2024 Rundown: The Real Economy
The economy continues to be one of the top issues for voters during the 2024 election, which makes it rife with rhetoric, misinformation, and claims about which political party is best able to manage it.
Let’s look at the various factors surrounding the US economy:
The Debt
During Donald Trump’s presidency, the national debt increased by 40%—a historic amount in modern times. While the pandemic played a part in creating this debt, Trump’s corporate and wealthy tax cuts had already exploded the debt before the pandemic even arrived.
President Biden took office while the pandemic was still ongoing and had to manage the global high inflation that followed. He was also saddled with Trump’s tax cuts, which continued until after 2025. By the end of this term, Biden will have added a similar dollar value of debt as Trump, yet the situation is quite different.
Biden has increased the debt by only 25%
The debt to GDP ratio was 133% when Trump ended his term. It is currently 123%
President Biden slowed the increase of the national debt and reduced the severity of the debt by significantly growing America’s GDP at a time when many predicted the US would fall into recession.
The Deficit
Ironically, Republicans love to say that we have a spending problem while pushing the largest military budget in the world even higher. Still, the simple fact is that we cannot cut ourselves to a surplus.
No one is willing to cut the military.
Everyone agreed not to cut Medicare.
Social Security doesn’t even add to the debt.
Then, there is the interest on the debt.
Those categories alone use up all of the federal revenue. So even if we gut veteran’s programs, federal food assistance, transportation, and education, we will not solve our debt.
We need to increase revenue.
The US has a federal revenue-to-GDP ratio of ~24%, one of the lowest ratios in the world. Only 100 countries, including all of our peer nations, have a higher ratio. Some of our peer nations have a ratio over twice that of ours.
This came about due to Republicans' continual tax decreases, including Trump, who lowered corporate taxes to a mere 21%. Combine that with tax loopholes, and the richest corporations in the world pay almost no tax while spending billions on executive bonuses and stock buybacks.
As a percentage of GDP, US corporate tax rates are low, with only a 1.6% share of GDP. Canada is 3.5%, Japan is 3.3%, the United Kingdom and France are both 2%, and Germany is 1.9%. Any way you look at it, we aren’t taxing corporations enough.
Whenever the topic of raising corporate and wealthy tax rates comes up, detractors claim that raising corporate taxes will increase costs for working Americans. This isn’t true. It is the messaging that corporations have invested in creating to serve their greed.
When the middle class was strongest, average GDP growth was highest, and minimum wage buying power was strongest, the corporate tax rate was 50%, and the top income tax bracket was over 75%.
Inflation
Inflation did climb to a high rate shortly after Biden took office, but it hasn’t been high for over a year. The inflation rate for the month of May was 0%. The 12-month rate was 3.3%, which is the same as the US historical average. 12-month wage growth during that same time was 4.1%.
In addition, grocery prices have been dropping for four months straight, and gas prices are also lowering.
This is why you don’t hear Republicans talking about inflation for the past month or year. They only talk about what cumulative inflation was over Biden’s whole Presidency.
Admitting that the US economy is doing well and inflation is under control would give Democrats too much credit in an election year. But since Republicans have made inflation their messaging for the last few years, they can’t simply stop talking about it either.
Jobs
Trump ended his term having lost 2.9 million US jobs and had an unemployment rate of 6.3%. Biden has replaced all of those jobs and added over 12 million more, and his unemployment rate has been at or below 4% for the last 30 months in a row.
Trump awarded over $425 billion in federal contracts to companies who offshored 200,000 US jobs. Biden passed the CHIPS and Science Act, which brought manufacturing back to the US and added over 800,000 jobs.
There is no denying that America has the best economy in the world. It is outpacing China’s economy for the first time in almost 50 years, and even the World Bank says that the entire global outlook will be better over the next couple of years because of how strong America’s economy is.
Attempts to minimize and distort America's economic performance will increase through November, but the powerful US economy will be harder to downplay and ignore month after month.
Republicans can’t win on the economy, which is why the best they can try is to make voters believe the economy is terrible and then tell them only Republicans can fix it.
