It’s Joe Biden versus the Trump economy

Joe Biden, astonishingly still the front-runner in the 2020 Democratic presidential primary race, wants to take on the Trump economy. Good luck with that.

With the majority of Americans, even many who detest him, giving President Trump high marks for his handling of the country’s financial affairs, Biden will struggle to convince voters that they want to go back to the Obama era. And make no mistake — that’s what Biden wants to do.

Biden traveled to his home state of Pennsylvania recently and talked up the policies that he and “Barack,” as he calls his former boss, put forward during their eight years in office. “Things were beginning to really move,” he said, claiming that Trump is in the midst of “squandering” that momentum.

Is that true? Has the economy weakened since Trump become president? Obviously not.

Unemployment stands at a 50-year low, the poverty rate is the lowest since 2001, U.S. household wealth hit an all-time high earlier this year, there are more than one million unfilled jobs and in 2018 the share of income held by the top 20 percent fell by the largest amount in over a decade, as did the Gini index, which measures inequality.

Lower unemployment has translated into higher wages, which have finally filtered through to middle-class families, with the greatest gains accruing to the lowest income brackets.

The Heritage Foundation’s Stephen Moore recently reported that, based on data from the Census Bureau, “middle-class incomes, after adjusting for inflation, have surged by $5,003 since Donald Trump became president in January 2017. Median household income has now reached $65,976 — an all-time high and up more than 8 percent in 2019 dollars under the Trump presidency.” 

Moore points out that under Obama, average monthly middle-class incomes increased by $11, while so far under Trump they have grown by $161.   

Biden claims that the “forgotten” men and women that Trump promised to help have been forgotten by the president and cited the usual canard that the Republican tax cut signed by the president benefited only corporations and the wealthy. No matter how often the official bean counters tally up the tax savings that accrued to all Americans, including those in middle-income brackets, Democrats still deny that the GOP tax cuts boosted everyone.

The reality is, according to the Tax Policy Center, those in the middle-income bracket got a tax cut of $780.

To its credit, even the New York Times has acknowledged that most Americans saw their tax bill drop. But the Times noted that many don’t believe it, thanks to “a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”  

There is no doubt that corporations were the major beneficiaries of the GOP tax law. The corporate tax rate had been at 35 percent, the highest of any developed country; it was lowered to 21 percent in an effort to match levies imposed on businesses elsewhere. The United States saw a steady stream of major corporations move operations to more tax-friendly regions in an effort to cut costs and stay competitive. Revenues and profits from those ventures were held outside the country in order to avoid U.S. taxes. 

In some cases, firms relocated to foreign countries by buying an overseas company, a process called an inversion. As the gap between U.S. and overseas tax rates widened, the number of inversions soared. Under Obama and Biden, in the five years leading up to the tax re-write, 25 companies quit the U.S., including Samsonite, Medtronic and the parent company for Burger King.

Biden complains that corporations took their winnings from the tax change and squandered them on stock buybacks. He is correct that a significant amount of money has flowed to stock repurchases, as was the case when he was in the White House.

But it is also true that business investment, which was depressed by the Obama-Biden regulatory tsunami, finally turned around and ticked up under President Trump, hitting an all-time high in the first quarter of this year.

Biden said in Pennsylvania that he wants to hike taxes on corporations. What a terrible idea. A thriving business community is essential to providing for the less fortunate in the U.S., something Democrats like Biden don’t seem to understand. And by the way, corporate tax revenues, after dropping because of the GOP cuts, are again trending higher, thanks to record earnings. Which shows once again that a reduction in tax rates generates higher tax revenues.

Uncle Joe told the hometown audience that Trump lacks “empathy.” But this is the same Joe Biden who, as a senator and then vice president, watched as millions of American jobs went overseas. This is the fellow who claims to be looking out for the little guy, but under Biden, that “little guy” got a whole lot smaller. 

We lost nearly 300,000 manufacturing jobs under his White House watch. In Trump’s first 30 months in office through June, we added half a million manufacturing jobs. That’s quite a turnaround.

Biden is correct that the economy, and in particular the manufacturing sector, has slowed of late. Donald Trump has spent some of his political capital and some of the economic resurgence created by his tax cuts and deregulation to challenge China. He wants to level the playing field and has demanded that Beijing treat U.S. companies fairly.

Biden has criticized that approach. But then this is the same Joe Biden who said China was not a threat to the U.S. That statement alone should disqualify him from occupying the Oval Office and running our economy.

Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.