays a big role. One might choose to exclude 2020 from Trump’s record, for example, on the grounds that the coronavirus was just bad luck. Even excluding the pandemic period, however, the increases in GDP, employment and the stock market merely continued trends that he inherited from Barack Obama (who, for his, part, inherited an economic crisis).

One cannot excuse Trump from responsibility for mis-managing the pandemic.  His only “plan” remains ever-renewed predictions that the virus will disappear within a few weeks.  He has aggressively undermined the health measures urged by the experts, such as masking and testing, which would have better protected national health as well as delivered a better economy.  (He has company, in the leaders of Brazil, Mexico, and the United Kingdom, who have done poorly. Countries that did much better both economically and health-wise include China, South Korea, Taiwan, Japan, Germany and Finland.)

In any case, the difference in average economic performance between Democrats and Republicans is statistically significant, that is, it is not attributable to pure chance.

A very simple calculation can make the point. The last five recessions, including the current one, all started while a Republican was in the White House. If the chances of a recessions starting during a Democrat’s term were equal to that of a Republican’s term, the odds of getting that outcome would be (1/2)(1/2)(1/2)(1/2)(1/2­­), i.e., one out of 32.  Just like the odds of getting “heads” on five out of five coin-flips.  Not very likely.   The odds are even smaller if one goes back ten business cycles. (Ten of the last eleven recessions have started under Republican presidents.  The odds of the Democrats doing that well just by chance are less than 1 in a hundred.)

Economic policies

The difference in past performance seems too strong to be true.  One would feel better if one where able to confidently identify and quantify policies that Democratic presidents have adopted that could directly explain better outcomes. That is a tall order.  Let us, instead, turn to the policies that the current candidate, Joe Biden, can be expected to implement, at least if he gets a Senate he can work with. In these partisan times, that means a Democratic Senate.

Trump has been telling voters that a vote for Biden is a vote for radical leftist policies.  Some other candidates for the Democratic nomination this year did indeed support policies that, if interpreted literally, were well to the left of the American electorate, even to the left of the median Democratic voter.  One such policy was the “Medicare for All” proposal of Bernie Sanders, which would have abolished private health insurance.  Another was the provision in the proposed “Green New Deal” legislation that the government would guarantee a job for everyone.

As Biden said in both presidential debates, he won the Democratic nomination; his rivals lost. He has explicitly not supported these policies, despite Trump’s false claims that he does.

But there is a huge difference between Biden’s economic plan and Trump’s policies.  [I did a video on this Wednesday.]

The Republican national convention did not produce a platform, so we must look at the president’s past actions to assess what he might do in a second term.  Trump, in practice, has pursued three economic policies that stand out in his first term:  attempts to dismantle Obamacare; a trade war that has managed to leave almost everybody worse off; and the December 2017 tax cut that mostly went to corporations (and certainly did not pay for itself, as its proponents claimed it would).  I don’t count as “policies” the many promises in Trump speeches are the diametric opposite of his actions, including promises to help workers, drain the swamp, and protect health insurance for those with pre-existing conditions.

What would Biden do?

Biden’s proposed policies pursue the goals that most Americans share – restoring economic prosperity while doing a better job of helping the median household who had been left behind even before the pandemic, and also while restoring progress on environmental protection. His proposals would pursue these goals in ways that are practical, rather than merely sounding good on a bumper sticker.

What should and would Biden do?  A partial list includes:

  • Rather than evading responsibility for the coronavirus and undermining the advice of the experts, implement a federal plan to beat it, informed by the expertise of the science and health professionals. Biden’s plan includes making free testing widely available, eliminating cost barriers to prevention and treatment of Covid-19, developing an actual reliable vaccine rather one than that exists only in speeches, and building our public health capacity (as we should have done even before the pandemic hit), to be able to deal better with future crises.
  • Assuming he were to win enough support in the Senate, Biden would immediately renew big spending programs that the Congress bi-partisanly enacted in response to the coronavirus recession but has allowed to lapse. These include emergency paid sick leave, extended unemployment compensation, and help for state and local governments with finances devastated by the coronavirus…  Continue strong macroeconomic stimulus until income and employment are back to their pre-pandemic levels.
  • Undertake large-scale investment in infrastructure (especially of an environmentally friendly sort), research and development, and education. These sorts of spending add to productivity growth over time, which is not true of most of the things that Trump has increased spending on.
  • Build on the progress made by Obamacare, to reduce sharply the number of Americans who lack health insurance (adding a public option, increasing subsidies, preserving access for those with pre-existing conditions), rather than shifting into reverse, as the Republicans have ceaselessly worked to do.
  • Finance such spending by progressive taxation, Two specific measures would be rolling back the 2017 corporate tax cut and raising the cap on wages that are subject to the payroll tax which helps fund social security.  Biden would also make the income tax system more progressive. He has said these tax increases will not apply to incomes less than $400,000.  He would also raise estate taxes, not allowing unrealized capital gains to go permanently untaxed. Moody’s Analytics  estimates that the gains from Biden’s proposed new spending would outweigh the dampening effect of his tax increases, with the result that 2024 GDP would be 4 ½ percent higher than under current policies.
  • Pursue environmental goals aggressively, but in ways that are economically efficient while creating jobs. This strategy includes continued rapid expansion of renewable energy.  But don’t pretend that solar and wind power can supply 100% of our energy needs in the near future. There may still be a role for natural gas as “bridge fuel.”  Biden doesn’t think that fracking should be banned in those parts of the country that want the jobs it brings.  But methane leaks and other negative environmental side-effects can and should be tightly curbed by regulation; if not, then fracking should not proceed.
  • Return the USA to its role in the international community by supporting the WHO and rejoining the Paris climate agreement, abiding by international agreements that we have made, and treating our allies better than our adversaries.

In few elections has one been able to assess such a big difference between the two candidates in the likely quality of their economic policies.  Biden’s are better.

This post written by Jeffrey Frankel.

18 thoughts on “Guest Contribution: “Biden’s Better on Economics”

  1. SecondLook

    Again, correlation does not imply causation. 4 of the 5 significant military conflicts of the 20th century started under Democratic Presidents; you work out the probabilities of that yourself, beyond happenstance, right? So, are we to say that we seriously risk another war when we elect Democrats to the White House?

    And, whatever happened to the old fashioned notion that you need decent sized frequency sampling?

    Mind, I think rightwing economics is an oxymoron, but there are so many better ways to point out the ineptitude of the GOP when it comes to fiscal and finciancial policies.

      1. SecondLook

        Our involvement more or less directly (and lot more covertly than we told anyone) actually starts back in the post-war era when when we supported the French trying to restore their meager Indochina empire.
        But I think most military scholars would point to the Tonkin incident as the real beginning of the war, as opposed to “conflict” (we have a continual stream of the latter over two centuries) – certainly that was the moment when the country finally realized that we were at war. The second of our informal, very questionably constitutional ones.

        My comment was intended as part of my sarcasm about using small data sets to make sweeping statements. As an matter of being more inclusive: since the establishment of the Republican Party there have been 9 engagements of sufficient size to be called wars (pace, the Indian Wars were a holocaust event over time, just horribly that; but I do include the Phillipine War as being distinctive) . Democratic presidents during the start of 4. Republicans for 5. Not statisically signifcant.

  2. Rick Stryker

    Jeff begins his post by committing a common and regrettable statistical fallacy. He says that “the difference in average economic performance between Democrats and Republicans is statistically significant, that is, it is not attributable to pure chance.” That’s just wrong. A p-value that indicates statistical significance does not mean that the result is not attributable to chance. As this is an old fallacy, I will not belabor it here but rather refer those interested for more information to this blog post by Columbia statistician Andrew Gellman. Putting that fallacy aside, the idea that there is some sort of statistical argument for Biden, based on historical correlations between economic performance and party of the President, is just plain silly.

    Let’s turn to more serious points instead. Probably the most important economic question on Jeff’s list is whether Trump or Biden will handle the pandemic better, given where we are in the pandemic and the state of the business cycle today. That question is of first order magnitude, much more important than the other reasons on Jeff’s list. I think the evidence clearly supports that Trump will do better. The problem with Biden’s proposals are that they are mostly just plagiarism of what Trump has already done. Biden is not offering anything new. Biden (and Jeff) claim that there has been no federal leadership. That’s just false. The US, like many other countries, does not give the President the authority to lock down the country, a point that Biden has acknowledged. However, the President can do a lot and Trump has. Here is a list:

    –Biden talks about putting out Federal guidance, as if that’s never been done, but the White House many months ago put out very specific guidelines for states to follow in opening up or restricting their economies. These guidelines, which followed bipartisan public health recommendations, implement a phased approach based on quantitative criteria for states to follow. Legally, of course, states are not obligated to follow any federal guidelines, just as they would not be in a Biden administration.
    –Biden talks about developing treatments and vaccines, as if that hasn’t already been done, but Trump developed “Operation Warp Speed,” an unprecedented public-private partnership in which the Federal government acted as a venture capitalist and bet simultaneously on different treatments and vaccines. Trump at the same time tremendously streamlined the regulatory process. As a result, treatments and vaccines are being developed in an extraordinarily short time. Promising vaccines, which normally take 5 years to develop, are already in phase 3 trials. Trump has pushed the FDA to overcome its natural inertia and bureaucratic conservatism, approving for use experimental treatments like remdisivir and monoclonal antibodies. Trump himself courageously took an experimental treatment, Regeneron’s antibody treatment. Just today, it was announced that Regeneron’s treatment is producing very good results if it is given early during the infection, as in Trump’s case.
    –Early in the epidemic, there was a shortage of ventilators. The national stockpile was light since the Obama Administration had identified the problem but failed to deliver any new ventilators into the national stockpile after trying for 8 years. . The Trump Administration, again through a public-private partnership, produced tens of thousands of new ventilators in just a few months.
    –Early in the epidemic, the health technocrat strategy that Biden favors, which is to empower federal health agencies, failed when the CDC could not produce a coronavirus test that worked. This failure could have led to disaster if Trump had doubled down as Biden would have done and allowed the CDC to retain control over testing. A similar failure happened in South Korea in 2015 during the MERS epidemic. At that time, the South Koreans had empowered its version of the CDC to produce a MERS test and it failed too. The South Koreans fixed the problem by privatizing testing, allowing their version of the CDC only a coordination role. It took the South Koreans two years to implement their new public-private testing regime. When the coronavirus hit, South Korea was prepared on testing. The Trump Administration did essentially what the South Koreans did, privatizing testing, but they did it in just a few months. Testing was slow at first but ramped up very, very quickly.
    –Hard hit states, such as California and New York, pleaded for federal assistance. Trump gave them what they needed. For example, both Cuomo and Newsom asked that the Naval hospital ships be sent to their state. Liberal commentators like
    Rachel Maddow, , echoing the Democratic-media complex, mocked Trump for saying that he’d have a ship in the NY harbor by next week. Maddow said there is no way that could happen. But the ship was there next week, in NY and CA. Trump also had the Army Corps of engineers build rapid pop-up hospitals. Sadly in NY, Cuomo pleaded for the ship and the hospitals and then didn’t use them. He sent elderly covid patients back to nursing homes, where they infected other patients, when he had an empty pop-up hospital and a Navy ship.

    I could go on and on. What about Biden? Biden was put in charge of the H1N1 virus response in 2009. In the beginning, the H1N1 virus looked like it might be as bad as the coronavirus; fortunately it wasn’t. But here is what Biden’s man in charge, Ron Klain, said about the pandemic response that Biden was entrusted with running:

    “It is purely a fortuity that this isn’t one of the great mass casualty events in American history. It had nothing to do with us doing anything right. It just had to do with luck. If anyone thinks that this can’t happen again, they don’t have to go back to 1918, they just have to go back to 2009, 2010 and imagine a virus with a different lethality, and you can just do the math on that.”

    Well, it did happen again and Biden put Ron Klain in charge again of his campaign’s coronavirus response, that is until Klain’s quote came out, after which the Biden campaign ghosted him.

    There are many, many good reasons to vote for Trump. I could spend time refuting Jeff’s other points and talk about those many reasons. But if you only care about the economy over the next few years and nothing else–not the peace that’s breaking out because of Trump’s foreign policies, not Trump’s reversal of Biden’s racist crime policies–nothing else, then consider this: Whoever can balance the pandemic and the economy most effectively will see the best economic performance. It’s not a choice between Trump and some perfect policy. It’s a choice between Trump and Biden. Trump has already proved himself. Biden only has plagiarized ideas to offer and a record of failure on H1N1. Biden, with his worship of government agencies and health technocrats, would never be able to move at the speed the Trump administration did. Trump understands that there is a tradeoff between economic growth and controlling the pandemic. Trump understands that the cure cannot be worse than the disease. Biden does not understand that. Biden would inherit what Trump has already done and then screw it up.

    If the economy is your only issue, you must vote for Trump.

    1. 2slugbaits

      Rick Stryker Nice try. Now let me correct a few of your errors.

      1. The story about Obama leaving Trump with an empty cupboard is incorrect. I recommend this from
      It is true that the stock of some supplies, such as N95 masks, were low; however, that’s because the GOP Congress refused to fund the restocking despite the fact that the Obama Administration had included requests in its budget submissions.

      2. You’re also deliberately misrepresenting what the NYT article said about ventilators. The reason the Obama Administration wasn’t able to buy new ventilators was because your friends the monopolist business leaders bought up the company contracted to manufacture those ventilators and then unilaterally decided they they would ignore the contract. Is that your idea of a successful private sector initiative?

      3. Trump put Jared Kushner in charge of the PPE supply chain:
      Really? Jared Kushner? It was a typically corrupt enterprise that utterly failed. Do you really believe that Jared Kushner has the slightest understanding of any flavored MIME/METRIC model for reparable items like ventilators?

      4. You misrepresented the story about the Navy hospital ships. The Navy decided that those ships would not be used for COVID patients, but would be used to handle non-COVID. That’s why they did not see a lot of patients.

      5. Trump completely bungled the return of US citizens from Europe. If you’ll recall, Trump created a mass exodus that ended up swamping US points-of-entry with American citizens coming from the hottest of hotspots in Europe. Any fool could have foreseen the results. It was a cluster**** of the first order. And entirely predictable.

      6. When RBG’s seat on the SCOTUS opened up Trump had an opportunity to use leverage against McConnell to force through a relief package. He could have told McConnell that he would not name a nominee until the Senate went along with the package negotiated by Pelosi and Mnuchen. McConnell would have folded in a heartbeat because there was nothing he wanted more than a SCOTUS nomination. But Trump being the lousy dealmaker that he is, blew that opportunity. It was a gift and he wasted it. Utterly incompetent.

      7. There was a brief period during which Trump was saying and doing the right things. Even I found it a refreshing change. That was back in early April. But Trump quickly got bored with being responsible and reverted to form. He started calling in GOP governors into the WH for one-on-one sessions, during which he browbeat the governors into opening up their economies too early even though none of those states had met the Administration’s own guidelines for when it was safe to open up. Trump started mocking anyone who wore a mask. Trump started talking about HCG and ingesting bleach. He promised that it would magically disappear very soon. He started holding superspreader MAGA rally events. He hired this clown Scott Atlas from Fox Noise fame.

      8. Trump also bungled the vaccine development. I don’t know of any economist who thinks it made any sense to give upfront guarantees to vaccine developers. If you want to motivate vaccine development, then you don’t promise money upfront without a guaranteed delivery date. The Administration should have told vaccine developers that the big bucks would go to the company that got their first. That would have further shortened the timeframe to deploy a vaccine.

      9. The big difference between Biden and Trump is that Biden knows you can’t fix the economy until you get the virus under control. Trump thinks you can pretend the virus isn’t a problem and just go about your normal business. The history under Trump has been three successive waves, with each wave being worse than the first. Other countries have followed Biden’s approach and kept the virus under control. For example, Canada shares a long border with the US, but Canada has kept the virus in check.

      If tribalism is your only issue, then you must vote for Trump. But if you want to get back to something normal, then vote for Biden.

        1. 2slugbaits

          Number ten would be the difference between Biden and Trump on healthcare during the pandemic. Biden wants to save and improve Obamacare. Trump is in court trying to abolish it without having anything to replace it. That’s kind of a big difference in how they would handle the pandemic. Or as Biden might have memorably put it…”It’s a big f***ing deal.” The difference in how the two would handle healthcare is stark and not the “plagiarism” that Rick Stryker claimed.

          I’ve come to expect better from Rick Stryker. His defense of Trump was especially weak. I realize that he was assigned a tough job by the Central Committee, but I still expected better.

      1. Barkley Rosser

        In terms of the pandemic almost certainly the most important and damaging failure by Trump has been his refusal to clearly support and encourage mask wearing, a clear contrast with Biden and what has been done in most other countries, especially those with clearly better performances on the pandemic than the the US. We can even see this across the states within the US, with the ones that currently have the worst surges of the virus being precisely those where the governors have followed Trump in sneering at mask wearing.

        Note that Moody’s has forecast a better economy under Biden than under Trump, with them hardly the only outfit to do so.

        Stryker is in fantasyland on both fronts.

    2. 2slugbaits

      Rick Stryker I’ll note one other thing about Trump’s use of the Navy in support of the pandemic. My niece (and goddaughter) is a Navy doctor at Walter Reed/Bethesda. She is a surgeon but got drafted into working COVID patients. Trump had three years to replenish PPE stocks, but did nothing. My niece was issued one N95 mask and told to make it last. Her aunts and uncles had to scrounge around construction company suppliers for N95 masks and sew filtered masks and send them to her.

    3. pgl

      A long winded defense of how Trump handled the pandemic. I’ll leave it to 2slug to take down this stupid rant. Most people realize that a lot of economists are providing substantive analysis on Biden’s other economic proposals which of course you cannot even begin to comment on. Oh wait – you would rather attack Mark Zandi with your usual blatant lies designed to accuse him of being a partisan. Of course you cherry picked something Douglas Holtz-Eakin said about 2008 to support your accusing Zandi of being a partisan. Douglas Holtz-Eakin of course was defending Mark Zandi against hacks attacking him for being partisan. That is how much of a liar you are and will always be.

    4. pgl

      “Biden was put in charge of the H1N1 virus response in 2009.”

      Eh Rick – how many Americans died from this virus? How many Americans will die from COVID19 and Trump’s utter incompetence. We’ll wait while you take your shoes off.

    5. pgl

      I’m just waiting for Rick Stryker or Bruce Hall to repeat Trump’s latest lie to deny the number of COVID-19 deaths:

      ;President Trump elicited disgust and anger from nearly the entire medical community this week, after he said that doctors were over-counting COVID-19 deaths to rake in piles of cash. Trump called American doctors “smart people” at a Michigan rally on Friday, saying that “what they do is say, ‘I’m sorry, but you know, everybody dies of COVID.’”
      “Our doctors get more money if someone dies from COVID,” Trump said, adding that a death due to the virus was “like $2,000 more.” Large swaths of the medical community expressed revulsion at the remarks.
      “Throughout this pandemic, physicians, nurses, and frontline health care workers have risked their health, their safety and their lives to treat their patients and defeat a deadly virus. They did it because duty called and because of the sacred oath they took,” Dr. Susan Bailey, president of the American Medical Association, said in a statement. “The suggestion that doctors — in the midst of a public health crisis — are overcounting COVID-19 patients or lying to line their pockets is a malicious, outrageous, and completely misguided charge.” Bailey alluded to the record spike in infections, saying that the country’s leadership was “attacking us and lobbing baseless charges at physicians” instead of “following the science and urging adherence to the public health steps.” The American College of Emergency Physicians said that it was “appalled” by Trump’s “reckless and false assertions” in a statement. “These baseless claims not only do a disservice to our health care heroes but promulgate the dangerous wave of misinformation which continues to hinder our nation’s efforts to get the pandemic under control and allow our nation to return to normalcy,” the group said.;

      Yes – Trump’s lies are beyond disgusting. But these doctors should see the intellectual garbage we have to endure here from the Usual Suspects.

  3. macroduck

    The observation that some Democratic politicians hold policy views to be left of the median voter and of the median Democrat is worth noting, but also unremarkable. If politicians represent heir constituents and there is a diversity of views among heir constituents, one would expect diversity in the policy proposals of politicians. Politicians seeking to represent the median voter are found more commonly in intro poli-sci texts than in reality.

    Democratic politicians are, in general, more representative of the median voter’s policy preference than are Republican politicians, at least at the national level. National-level Republicans have drifted far to the right of the median in recent decades, a reflection of the proliferation of safe seats in Congress. Primary voters carry a big stick. What is curious, to me at least, is the Democrats at the national level are so close to the policy preferences of the median voter. Why does the fringe operate more strongly in Republican primaries than Democratic primaries?

  4. macroduck

    One point to note, to counterbalance the inevitable trash-talk from paid trolls, is that Frankel’s assertion that Biden is better for the economic outlook than Trump is in line with what has already been published by major banks and economic forecasters. Frankel’s view reflects mainstream economic thinking. The record of better economic performance under Democrats than Republicans is evidence in support of the mainstream view.

    1. pgl

      “Frankel’s assertion that Biden is better for the economic outlook than Trump is in line with what has already been published by major banks and economic forecasters.”

      But THE RICK would tell us that the major banks are all led to by leftwing socialists!

  5. pgl

    If I were asked to write an explanation for why growth was higher under Democrats than under Republicans (yea I decided to make this easier by skipping the last 4 years of chaos) I might frame the discussion in terms of a few big picture policy differences.

    The first would be to put forth the idea that Democrats are better at promoting national investment than those pseudo supply side Republicans who both short change public infrastructure investment but also lower national savings by tax cuts that promote consumption on luxury goods. Jeff did mention both in his own way.

    The second would be to steal Newt Gingrich’s term “rational regulation”. Of course Newt promoted irrational policies as he was nothing more than a two faced liar. Rational regulation would include a more progressive health care system and more efforts to address pollution and climate change. OK – I would give a little credit to Bush41 on the latter but a lot of Republicans think deregulation all the time is rational when it clearly is not.

    Speaking of rational regulation let’s recall how the deregulation of the financial system allowed the S&L crisis to become a tidal wave under the reign of Reagan. And of course we repeated this disaster at the turn of the century allowing the tsunami that led to the Great Recession. Heck of a job – George Jr.

    So yea – it is more than luck. It is sound policy rather than stale slogans.

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