President Biden in his budget this week staked out major economic battle lines with former President Donald J. Trump, the presumptive Republican presidential nominee. The proposal offers the nation a glimpse of the diverging directions that retirement programs, taxes, trade and energy policy could take depending on the outcome of the November election.
During the past three years, Mr. Biden has enacted key pieces of legislation aimed at bolstering the green energy economy, making infrastructure investments and reinforcing America’s domestic supply chain with subsidies for microchips, solar technology and electric vehicles. Few of those priorities are shared by Mr. Trump, who has pledged to cut more taxes and erect new trade barriers if re-elected.
The inflection point will be arriving as the economy enters the final stretch of what economists are now expecting to be a “soft landing” after two years of high inflation. However, the prospect of a second Trump administration has injected increased uncertainty into the economic outlook, as companies and policymakers around the world brace for what could be a dramatic shift in the economic stewardship of the United States.
Here are some of the most striking differences in the economic policies of the two presidential candidates.
Sparring over the social safety net
At first glance, Mr. Biden and Mr. Trump might appear to have similar positions on the nation’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 insisted that the programs should be protected and has hammered Republicans who have suggested cutting or scaling back the programs.
In his budget proposal on Monday, Mr. Biden reiterated his commitment to preserving the nation’s entitlement system. He called for new efforts to improve the solvency of Social Security and Medicare, including making wealthy Americans pay more into the health program. However, his plans were light on details regarding how to ensure both programs’ long-term sustainability.
Separately on Monday, Mr. Trump appeared to suggest that he was open to entitlement cuts. He said on CNBC that there is “a lot you can do in terms of entitlements in terms of cutting and in terms of also the theft and the bad management of entitlements, tremendous bad management of entitlements.”
The Trump campaign clarified that the former president was referring to cutting waste, but the Biden campaign seized on the comment. It quickly released an advertisement contrasting Mr. Trump’s remarks with Mr. Biden’s vow at the State of the Union to stop anyone who tries to cut Social Security or Medicare or raise the retirement age.
Although Mr. Trump never signed cuts to Social Security or Medicare as president, he has previously flirted with the idea. Asked about entitlements cuts in a CNBC interview in 2020, he said, “At the right time, we will take a look at that.”
To tax or not to tax?
One of the biggest contrasts between Mr. Biden and Mr. Trump revolves around who — if anyone — should pay more in taxes.
The president proposed more than $5 trillion in tax increases on corporations and the wealthy this week, including a new 25 percent minimum tax on the wealthiest Americans and an increase in the corporate tax rate to 28 percent from 21 percent.
Mr. Biden paired his proposed tax increases on the wealthy with tax relief for the middle class. He called for an expansion of the child tax credit, which many Republicans have opposed, broadening eligibility for the earned-income tax credit and new tax credits that aim to make housing more affordable for first-time buyers.
Mr. Trump signed into law the 2017 Tax Cuts and Jobs Act, which included nearly $2 trillion in tax cuts, much of which benefited companies and the rich. Many of those tax cuts expire in 2025, meaning that whoever is president will have a big say in whether they are extended or allowed to sunset.
Mr. Biden wants to roll back much of the 2017 law, except for the parts that benefit taxpayers earning less than $400,000.
Mr. Trump has offered few specifics about his tax plans, but suggested at a rally in February that he envisioned another round of cuts.
“You’re all getting the biggest tax cuts because we’re doing additional cuts and a brand-new Trump economic boom like you’ve never seen before,” Mr. Trump said.
Speaking to CNBC on Monday, Mr. Trump said it would be “very bad for this country” if the Trump tax cuts were not extended.
The Friend-Shorer vs. the Tariff Man
While Democrats and Republicans have become more polarized in recent years, trade policy is one of the few areas where views seem to have converged.
For all their differences, Mr. Biden has largely left the trade agenda that Mr. Trump handed to him intact. The tariffs on hundreds of billions of dollars of Chinese imports that Mr. Trump imposed have yet to be rolled back, Mr. Biden has intensified scrutiny of Chinese investments in the United States and of American investment in China, and the Biden administration’s industrial policy has rankled relations with some European countries.
If he is re-elected, Mr. Biden is likely to continue his policy of deepening trade ties with American allies — a policy referred to as friend-shoring — and reducing supply chain reliance on adversaries such as China. The Biden administration is expected to complete a review of the China tariffs in the coming months and could reduce some levies on consumer products and raise others that would further protect the burgeoning U.S. electric vehicle sector.
Mr. Trump has indicated that he is gearing up for a new round of trade wars. The former president and self-proclaimed “Tariff Man” has discussed imposing a 10 percent tariff on all imports in a second term and a tariff of 60 percent or more on Chinese goods.
Clashing 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 has been racing to roll out regulations associated with the tax and climate law to entrench investments in clean energy and the electric vehicle supply chain into the economy. The Biden administration hopes that the law could prove to be enduring because many of these investments are being made in states that are led by Republicans.
However, Mr. Trump, who has long derided electric vehicles as overpriced, 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 are demanding all electric cars, despite the fact that they don’t go far, cost too much and whose batteries are produced in China,” Mr. Trump said at a rally in New Hampshire in January.
The former president, who pulled the United States out of the Paris climate agreement, is also unlikely to prioritize other clean energy investments.
For years, Mr. Trump has argued that solar power is ineffective and that wind turbines are responsible for the slaughter of birds.