Published on February 7, 2024
Election Predictions: Trump vs. Biden on Taxes, Trades, and Energy
There is a reason why every four years, Americans are told this round’s election will be the most important of their lifetimes. Candidates need to rally their bases, and while there is no shortage of lightning rod issues to get folks to the polls, Americans are going into this election decidedly exhausted and angry.
American Feelings When Thinking About Politics
While this survey reveals an alarmingly high 65% of people always or often feel exhausted when thinking about politics, unhappiness does not necessarily result in apathetic voting behavior. In fact, the election turnouts of 2018, 2020, and 2022 were some of the highest at a time marked by great unhappiness with politics.
What's at stake?
Control of the Presidency, the Senate, and the House are all on the table for 2024. Democrats currently hold a majority (51-49) in the Senate but face the daunting task of defending two-thirds of election cycle seats. The odds of a Republican capture are high. House control by the Republicans is also razor-thin, and while Democrats have a slight advantage moving into the elections, continued Republican control is not out of the question.
The economy, historically speaking, does best with a Democrat in the White House and the Senate and House under Republican control.1 By contrast, some of the weakest performance is just the opposite – a Republican President and Democratic control of the Senate and House.
Election Predictions for Trump and Biden
The likely candidates are still months away from formally presenting their agendas, but what follows are prognostications on what can be expected on taxes, trade, and energy policy from each.
The 2017 Tax Cuts and Jobs Act (TCJA) was one of the most significant U.S. tax code overhauls in three decades. Under former President Trump, corporate and individual tax rates were cut, and while the corporate cuts were permanent, many of the individual rates are set to expire in 2025. Roughly 65% of Americans received a tax cut at an average of $1,200 (based only on H&R Block processed returns), but the persistent feeling that tax breaks are only for corporations and the wealthy remains.2
Trump in 2024
Should Trump be elected, a commonly held election prediction is an extension of the 2017 TCJA tax cuts, and some posit further slashes to individual and corporate taxes.3 Second, Republicans appear keen on minimizing the IRS’ ability to investigate tax fraud, which could, according to one estimate, amount to up to $7 trillion in revenue over the coming decade.4 Deficit spending is never popular, but both sides of the aisle have been guilty of contributing to a total debt of $34.1 trillion and a 123% debt-to-GDP ratio.5
Federal Deficit Trends, FY 2001-2003 ($ Trillions)
A Biden Election Prediction
Should the election prediction of President Biden hold true, he has already set out an ambitious agenda that will require significant funding : cheaper prescription drugs, universal preschool and affordable childcare, and tuition-free community college, among others. Raising taxes on the wealthy is a priority, but Biden has also stated that those earning less than $400,000 annually would not see an increase. Biden has expressed interest in raising the top tax rate to 39.6% from 37% for those individuals making over $400,000 per year and $450,000 for married couples.
The most eye-popping election prediction is a minimum-tax proposal for people with a net worth upwards of $100 million. The President argues that extremely wealthy individuals benefit from increases to their overall portfolios without necessarily reporting income. As such, unrealized capital gains would be calculated into their income, and a minimum 20% tax would apply.
As compared to just 15 years ago, both candidates are remarkably protectionist. Yet, former President Trump is particularly fond of tariffs, having previously targeted everything from steel and aluminum to solar panels and washing machines. The prediction in 2018 was that tariffs would revive US manufacturing and reduce the trade deficit, while critics of the former President’s strategy predicted higher consumer costs. Neither bore out, but trade wars are likely with a second Trump term in the White House.6
The Proposed 10%
The Former President has leaked a proposed 10% tariff on imports from all countries. There are some questions as to whether this is possible without Congressional approval, but the President does have authority under the IEEPA (International Economic Emergency Powers Act) to raise tariffs, something he threatened to do with Mexico.
A higher tariff equates to higher prices. The likely prediction is businesses will pass as much of that to the consumer. And in an environment without inflation under control quite, tariffs could push prices up even further.
President Biden had prepared an ambitious global trade plan that was sold as “worker-centered” but the perception from fellow Democrats was it would not resonate with “at-risk Democrats,” namely in the industrial Midwest. As such, the plan has been scrapped for now, leaving a host of Indo-Pacific nations concerned.7
President Biden has maintained most of Trump’s tariffs, but unlike his predecessor, Biden has not withdrawn or even threatened to withdraw from trade agreements. We expect a more moderate approach from Biden moving forward on curbing China’s influence.
U.S. Field Production of Crude Oil Thousand of Barrels per Day vs. Month
Despite the anti-fossil fuel perception, under President Biden, the US is producing a record 13.3 million barrels of crude per day. The Trump era record was 13.1 million just before the Covid-19 crisis. Now, Presidents don’t set oil production, but Biden, to his credit, has moderated his tone on fossil fuels and shifted back to the center.
Trump’s Likely Direction
Former President Trump has made it clear that “drill, baby, drill” will be front and center should he be elected. The commonly held election prediction is that Trump would increase oil drilling on public lands and provide tax breaks to not only oil and gas producers but likely coal, something environmentalists will certainly take great issue with.
Moreover, it is expected a Trump presidency would roll back Biden’s efforts to influence the adoption of Evs (electric vehicles) and limit pollution by requiring up to 54% of new vehicles sold to be electric by 2030.
Biden & Environmentalists
President Biden has been trying to have it both ways with energy policy. While simultaneously approving controversial drilling ventures, the President is now flirting with an LNG (liquified natural gas) export ban.8 In an attempt to appease the environmentalist flank of the party, the administration is taking a “second look” at the criteria employed to approve new LNG export projects. The US began shipping LNG exports in 2016 and now exports more than any other country.
The President is in a thorny position as renewables are far from a viable replacement for oil and gas, something a portion of his base remains in wild disagreement with.
The economy is improving, and so is consumer sentiment.
As the great former Clinton strategist, James Carville was fond of saying, “It’s the economy, stupid.” So, while sentiment is up, most Americans still recognize they are paying more at the supermarket - 20% more for a typical basket of goods compared to February 2021.
As there are more registered Democrats than Republicans, 2024 will likely hinge on Independents. Back in November 2023, The Center Square Voters’ Voice poll revealed Ron DeSantis and Nikki Haley both performing better than former President Trump in a hypothetical election against President Biden.9 The former President now must pick up a large chunk of independents to have a chance at a second term.
First-term incumbency nearly always provides a statistical advantage. The caveat is if the economy is in recession. In the post-World War II era, the incumbent has always won when the economy is not in a recession and Goldman Sachs Research points to just a 15% probability of a recession.10
- Chittenden, William T. February 21, 2020. “Political Parties in Power and U.S. Economic Performance,” SSRN.
- H&R Block. April 11, 2019. “H&R Block data shows taxes down 25 percent due to TJJA.”
- Stein, Jeff. September 13, 2023. “Trump advisers plot aggressive new tax cuts for second White House term.” The Washington Post.
- Sarin, Natasha. September 7, 2021. “The Case for a Robust Attack on the Tax Gap.” U.S. Department of the Treasury.
- U.S. Debt Clock. January 29, 2024.
- Hersh, Adam S. June 21, 2022. “Revoking tariffs would not tame inflation.” Economic Policy Institute.
- Bade, Gavin. January 1, 2024. “RIP ‘worker-centered trade’: Biden’s global economic agenda stalls.” Politico.
- Nilsen, Ella. March 14, 2023. “Inside the Biden administration’s fraught decision to green-light the controversial Willow Project.” CNN.
- Harper, Casey. November 6, 2023. “Poll: In faceoff with Biden, Haley, DeSantis outperform Trump.” The Highland Country Press.
- Goldman Sachs. November 15, 2023. “The US economy is on its final descent to a soft landing.”