President Donald Trump said the stock market “will crash” if former Vice President Joe Biden were to replace him in the White House during the final presidential debate on Thursday night. Fact-checkers said this statement is false on its face. The stock market is not expected to dip if Biden is elected, let alone “crash,” although investors are worried about the specter of a contested election raised by Trump’s attacks on mail-in voting.
In fact, recent analysis by independent financial experts of each candidate’s economic plan predicts that a Biden victory and a Democratic takeover of the Senate would produce up to 7.4 million more jobs and a faster economic recovery from pandemic recession than a victory for Trump and the GOP. Since his first run for office, Trump has billed himself as a boon for the economy, but his record is obscured by his rhetoric.
Trump has consistently used the stock market as a barometer of the economy’s health, but economists say that view is out of touch with most of the population. The bottom 90 percent of households in terms of income hold only 12 percent of corporate equities and mutual fund shares, and the bottom 50 percent hold only .16 percent, according to federal data. That may be one reason why Biden responded to Trump’s attacks by highlighting the economic pain middle class families are feeling as a result of the coronavirus pandemic.
“Where I come from in Scranton and Claymont, the people don’t live off of the stock market,” Biden said.
The stock market has improved overall in the months since COVID-19 shutdowns spurred a recession, which is good news for some investors, but millions of working Americans are still hurting. While the number of new unemployment claims is slowly shrinking, at least 24 million people were receiving or waiting unemployment claims last week, and job growth is slowing, according to the Economic Policy Institute (EPI). Last week was the 31st straight week that total initial claims — about 1.1 million — were far greater than the worst week of the Great Recession.
Meanwhile, millions of adults and children are going hungry as Republicans in the Senate refuse to take up a second pandemic relief package passed by House Democrats, and talks over a compromise bill have stalled for weeks. More than one of four children live in households that are unable to pay for basic expenses, such as food, rent or mortgage, car payments and medical expenses, according to the Center for Budget and Policy Priorities.
The COVID-19 pandemic — along with the Trump administration’s botched response and failure to prioritize public health — are clearly the biggest factors impacting the economic reality for most people. That’s why Trump has consistently sought to blame the virus for economic woes and China for the virus, although China has done a much better job at controlling the spread of the virus among its people and reducing death rates than the U.S.
The economy was booming before the virus, Trump claims, when the stock market was growing and the unemployment rate rested at around 3.5 percent. However, some progressive economists argue Trump inherited a strong economy from the Obama administration, and a number of policies championed by Trump were slowly degrading the economy before COVID-19 appeared.
For example, Trump has hailed the GOP’s tax cuts passed in the early months of his presidency as a gift to the economy. However, most of those tax cuts benefited the wealthy, who are more likely to save money than to spend money. Consider a rich family that has paid off their seven cars and a poor family struggling to pay for a lease on one, not to mention mortgage payments and outstanding medical bills. Who is more likely to immediately spend the windfall of a tax break and put that money back into the economy?
Business investment plummeted under the Trump administration even before COVID-19 hit and despite Trump’s massive tax cuts for corporations, according to EPI research director Josh Bivens. The administration also undercut labor rules and standards that degraded bargaining leverage for workers, sending more wealth toward upper class.
“You don’t have to be an economist to know how the U.S. economy is doing today: It’s an utter shambles, with tens of millions of workers unable to find the work they need to get by, and with tens of millions of families facing extreme hardship and anxiety,” Bivens wrote in a blog post this week.
Trump claimed he would protect domestic manufacturing jobs with protectionist trade policies and lower the trade deficit, but experts say he has failed on both fronts. The U.S. trade deficit, which is the gap between what the U.S. buys and sells abroad, reached a 14-year high in August as the domestic economy sputtered.
While it’s difficult to gauge how many U.S. jobs were lost and sent overseas during Trump’s tenure, he did not keep his pledge to prevent offshoring. Claims for Trade Adjustment Assistance, which is provided to workers who lose their jobs due to trade, covered nearly 184,888 jobs in manufacturing, financial services and other sectors during Trump’s time in office, according to analysis by Bloomberg. That’s about 12,000 more than were offshored during the eight years President Obama was in office. An estimated 700,000 jobs were lost due to the trade deficit with China in the first two years of the Trump administration alone, according to EPI.
Trump’s trade war with China and other major economies has also hurt U.S. businesses and consumers. Trump initially put tariffs — essentially taxes on imports and exports between countries — on a number of products, and earlier this year the Congressional Budget Office estimated the tariffs would reduce the average household $1,227 in annual income this year. While Trump has pursued an agreement with China to end trade disputes, the harm from his policies has economic ripple effects. From fact-checkers at the Washington Post:
China does not pay any of these tariffs. The tariffs — essentially a tax — are paid by importers, generally U.S. companies, who in turn pass on most or all of the costs to consumers or producers (who may use Chinese materials in their products). So, ultimately, Americans are footing the bill for Trump’s tariffs, not the Chinese. The president is fooling himself if he thinks otherwise.
Trump has attempted to hang his economic hat on the fossil fuel industry, saying falsely that Biden would ban fracking and his administration has unleashed a renaissance for U.S. energy by slashing regulations that protect clean air and water. However, fracking for oil and gas had already caused a fossil fuel boom before Trump became president, and the industry was struggling before COVID-19 as prices plummeted do to overproduction. Meanwhile, the costs of Trump’s failure to address the damage caused by climate change are adding up and will only grow in the future as seas rise and climate-related natural disasters increase.
Trump argues that Obama-era regulations on the fossil fuel industry are “job-killers,” and warns states like Texas and Pennsylvania that produce oil and gas that Biden would destroy their economies by turning away from fossil fuels. However, the Trump campaign uses inflated numbers when boasting about the number of jobs created by oil and gas. Biden has only promised a slow transition to cleaner energy over decades by investing in cleaner energy and ending federal subsidies for fossil fuel production, not a national “ban” on fracking that climate activists demand.
After the debate, Biden told reporters that workers in the oil and gas industry would not lose their jobs if he became president, and new jobs would be created by “alternatives” in the energy sector.
“We’re getting rid of the subsidies for fossil fuels, but we’re not getting rid of fossil fuels for a long time,” Biden said.
Biden would not crush the fossil fuel industry as Trump claims (observers argue the fossil fuel industry is crushing itself). Biden likely would, however, reinstate regulations decimated by the Trump administration that could create jobs and prevent pollution, according to the BlueGreen Alliance, a coalition of the nation’s largest environmental groups and labor unions.
For example, Obama-era regulations requiring oil and gas producers to prevent climate-warming methane gas from leaking into the atmosphere would have created 5,400 direct and indirect jobs if the Trump administration had not revoked the rules. If Biden wins the election and fully implements the rules, up to 50,000 new jobs could be created over a decade, according to the BlueGreen Alliance.
Correction: This article incorrectly stated that 700,000 jobs were lost to China. Those jobs were lost due to the trade deficit with China.