Donald Trump, Joe Biden at a crossroads: Economist Stephanie Kelly

August 27, 2020

 

Donald Trump, Joe Biden at a crossroads regarding the shape of fiscal policy moving forward: Economist


Stephanie Kelly, a senior political economist at Aberdeen Standard Investments,

talks about the November election amid the GOP's virtual RNC




Q1: Stephanie had some strong words from Larry Kudlow. He's obviously out there telling people that the Trump administration is handling things well. What do you see as the biggest difference between maintaining president trump's administration and possibly having a Joe Biden?


Ans: One I think the reality is that although Kudlow's comments point to that very traditional assessment of republicans being much more kind of economic minded and more especially among investors seems to be more business-friendly.

The reality is we are in the middle of an incredibly significant global recession and the US has not been immune to that by any means. We have got like 30 million voters who are out of jobs at the moment. So I think that's going to be the difference-maker is can the republicans win the argument that the pandemic is an external issue that the Trump administration has dealt with as well as they could or will he end up getting blamed for the kind of the extent of the damage.

                                                                     

You have seen particularly with his key voters, who are probably those who are also you know of those unemployment benefits that are coming down in your mind as you take a look at both tickets. There have to be market differences right between the two of them and perhaps some similarities.


Q:2 What exactly are the key differences from a political economy standpoint

that you are seeing between those administrations?

Ans: I think they're actually genuinely, you know, at a crossroads in the United

States around the shape of fiscal policy. Now I do think that if President Trump got re-elected and he has you know republicans in the house in the senate or indeed just in the majority in the senate. I think that you continue to see this low tax approach, some business support continuing but much less of the kind of significant support we've seen in the recent bills under Biden.


You're actually talking about a really significant shift in the composition of fiscal

spending and that leads to much more spending that likely has to be funded

through higher tax particularly corporate tax rates and high-income tax rates Eamon Javers. 


Q: let's bring you into the conversation here: what's going to win this election?

Are we going to give enough tax credits, tax breaks, tax cuts, everything else out there to get people to say, you know what in a Trump administration I'll get those that's enough to buy my votes? So to speak or do you think that there's going to be a real tilt towards other big social issues there Eamon looks dom.

Ans: I don't think this is going to be about tax cuts that are sort of in the rearview mirror politically for a lot of Americans there is some concern among republicans that Biden would come in and raise taxes absolutely but this is going to be an election decided by the sort of double barrel of the virus and the economy. Right, I mean you're seeing an epic pandemic across the world that is crippling America's ability to go to work that's why I'm standing in my living room right now Americans are feeling that day in and day out and also this the free fall that we saw the economy earlier.


In the year the millions of Americans who lost their jobs you know you're starting to see

some of the airlines announcing now that they're going to make layoffs permanent. Now they've emerged from that government funding delay that was mandated. They weren't

able to lay off people as you see those rounds of layoffs and if the virus doesn't improve

I think that's very bad for the president even though we do see this uptick in the poll numbers. That I just read you, I think the president really is sort of strapped to the virus in the economy here and the fate. There is his fate politically.


Q:3  Stephanie, it's hard to imagine anyone saying that there are similarities between a

possible Biden administration and that of president trump yet. One of the experts I talked to said you know what when it comes to China they could be pretty similar. Is that fair to say that the Biden administration and the Trump administration would both look at china's and our trade policies in a similar fashion?


Ans:  I think it's useful to think about it. In terms of the path, you take to the outcome with

China versus the actual outcome itself. The reality is that it's very clear if you know voter polling. It's very clear among democrats and republicans that there are deep skepticisms about the Chinese regime and issues around transparency and particularly around technology.



Those are things that are shared. That's very clear, it's more around the path that we would see and here specifically. It is rather than necessarily waking up on a Monday morning to a tweet saying that the trade deal is done or indeed, that the trade deal is back on. I think under Biden would be much more strategic. He had launched a strategic review. He had wanted to work more with European partners to do a more multilateral approach it doesn't mean that the kind of U.S and china become close again by any means it's just the path you have to get to what is I think an ongoing.


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