Only Joe Biden can provide the fact-based policymaking we desperately need

The coronavirus recession has created an economic crisis like no other. I mean that very literally. We have never experienced an economic crisis that came purely from a public health emergency. If we were in uncharted waters after the Great Recession, with interest rates at low levels unseen in more than 50 years and inflation persistently below healthy levels, we are now totally off the map.

This situation requires us to look at economic policy with fresh eyes. The needs of the moment are enormous and pressing. Unemployment remains at recession levels; economic insecurity is rife; funding is desperately needed for pandemic containment via contact tracing, improved testing and treatment; and state and local government finances have suffered both drastic decreases in revenues and massive increases in necessary expenditures.

These problems simply cannot be solved without large-scale government spending. Economists, who often warn about the dangers of large government deficits, have been unusually united in supporting robust government responses. The International Monetary Fund (IMF), long the high priest of fiscal prudence, has taken a clear stance in favor of spending amply but wisely. The enormous positive impacts and the unusually low interest rates created in part by supportive monetary policies tip the balance of costs and benefits strongly in favor of fiscal expansion.

Back in the spring, Congress seemingly accepted this logic when it passed the CARES Act. But after the House passed a follow-up bill in May, the Republican-controlled Senate has failed to pass its own legislation. On and off again negotiations, punctuated by wildly varying statements from President Trump, have so far produced little result. What can we expect from the next president and the next Congress?

Despite the cacophony and disinformation flying around this appalling campaign season, the candidates’ positions on the economy are actually fairly clear.

Former Vice President Biden proposes vigorous efforts to expand funding for public health measures to fight the pandemic, along with renewed income support for those most impacted by the recession. He also calls for the repeal of the 2017 tax cut, replacing it with higher taxes on the top 5 percent of earners.

President Trump’s record is there for all to see. The 2017 Tax Cuts and Jobs Act sought to strengthen economic growth by lowering business taxes. He has consistently worked to loosen regulation, lower the costs of doing business and remove restrictions on companies.

The Trump administration inherited a fairly healthy economy, with steady but unspectacular growth and low unemployment. The administration’s policies may have contributed to the mild uptick in GDP growth in 2018-19. They can best be described as a sugar high, producing a mild rush now, but hurting the body in the longer term. These policies have disproportionately benefitted the wealthiest Americans, opened the doors to increased environmental damage, allowed abuse of consumers by predatory financial actors to go unpunished and imposed substantial costs on consumers and farmers via the trade war with China.  

On top of that, the Trump administration’s determined efforts to undermine and repeal the Affordable Care Act (ACA), without offering any coherent alternative, threaten the access to health care of millions of Americans. Health care is not only a social justice issue, it is also a long-term economic issue. Research shows clearly that improved health outcomes improve long-term economic growth.

In other times, Biden’s massive spending proposals and tightening of environmental regulation might have caused a backlash from business. This time seems different. The likes of Moody’s, Goldman Sachs and Merrill Lynch/Bank of America have made favorable comments. Even the conservative American Enterprise Institute finds a minimal negative impact, a 0.16 percent decrease in U.S. GDP, after 10 years.

Looking beyond the immediate pandemic and recession issues, Biden’s focus on the environment could be central. From the raging wildfires in California to hurricanes and floods in the Gulf States and Midwest, failure to take preventive action has put us in an ever more difficult and expensive game of catch-up on the environment. Not only has the Trump administration preached climate change denial, it has placed leaders from the most polluting energy interests in charge of energy and environmental policy.

Furthermore, Biden seeks to tackle the expanding social and economic fissures in our society. Biden’s proposals for providing childcare credits, funding universal preschool and forgiving some student loan debt would be important steps towards improving women’s ability to participate in the workforce and addressing inequalities of opportunity in our education system. His proposal to incrementally strengthen the ACA by adding a public option and restoring funding is both practical and potentially highly effective in expanding affordable health insurance.

What a Biden administration would actually be able to get done would depend on the composition of Congress and the overall political situation after the election. Plans are one thing; reality is another. But after the frontal assault on social and economic equality, on our environment and on science during Trump’s term, we desperately need sensible, fact-based, compassionate policymaking. I have no doubt which candidate is better equipped to provide that.

Evan Kraft is the economist in residence for the economics department at American University. He served as director of the research department and adviser to the governor of the Croatian National Bank.