„Bidenomics” would be massive federal subsidies to corporations, all with very little meaningful oversight, and paid for with vast increases in debt. Or alternatively, we could have „Trumponomics Mach II,” this time not because of tax cuts and deregulation, but because A monstrous 10pc customs duty on all importss.
With the U.S. presidential election less than a year away, the outlook for the rest of the world looks bleak.
A few sensible candidates are still in the field Nikki Haley is a rising Reaganite star in the Republican Party. But in reality, as the global economy teeters on the brink of a new recession, it’s clear that neither Biden Or Trump It can be redeemed — and the chances of another candidate challenging them in the race for the White House seem slim.
The choice facing American voters next year will be the worst in at least a century. A seemingly fragile President Biden has begun championing his economic plan and has vowed to double down on his industrial strategy if he wins another four years in the White House.
The problem is, „Bitenomics” is already starting to unravel. The amount of subsidies to re-industrialize the US economy and transition to alternative green energies is spiraling out of control. The total bill could easily punch the $1 trillion (£800bn) barrier. As most of this is in the form of uncapped tax credits, it is open ended and no one can be sure of the final cost.
At more than 6pc of GDP, the deficit is still high for the peak of the economic cycle, and the US’s debt rating has already been downgraded. The country is deep in debt, and Biden’s only plan still seems to be borrowing. In the second installment, there will definitely be a reckoning.
But here’s the problem. The second Trump presidency wasn’t much better. For all the fair criticism of the chaotic management of the White House during his first term, the economic platform of „Trump Mach I” brought growth and jobs.
He slashed America’s largely uncompetitive corporate tax rates (Biden wants to raise them), launched enterprise zones to help revitalize blighted urban areas, and waged a war on red tape. It was a decent post.
The second period will be different. Trump’s flagship plan is a 10pc global tariff on all imports, a major disappointment to those who believe in a free market economy.
A trade war of that scale would be devastating for the British economy, as America is our biggest exporter. The US imports the world’s largest number of goods and services by a wide margin. Its imports total $4 trillion a year, topping China’s $3 trillion and Japan (less than $1 trillion).
Trump’s Planned Tariffs It could trigger a global trade collapse the world has not seen since the 1930s. Even if the tariffs were imposed domestically, they would no doubt be terrible for America’s major trading partners.
There have been no such weak candidates in modern times, and at a time when the global economy is growing slowly, government debt is too slow to handle the rising rate.
Europe is already mired in recession. Led by a German economy, it is stuck with a business model that struggles without cheap Russian energy. China is struggling against a legacy of overinvestment, and there is little sign that it can turbo-charge growth as it did after the 2008 and 2009 slump.
Meanwhile, global financial markets are struggling to adjust to interest rates above 5pc. inflammation, When it comes down, Exceeds central bank targets.
Among next year’s White House winners, Republican nominee Nikki Haley appears to be the best hope. The former South Carolina governor is rising in the polls and attracting some serious donations from Wall Street.
Billionaire investor Stanley Druckenmiller, a major contributor to the party, has announced his support for Haley and urged Republicans to rally around her. He attended a meet-and-greet breakfast attended by BlackRock CEO Larry Fink this week and reportedly received a personal endorsement from JP Morgan Chase chief executive Jamie Dimon.
It’s not hard to see why the big bucks are flocking to her. He may be far behind Trump, and indeed, Ron DeSantis, in the polls, but he’s ahead of Biden in key battleground states.
His economic policies promised a return to traditional republicanism. Haley wants to prioritize curbing the deficit, ending thoughtless subsidies of „green industries,” and helping small businesses and entrepreneurs. The agenda may not be an original one, but it is what the engine of the global economy needs.
Global GDP will expand by 3pc this year, before slowing to 2.9pc in 2024, according to the IMF. In contrast, the average global growth from 2000 to 2019 was 3.8%. We need an acceleration in US growth – if it is not accompanied by increased trade barriers.
So even if Haley’s own ambitions don’t materialize, we have to hope that her ideas will advance within her party. Neither Biden nor Trump know how to pull the economy back from the brink, nor does anyone else seem to have a chance.