THE US ECONOMY: Obama to Trump to Biden

How Biden inherited a pandemic and a country divided
Throughout 2020 and 2021, the Covid-19 pandemic has dominated the global economy, and Biden’s presidency has had to contend with this. Even before the electoral vote in November 2020, it was clear that Covid-19 was shining an unforgiving spotlight on Trump, and his perceived inability to handle the pandemic in an effective manner proved crucial to his chances of re-election.

In September 2020, in the midst of a pandemic, the first presidential debate between Biden and Trump took place, and it was dominated by a face-off over the US’s handling of Covid. When asked to address Trump’s performance during the pandemic, Biden gave stark statistics, highlighting that the approximate 200,000 US Covid deaths (at the time of the debate) meant that the US was shouldering 20% of global Covid deaths at that time, despite the US holding just 4% of the world’s population.

As of 10 August 2021, the US Covid death count has risen to approximately 614,000, according to the Centers for Disease Control and Prevention Covid Data Tracker. On Biden’s inauguration day, the US Covid death count was approximately 437,500. The downward trend in Covid deaths began on 13 January, and then the rate of death continued to considerably slow after Biden took office.

Of course, number tracking aside, Covid-19 also presented numerous economic challenges. Dr Alexis Crow, head of geopolitical risk at PwC, explains that Biden prioritised people over economy in his initial handling of Covid-19.

“Having assumed the presidency in the middle of a spike in Covid-19 cases across the US, Biden designated relief as a clear priority, prior to implementing measures for economic recovery," she says. "Also consistent with his campaign trail promises, Biden has pursued an inclusive economic policy, to help households whose livelihoods have been exacerbated by the Covid-19 crisis.”

Upon entering the White House in January, Biden was quick to report to the media that vaccine distribution was in "worse shape than we anticipated". Furthermore, a number of high-level White House officials such as Chief of Staff Ron Klain and adviser Cedric Richmond reported that Biden’s White House had been given no plan or blueprint to follow by Trump’s administration.

What about the debt?

Biden inherited substantial debt and deficit from the Trump administration. Despite promises to reduce the national debt, Trump, the self-proclaimed ‘king of debt’, instigated tax cuts that caused an expansive gap – with the national debt rising by almost $7.8trn – creating the third-biggest deficit increase of any presidential administration.

Unlike Trump, Biden has raised taxes in a move that Donovan says is typical for Democrats. He believes that a more balanced approach would work better for investors: “They have got to meet somewhere in the middle. This proposed increase of payroll tax on [earnings of more than] $400,000 – 12.4% – is misguided and should never be passed. That is unnecessarily taking money from people who have earned it.”

For such a rigorous spending plan though, Edwards believes that tax rises are inevitable if there is to be meaningful progress on long-term issues facing the US. “The ambition for this administration is to increase federal spending across a range of initiatives and to pay for much of this by increasing corporate income taxes from 21% to 28% and to increase personal income tax for everyone earning more than $400,000 per year by increasing the rates of income, payroll and capital gains taxes," he says. "None of this has yet happened and the next few months will be crucial.”