Is Trump Worsening US Inflation? Economists Think So…

Meanwhile, Pence is spending millions to preserve Trump’s tax cuts 

A Spending Spree

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Mike Pence, former vice president to Donald Trump, is shelling out $10 million to preserve his ex-boss’ tax cuts that mostly benefitted the super wealthy. 

Not Backing Trump

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Pence, who is not endorsing Trump for the current presidential run, announced plans for a “nationwide grassroots education campaign” via his political advocacy group, Advancing American Freedom. This was signed into law when Pence was vice president in 2017.

Choices to Make

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According to the group, efforts will include direct contact with Capitol Hill via seminars, policy memos, and grassroots advocacy. As the campaign proceeds into 2025, lawmakers will have to decide whether to extend the Trump-era tax cuts or allow them to lapse. 

Pence on Biden

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Pence recently stated, “The past few years of the Biden administration have shown us that you cannot spend your way out of inflation, and you will not be able to tax your way out of a spending problem”. 

What’s the Problem?

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He also added, “Washington has a spending problem, not a revenue problem. Our national debt is out of control, and taxing the American people more is not the solution.” 

What Did Trump Do?

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Among other changes, Trump’s signature legislative law, which was signed on 22nd Dec 2017, cut individual income tax rates, boosted the standard deduction and child tax credit, plus minimized the corporate tax rate from 35% to 21%. 

Biden on Tax Cuts

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While running for office in 2020, President Biden regularly stated that he wanted to “eliminate” the Trump tax cuts as they benefited the wealthy and corporations. 

No Change?

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However, Biden and the Democrats didn’t change the Trump-era law while in control of the White House and both chambers of Congress in 2021 and 2022. 

Worsening Inflation?

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Now, 16 Nobel Prize-winning economists have drawn up a letter, warning that Trump’s proposals would make inflation worse.

Don’t Elect Trump

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Organized by economist Joseph Stiglitz, the letter expresses concern about the rule of law and stability should Trump be elected President. 

Not Stable

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As stated in the letter, which was first reported by Axios, “Donald Trump and the vagaries of his action and policies threaten this stability and the US’s standing in the world”. 

A Big Worry

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The economists also added, “We the undersigned are deeply concerned about the risks of a second Trump administration for the US economy”. 

Who’s in on It?

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Along with Stiglitz, the letter was also signed by former World Bank Chief Economist Paul Romer, Robert Shiller (who predicted the mid-2000s housing bubble), and George Akerlof, husband of US Treasury Secretary Janet Yellen.

Thumbs up for Biden

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Switching lanes, the letter also applauded Biden’s work on the US economy, claiming that his big investments in infrastructure, manufacturing, and climate will minimize long-term inflationary pressure while easing the transition into clean energy. 

Trump’s Side Replies

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The Trump campaign’s national press secretary, Karoline Leavitt, stated to CNN: “The American people don’t need worthless out of touch Nobel prize winners to tell them which president put more money in their pockets”. Biden was also blamed for the US’ high inflation. 

Out With Biden?

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Leavitt further added, “Americans know we cannot afford four more years of Bidenomics, and when President Trump is back in the White House, he will reimplement his pro-growth, pro-energy, pro-jobs agenda to bring down the cost of living and uplift all Americans”.

Money Matters

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During his term, Trump approved $8.4 trillion of new 10-year borrowing, which is almost double as much as President Biden currently has in office. 

Big Costs

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The Congressional Budget Office argues that if Trump extends his 2017 tax cuts, it will cost nearly $5 trillion. But in a recent closed-door meeting, Trump told CEOs that he wants to cut the corporate tax rate even further. 

Watch Inflation

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However, at a time when the Federal Reserve wants to slow down the economy to combat inflation, cutting taxes would risk accelerating it instead. 

Vote Carefully

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The economists further stated in the letter: “The outcome of this election will have economic repercussions for years, and possibly decades, to come”. 

Trump Targeting China

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Meanwhile, Trump wants to raise tariffs on China and other trading partners, yet Moody’s Analytics predicted that would cancel jobs and worsen inflation. 

And Biden?

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In contrast, most of the Trump-era tariffs have been kept in place by Biden, who also recently lifted some tariffs on China, although in a more targeted approach. 

Who’s the Favorite?

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In an ABC News/Ipsos survey conducted in May, over 80% of respondents named the economy and inflation as crucial vote-determining factors. And Trump scored a 14-point lead over Biden on both issues. 

Interesting Times Ahead

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And in an April poll by CNN, only 34% of Americans approved of Biden’s economic policies, while just 29% approved of Biden on inflation. 

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The post Is Trump Worsening US Inflation? Economists Think So… first appeared on EcoHugo.

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For transparency, this content was partly developed with AI assistance and carefully curated by an experienced editor to be informative and ensure accuracy.

 

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