Moody’s Analytics; cooling inflation, economic growth of 2.1% v. an economic disaster

AB: I am not sure how Republicans will sugar coat Trump’s economic plans for 2025.

June 23, 2024

Prof. Heather Cox Richardson

Letters from an American

On Thursday, Moody’s Analytics, which evaluates risk, performance, and financial modeling, compared the economic promises of President Joe Biden and presumptive Republican nominee Donald Trump. Authors Mark Zandi, Brendan LaCerda, and Justin Begley concluded that while a second Biden presidency would see cooling inflation and continued economic growth of 2.1%, a Trump presidency would be an economic disaster.

Trump has promised to slash taxes on the wealthy, increase tariffs across the board, and deport at least 11 million immigrant workers. According to the analysts, these policies would trigger a recession by mid-2025. The economy would slow to an average growth of 1.3%. At the same time, tariffs and fewer immigrant workers would increase the costs of consumer goods. Inflation reaching 3.6% would result in 3.2 million fewer jobs and a higher unemployment rate. 

Trump’s proposed tariffs would not fully offset his tax cuts, adding trillions to the national debt. 

Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank, said that Trump’s tariff policy “would be bad for workers and bad for consumers.” Chief Economist of Moody’s Analytics Mark Zandi said: “Biden’s policies are better for the economy.”   

In the New York Times today, Jeffrey Sonnenfeld, the president of the Yale Chief Executive Leadership Institute at the Yale School of Management, debunked the notion that corporate leaders support Trump. Sonnenfeld notes that he works with about 1,000 chief executives a year and speaks with business leaders almost every day. Although 60 to 70 percent of them are registered Republicans, he wrote, Trump “continues to suffer from the lowest level of corporate support in the history of the Republican Party.”

Among Fortune 100 chief executives, who lead the top 100 public and private U.S. companies ranked by revenue, Sonnenfeld notes, not one has donated to Trump this year. 

While they might not be enthusiastic Biden supporters, unhappy with his push to enforce antitrust laws and rein in corporate greed, the president has produced results they like: investment in infrastructure, repair of supply chains, investment in domestic manufacturing, achievement of record corporate profits, and transformation of the U.S. into the largest producer of oil and natural gas in the world. 

In contrast, they fear Trump. The populist plans that thrill supporters—like hiking tariffs and taking financial policy away from the independent Federal Reserve Board and putting it in his own hands—are red flags to business leaders. Such positions have more in common with the far left than with traditional Republican economic policies, Sonnenfeld says. Those policies reflect that Trump has surrounded himself with what Sonnenfeld calls “MAGA extremists and junior varsity opportunists,” while the more senior voices of his first term have been sidelined. 

On Saturday, Trump spoke in Philadelphia with a message that The Guardian’s David Smith described as “light on facts, heavy on fear.” He appears to be trying to overwrite his own criminal conviction with the idea that Biden’s immigration policy has brought violent undocumented migrants to the United States, creating a surge of crime. He told rally attendees that murders in their city have reached their highest level in six decades, while in fact, violent crime in the city is the lowest it’s been in a decade. 

In February, Trump pushed Republican lawmakers to reject a strong bipartisan border bill so he could use immigration as his primary issue in the election. That focus on immigration was key to the rise of Hungary’s Viktor Orbán to power, and it is notable that Trump’s picture of the United States echoes the rhetoric of the authoritarians hoping to overturn democracy around the world.  

On Friday, during a podcast hosted by venture capitalists, Trump blamed Biden for starting Russia’s war against Ukraine by calling for Ukraine’s admission to NATO, the North Atlantic Treaty Organization that resists Russian aggression. This statement utterly rewrites the history of Trump’s support for Russia’s annexation of the same Ukrainian regions it has now occupied: as Trump’s campaign manager Paul Manafort testified, the Kremlin helped Trump’s 2016 campaign in exchange for the U.S. permitting Russian incursions there.

More significant in this moment, though, is that Trump, who is running to become the leader of the United States, is siding against the United States and parroting Russian propaganda. Mark Hertling, a retired lieutenant general of the United States Army who served for 37 years and commanded U.S. Army operations in Europe and Africa, wrote:

“This statement is, to put it mildly, stunningly misinformed and dangerous.”

Trump told host Sean Spicer that the U.S. is a “failing nation,” claiming that airplane flights are being delayed for four days and people are “pitching tents” because their flight is never going to happen. In reality, as Bill Kristol pointed out, with 16.3 million U.S. flights, 2023 was the busiest year in U.S. history for air travel, and the cancellation rate was below 1.2%. This was the lowest rate in a decade. 

Trump is insisting at his rallies that crime is skyrocketing under Biden. In reality, crime rose rapidly at the end of Trump’s term but is now dropping. From 2022 to 2023, according to the FBI, the only crime that went up was motor vehicle theft. Murders dropped by 13.2%, rape by 12.5%, robbery by 4.7%, burglary by 9.8%. The first quarter of 2024 showed even greater drops. Compared to the same quarter in 2023, violent crime is down 15.2%, murder down 26.4%, rape down 25.7%, robbery down 17.8%, burglary down 16.7%. Even vehicle theft is down 17.3%. 

Trump’s negative picture might play well to his die-hard supporters, but portraying the U.S. as a hellscape has rarely been a recipe for winning a presidential election.

President Biden and Trump are scheduled to debate on Thursday, June 27, and Trump’s team is trying to lower expectations for his performance. He became so incoherent in Philadelphia that the Fox News Channel actually cut away while he was talking. The Biden-Harris team has taken simply to posting Trump’s comments, prompting Josh Marshall of Talking Points Memo to note:

“It’s pretty bad when one candidates rapid response account just posts the other guys quote verbatim with no explanation at all.”

After months of insisting that Biden is mentally unfit, now Trump and his surrogates are saying Biden will perform well in the debate because he will be on drugs. There is no evidence that Biden has ever used performance-enhancing drugs, but curiously, Trump’s former White House physician Ronny Jackson (whom Trump repeatedly misidentified as Ronny Johnson last week) gave Fox News Channel host Maria Bartiromo a very detailed list of drugs that could sharpen attention and clarity. One of the ones he mentioned, Provigil, was on the list of those widely and improperly distributed by the White House Medical Unit in the Trump White House. 

Jackson said that he was “demanding” that Biden take drug tests before and after the debate. A White House spokesperson responded:

“[A]fter losing every public and private negotiation with President Biden—and after seeing him succeed where they failed across the board, ranging from actually rebuilding America’s infrastructure to actually reducing violent crime to actually outcompeting China—it tracks that those same Republican officials mistake confidence for a drug.”

With the evaluation that Biden is better for the economy and Trump’s apocalyptic vision of the U.S. is not based in reality, it jumps out that on Thursday, a filing with the Federal Election Commission showed that the day after a jury convicted former president Donald Trump on 34 criminal counts, billionaire Tim Mellon made a $50 million donation to one of Trump’s superpacs. Since 2018, Mellon has contributed more than $200 million to Republicans, giving $110 million to Republican candidates and funding committees in the 2024 election alone. He has also given $25 million to independent candidate Robert Kennedy Jr. 

In a 2015 autobiography, Mellon embraced the old trope that “Black Studies, Women’s Studies, LGBT Studies, they have all cluttered Higher Education with a mishmash of meaningless tripe designed to brainwash gullible young adults into going along with the Dependency Syndrome,” saying that food assistance, affordable health care “and on, and on, and on” had made Americans on government assistance “slaves of a new Master, Uncle Sam.” Writing . . .

“The largess is funded by the hardworking folks, fewer and fewer in number, who are too honest or too proud to allow themselves to sink into this morass.” 

It is this trope that the Biden administration has smashed, returning to the idea that the government should answer to the needs of all its people. The last three years have proved the superiority of this vision by creating a roaring economy; rebuilding the country’s infrastructure, supply chains, and manufacturing; cutting crime rates, and reinforcing international alliances. 

As Dan Eberhart, a Republican donor and chief executive officer of the energy company Canary, told Wall Street Journal reporter Tarini Parti about Mellon:

“He’s clearly terrified of Biden remaining the president.”