Analysts say the Biden administration’s policy mistakes regarding the economy contributed to Donald Trump regaining the White House. But not everyone agrees on which of Biden’s actions were mistakes. Some argue like Sen. Bernie Sanders (I-VT) said if Joe Biden had governed in a more populist manner, his policies would have won the support of voters. From reviewing the records, it is unclear whether this assessment is accurate.

Voters’ Feelings About the Economy

According to exit polls, voters are deciding the 2024 presidential election based on their perceptions of the US economy. “Widespread voter anger at the economy appeared to strengthen former President Donald Trump in Tuesday’s election, emerging as one of Democrats’ primary liabilities despite low unemployment and strong growth,” according to the report. Washington Post. “According to network exit polls, two-thirds of voters rated the economy as ‘not very good’ or ‘poor,’ while only a third rated the economy as ‘excellent’ or ‘good.’ 69 percent of voters who evaluated the economy negatively voted for Trump; It’s a significant difference.”

Mistake #1: Ignoring Warnings About Inflation

Economists have warned of the risk of inflation as the United States prepares to emerge from the Covid-19 pandemic. Despite these warnings, Joe Biden signed a major agreement in March 2021. stimulus package This contributed to inflation. Nineteen months after the bill was signed, David Lynch Washington Post “Although some experts—even from his own party—warned that new spending could cause the economy to overheat, administration officials saw little cause for concern.”

Lynch wrote: “Within a few days of March 2021 In the case of the White House, as the plan’s $1,400 stimulus checks entered Americans’ bank accounts, prices for items like used cars, airline and sports tickets began to rise. Today, annual inflation is close to the highest level of the last 40 years, at 8.3 percent.”

In February 2023, economists Julian di Giovanni, Şebnem Kalemli-Özcan, Alvaro Silva and Muhammed A. Yıldırım published the New York Federal Reserve Bank. staff report. It measured the inflationary impact of fiscal stimulus: “US headline inflation reached levels not seen for several decades, reaching 9% annually in June 2022 and falling to around 7% annually by the end of 2022. In contrast, inflation before the 2020 Covid-19 pandemic was It was under 2.”

The report found that the fiscal stimulus package signed by Biden significantly contributed to “aggregate demand shocks” that caused half or more of inflation set between December 2019 and June 2022. Aggregate demand shocks explained roughly two-thirds of the total model-based inflation, and fiscal stimulus contributed half or more of the total aggregate demand effect.”

While Congress passed a fiscal stimulus package under Trump that also contributed to inflation, Donald Trump wasn’t in the White House in 2022 to take the blame. What’s more, according to a Federal Reserve Bank of New York staff report, “the 2021 Biden fiscal package accounted for 15% of GDP (Gross Domestic Product),” even though economists question the need for significant federal stimulus.

Mistake #2: Maintaining Tariffs in the Face of High Prices

When American consumers complain about inflation, they are often referring to price increases that affect them, not official government statistics. The Biden administration missed an opportunity to lower prices by deciding to maintain many of the tariffs that Donald Trump imposed as president.

During the presidential debate, Kamala Harris criticized the Republican candidate’s trade policies. Trump responded: “Actually, they never lifted the tariff because it was so much money they couldn’t lift it. This would completely destroy everything they had planned to do. They received billions of dollars from China and other places. They left the tariffs open. When I had it, I had tariffs but still no inflation.

The Tax Foundation’s Erica York examines Trump and Biden tariffs in June 2024 analysis. “The Biden administration has kept most of the Trump administration’s tariffs in place and announced tariff increases in May 2024 on an additional $3.6 billion in tariff increases on an additional $18 billion of Chinese goods, including semiconductors and electric vehicles.” York. It concluded: “Before accounting for behavioral effects, $79 billion in higher tariffs amounts to an average annual tax increase of $625 for U.S. households.”

Mistake #3: Antitrust Policy and Undermining Venture Capital Investments

Although Biden has positioned himself as a moderate alternative when running for the Democratic nomination, critics say he delegated much of his economic policy to allies of more liberal Sen. Elizabeth Warren (D-MA) after entering the White House. The most controversial appointee was Federal Trade Commission chairman Lina Khan, whose policies so alienated the tech community that New York Times It reported that before the election, “Democratic donors, including billionaires Reid Hoffman, Barry Diller and Mark Cuban, were calling for him to be kicked out of the agency.”

Elon Musk and other Trump supporters have also criticized Khan, noting that Khan’s policies, cryptocurrency regulations, and proposed tax on unrealized capital gains have motivated many wealthy individuals to donate millions of dollars to elect Donald Trump over Kamala Harris. Press reports shows that donations play an important role in elections.

High-profile Justice Department-backed antitrust actions against Meta and Google received the most media attention, but the blocking of corporate mergers also affected other businesses. U.S. Chamber of Commerce Vice President Neil Bradley said: New York Times He said Khan came up with unpredictable theories to prevent mergers that make things difficult for companies.

Media attention has focused on how Khan’s policies are interfering with the foundations of Silicon Valley’s venture capital and innovation ecosystem that other countries are trying to emulate. Venture capital firms hope to make a profit on their investments. Investing in companies that then go public (i.e., are traded on the stock exchange) is one way for venture capitalists to make money. Because relatively few companies are successful enough to be publicly traded, venture capital firms also hope that another company will acquire (or merge with) a business in which they have invested or acquire the technology underlying it.

In one widely watched case, Khan tried to block Meta’s acquisition of virtual reality startup Within Unlimited. “Historically, the FTC and the Department of Justice have challenged mergers of two major players in established industries,” he said. Wall Street Magazine. “So the FTC’s challenge to Meta’s acquisition of a startup in a relatively new market was seen as an unusual approach and an important test case.” After the loss in federal court, the FTC withdrew its objection to the purchase.

Khan suggested that such acquisitions by large companies stifle innovation. Venture capital executives wondered: If the small tech companies they invested in could no longer be acquired by larger companies, who could buy them, and what would happen if the government blocked that path to profit from their investments? With the election of Donald Trump, Khan is unlikely to remain in office long enough to test this proposition, but it helps explain the opposition his policies have sparked.

Michael R. Strain, an economist at the American Enterprise Institute, in question“Lesson for Democratic policymakers: Do not enact policies as reckless and irresponsible as the 2021 American Rescue Plan.” Strain believes voters understand that the Biden administration’s policies are worsening inflation. Inflation was inevitable given the global supply shocks to the economy caused by Covid-19, and incumbents in many countries lost elections. Still, Strain believes Harris could have won the election “if inflation had reached 6% instead of 9%.”