What budgetary situation is President Biden inheriting?
Montreal, January 28, 2021 – As he takes office, President Joe Biden is inheriting a health crisis, an economic crisis compared by some to the 1929 crisis, and mismanaged public finances. An Economic Note launched today by the Montreal Economic Institute sketches a picture of the budgetary policy of President Trump, under whose management the federal government’s debt grew by 36%.
“While the presidency of Donald Trump was marked by a very unconventional style and attitude, it remains the case that his budgetary policy borrowed freely from his predecessors,” says Alexandre Massaux, Associate Researcher at the MEI. “Whereas he took the reins in the United States with a deficit that was going in the right direction, President Trump increased spending at a rate that was not matched by equivalent revenues. As a result, the size of the deficit increased under his administration.”
“It can be difficult for a US president to control spending, since it is Congress that has the authority to dictate large portions of budgetary policy. There is no doubt that the increased spending under Trump was in part caused by Democratic legislators,” adds Alexandre Massaux. “Yet President Trump had the opportunity to set the tone at the start of his term, when the Republican Party controlled Congress, for a return to a balanced budget, which he clearly did not do.”
To whom should President Biden look instead for inspiration?
“President Biden should take a page from another Democrat, namely President Clinton. During the Clinton years, the size of the debt as a share of GDP fell by 14%, and he had the best record of the past 40 years. Unfortunately, President Biden’s estimated $1.9‑trillion relief package suggests an interventionist approach,” concludes Mr. Massaux.
The Economic Note entitled “How Does the Trump Administration’s Budgetary Record Compare?” is available on our website.
* * *
The Montreal Economic Institute is an independent public policy think tank. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
-30-
Interview requests: Daniel Dufort, Cell. : 438-886-9919, email: ddufort@iedm.org