Gentlemen, thanks so much for being here. Let’s begin the debate. And let’s start with the issue that voters consistently say is their top concern, the economy.
President Biden, inflation has slowed, but prices remain high. Since you took office, the price of essentials has increased. For example, a basket of groceries that cost $100 then, now costs more than $12; and typical home prices have jumped more than 30 percent.
What do you say to voters who feel they are worse off under your presidency than they were under President Trump?
Biden:
You have to take a look at what I was left when I became president, what Mr. Trump left me.
We had an economy that was in freefall. The pandemic are so badly handled, many people were dying. All he said was, it’s not that serious. Just inject a little bleach in your arm. It’d be all right.
The economy collapsed. There were no jobs. Unemployment rate rose to 15 percent. It was terrible.
And so, what we had to do is try to put things back together again. That’s exactly what we began to do. We created 15,000 new jobs. We brought on – in a position where we have 800,000 new manufacturing jobs.
But there’s more to be done. There’s more to be done. Working class people are still in trouble.
I come from Scranton, Pennsylvania. I come from a household where the kitchen table – if things weren’t able to be met during the month was a problem. Price of eggs, the price of gas, the price of housing, the price of a whole range of things.
That’s why I’m working so hard to make sure I deal with those problems. And we’re going to make sure that we reduce the price of housing. We’re going to make sure we build 2 million new units. We’re going to make sure we cap rents, so corporate greed can’t take over.
The combination of what I was left and then corporate greed are the reason why we’re in this problem right now.
In addition to that, we’re in a situation where if you had – take a look at all that was done in his administration, he didn’t do much at all. By the time he left, there’s – things had been in chaos. There was (ph) literally chaos.
And so, we put things back together. We created, as I said, those (ph) jobs. We made sure we had a situation where we now – we brought down the price of prescription drugs, which is a major issue for many people, to $15 for – for an insulin shot, as opposed to $400. No senior has to pay more than $200 for any drug – all the drugs they (inaudible) beginning next year.
And the situation is making – and we’re going to make that available to everybody, to all Americans. So we’re working to bring down the prices around the kitchen table. And that’s what we’re going to get done.
Comments:
First of all, Biden is engaging in the same type of predecessor bashing on the economy as Obama did. The fact is the pandemic economy was already recovering when Biden took office. And some of the policies which promoted manufacturing improvements had more to do with favorable tax and regulatory reform under Trump,being challenged by Biden.
Biden has made manufacturing jobs a priority, unsurprising given its importance to the key union constituency in Rust Belt swing states. So let's first at the misunderstood thriving US manufacturing base (first chart Fed Reserve, second chart BLS)
So aggregate manufacturing jobs have been on the decline since 1978; this doesn't mean that US manufacturine sector is not robust. There is another trend at play: improvement in production efficiency, including automation and robotics:you could produce the same or even more widgets with fewer enployees at a competitive price. It reminds me of a couple of trends already in transition while I was earning my MBA. I was working on a CASHFAST system for a timesharing vendor; one of our clients was a well-known real estate developer which employed dozens of MBA's working on calculators on proposals spanning days up to a week; our automated solution cut that down to a few hours, better, faster, more accurately and cheaper. Not only that, but the technology expanded the nature and extent of the deals they could make or evaluate. This didn't obsolete their MBA's, but they were freed from the tedious drudgery of feeding numbers into a calculator. The second example involved telephone operators. I remember as a UWM junior professor I went to a dog and pony show at Wisconsin Bell, the host told us they used to have a staff of like 28, now down to maybe 7. Again, a partial adjustment in staffng by automating routine functionality did not imply Wisconsin Bell .was failing its mission. So using employment as a proxy for manufacturing is a dubious criterion. Employment in the servicr sector has been expanding at the expense of the manufacturing sector for decades. Industrial policy where the politically elite substitute for the collective judgment of 330 M American consumers is pure hubris whether we are talking corrupt public "investments" in politically connected industries, including green technologies.
Presidents have, constitutionally and in reality, very little to do with the economy. They can promote new suppliers and customers by lowering barriers to market entry, internal and external,. Serving the humongous national debt cimpetes with the private economy for business; at high levels; it adversely affects economic growth. In fact, Biden had 2 consecutive quarters of negative growth in 2022, commonly (but not necessarily) considered a recession. For the most part, groeth has been tepid, usually under 3%. He hasn't rolled back Trump's tariffs which have been passed onto struggling American consumers.
But Presidents don't create jobs--the private economy does. Presidents don't build houses; from the Constitution, the Congress can guarantee a free market among the States, and the POTUS can negotiate new treaties. There are a variety of reasons for higher prices: relative scarcity of available homes on the market; zoning/other regulations, higher construction costs. But home prices are up nearly a third on Biden's watch and remain out of the reach of income/savings constrained younger adults.
Inflation has a number of factors, some, like global supply chains, beyond a President's control. Some of it has to deal with massive federal spending, for which Biden bears major responsibility. Biden also bears some responsibility for the Federal Reserve through appointments, including reappointment of chair Powell, as the Fed failed to defend the dollar quickly enough. Having to ratchet up interest tates to the highest rates in over 15 years has had a toll on consumer borrowing costs and has especially hit the housing market,
Just a passing comment on Biden's attack on Trump for mismanaging the pandemic. No, Trump did not suggest injecting bleach. This has been long debunked. He asked the scientists if there was was some way of developing a med to work in the body against the virus like many cleaners do on surfaces. There are legitimate reasons to criticuze Trump's record on COVID, especially the botched, late government rollout of testing, not to mention his discouraging testing. However, we had record development of tested, effective vaccines on his watch, probably the biggest step towards economic recovery.
Garbled discussion of insulin; I don't know if there are typos in the transcript. No, the claim should be $35/month, not $15/shot. And that $400 number is totally bogus. He's probably referencing an HHS report on 2019 data saing people on Medicare or private insurance were paying out of pocket $452/year, not month. But Biden's claim here is highly misleading.
First, it was one of the big 3 (Eli Lilly, Novo Nordisk, Sanofi) which initially proposed the infamous $35 cap:
While both administrations advanced policies to make insulin more affordable, the candidates don’t often mention that copay caps are generally favored by pharmaceutical companies — and this cap was literally proposed by one. For two years prior to its 2019 proposal, Eli Lilly had been experimenting with offering different amounts of assistance to patients to help them buy insulin, Ricks said. At around $35 per month, patients would pay the required amount, and would stay on their medication. If the costs went much higher, patients would start abandoning their prescriptions. UnitedHealth Group joined Eli Lilly in proposing the Medicare pilot project that allowed drugmakers and plans to voluntarily offer at least one insulin at $35 per month.Verma said the copay amount that Lilly and UnitedHealth proposed was lower than the number the government was considering at the time..
Among other things, Democrats are misleading prople about their part in the initiative:
Wendell Primus, former House Speaker Nancy Pelosi’s top health care policy aide and currently a visiting fellow at the Brookings Institution, said House Democrats didn’t initially support the policy because it singled out a specific disease area...Ultimately, he said the $35 per month copay was chosen because it was around the average out-of-pocket cost for diabetes drugs at the time, and it didn’t cost the government much money.
Not to mention, as Trump will later note, it largely borrowed from a pilot program initiated under Trump.
Note there are competitive and economic reasons why lower co-pays make sense.. Lower overall patient costs mean more consistent insulin utilization and improved, less costly long-term health outcomes. ("According to a report published last year in the journal Annals of Internal Medicine, 1 in 6 Americans with diabetes who use insulin said the cost of the drug forces them to ration their supply.") Also, higher prices lure market competition: {"Once the medicines are approved by the Food and Drug Administration, [CA Gov. Newsom said at a press conference on Saturday, Civica — under the 10-year agreement with the state worth $50 million — will start making the new CalRx insulins later this year.")
Finally, whereas a large plurality of those who use insulin are senior citizens ("The team also looked at how people who use insulin were insured. Most had Medicare (41.1%) or private insurance (35.7%). Others were covered by Medicaid (11.1%) or other insurance (9.9%). The remainder (2.2%) had no insurance coverage for insulin."), the Inflation Reduction Act doesn't address the others, like my late friend's oldest daughter, who is a type 1 diabetic. But I believe all big 3 vendors have similar value plans for others, including the uninsured.
Let's talk about some other economically illiterate talking points . Biden wants to point tl alleged Trump's pandemic and "corporate greed". Of course, businesses aren't charities. One of the first things I learned in graduare school accounting is past costs are irrelevant for ongoing operations. For example, if a recompany has a limited supply of $45/barrel oil and global prices suddenly double in a crisis. Leftists want to screan about "windfall profits" as refined prices are marked up. The problem is the company has to finance the acquisition of new supplies at current prices.. (I won't review LGO vs FIFO vs. average cost inventory valuation here.) The fact is, we have the law of supply and demand. Generally, you sell fewer widgets at higher prices. I remember eggs at Lidl rising from under $1/dozen to nearly $5, and I bought few eggs at the latter price; I substituted other. cheaper breaskfast items.
But prices go beyond short-term avian flu outbreaks. Sometimes government policy plays a part. Consider the 2022 infant formula shortage on Biden's watch, triggered by product contamination issues at a major Abbott Labs facility and FDA regulation.. FDA regulations also effectively barred most international suppliers from our market. Remember Trump's politically corrupt USMCA version of NAFTA. Basically infant formula was included in Trump's dairy quotas from Canada. Eventually Congress passed the Access to Baby Formula Act enabling a waiver of import barriers
Another example is Biden's economic sanctions, something I oppose on principle as a violation of free trade. Here Biden roiled already tight energy markets in response to Russia's invasion of Ukraine. Biden, for ideological reasons, had already taken steps to discourage domestic exploration off publicly-held land. But he corruptly tapped into strategic oil reserves in an effort to lower oil prices in response to the surge in gasoline prices to the highest I remember since 2008.
Going back to the trite "corporate greed" soundbite, the fact is businesses are generally profit-seeking, good times or bad. Did you ever observe the conspiracy theory kooks come out of the woodwork when prices go up after supply shocks, but they are silent when prices go down later? If they ever had this market power to compel higher prices, why would they ever surrender such power? After all, we're now paying sharply lower than $5 egg cartons or gallons of gas. The answer is sales volume and market share. I may make less money per gallon if I cut my price by a nickel but I may make it up in volume, which is how WalMart became a lower-price retailing giant.
Biden is also economic illiterate when he talks about (unconstitutional) rent/price caps. If and when the the price cap is below the market clearing price. you end up with shortages, and you destroy the incentive to expand available more available housing: rent control is corrupt, bad, counterproductive public policy. The Dems' toxic mix of tax and regulation is like putting hurdles in front of sprinters on a track: it slows the runner and increases the risk of stumbling over the distance.
Finally, I expect to return to return to this topic shortly, but with both Presidents crowing about record employment. First of all, official unemployment is based on the somewhat arbitrary definition of the labor force and generally excludes the long-term unemployed or discouraged workers. More recently, we've seen several downward revisions of monthly job gains, more recent new hires concentrated in (unsustainable) government and healthcare, fewer full-time job gains, more part-time/gig work; CNN has recently noted:
The unemployment rate remains historically low, but it has noticeably crept higher three months in a row — “a sign the labor market may be turning,” according to economists at KPMG...The pace of workers quitting their jobs has dropped significantly. So has the rate of workers getting hired....In a Monday report, KPMG senior economist Ken Kim noted that the unemployment rate is close to triggering the Sahm Rule, which signals a recession has started when the three-month moving average of the unemployment rate increases by 0.5 percentage points or more above the three-month average Kim also pointed to how the services sector — a key engine of growth for the US economy — is suddenly showing signs of weakness [in part dependent on consumer spemding
The labor force participation rate remains below 63% where it started at the beginning of the pandemic. Now to some extent that's to be expected in an aging labor force with Boomers continuing to retire:
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| via the Fed |
Other salient points as of this past January
- "Average weekly earnings haven’t kept pace with prices. After adjusting for inflation, “real” weekly earnings declined 3.4%
- The publicly held debt has increased by about 24.7%."
TAPPER: Thank you. President Trump?
DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES AND CURRENT U.S. PRESIDENTIAL CANDIDATE:
We had the greatest economy in the history of our country. We had never done so well. Every – everybody was amazed by it. Other countries were copying us.
We got hit with COVID. And when we did, we spent the money necessary so we wouldn’t end up in a Great Depression the likes of which we had in 1929. By the time we finished – so we did a great job. We got a lot of credit for the economy, a lot of credit for the military, and no wars and so many other things. Everything was rocking good.
But the thing we never got the credit for, and we should have, is getting us out of that COVID mess. He created mandates; that was a disaster for our country.
But other than that, we had – we had given them back a – a country where the stock market actually was higher than pre-COVID, and nobody thought that was even possible. The only jobs he created are for illegal immigrants and bounceback jobs; they’re bounced back from the COVID.
He has not done a good job. He’s done a poor job. And inflation’s killing our country. It is absolutely killing us.
Comment:
Trump is delusional in his pretemtious hype of his economic record. Other than lowering globally high noncompetitive business tax rates, his tax cuts were more comparable to GW Bush vs. Reagan. No, economic growth, fueled by robust immigration in the nineteenth century leaped forward to the world's biggest economy. Both Reagan and Clinton experienced far higher growth during their more recent terms.(see chart below)
No we weren't the most admired nation on Trump's watch. The Human Freedom Index, published nt Cao Institute and the Fraser Institute, rated the US as #17 in 2020. The Top 10: New Zealand, Switzerland, Hong Kong, Denmark, Australia, Canada, Ireland, Estonia, and Germany and Sweden.
.No; the $7.8T national debt, the highest ever during one term as POTUS, did not save us from a Great Depression.. If anything, lagging effects likely contributed to the surge in inflation. He even attempts to argue his policies contributed to a stock market recovery after the pandemic crash. No, most economists attribute that to the Fed flooding the system with easy money, not with a struggling global economy with collapsed supply chains.
Trump's allegation that jobs are simply bouncebacks amd unauthorized alien jobs is rubbish. "Since President Joe Biden took office, the economy has added nearly 14.8 million jobs, 5.4 million more than the pre-pandemic peak in early 2020. " The fact is, unemployment rates between native- and foreign-born workers largely track each other, and foreign-born workers are generally younger, i.e., prime worker age while native-bien workers are an aging population, so to a certain extent you would expect some older workers leaving the workforce.
Finally, Trump seems to imply Biden's COVID mandates adversely affected the economy. This is ludicrous. The only one I am aware of is Biden seemed to try to establish a vaccine mandate in large corporations (or test periodically) through workplace regulations, That was soon overturned by SCOTUS. Let's point out by 2023 nearlt 70% were fully faccinated and another 12% had at least one shot. Trump seems to be reaching out for the anti-vaxxer vote, even though he wants credit for vaccine approvals on his watch
President Years Average Annual GDP Growth
Herbert Hoover 1929–1933 -9.3%
Franklin D. Roosevelt 1933–1945 10.1%
Harry S. Truman 1945–1953 1.4%
Dwight D. Eisenhower 1953–1961 2.8%
John F. Kennedy 1961–1963 5.2%
Lyndon B. Johnson 1963–1969 5.2%
Richard Nixon 1969–1974 2.7%
Gerald R. Ford 1974–1977 5.4%
Jimmy Carter 1977–1981 2.8%
Ronald Reagan 1981–1989 3.6%
George H.W. Bush 1989–1993 1.8%
Bill Clinton 1993–2001 4%
George W. Bush 2001–2009 2.4%
Barack Obama 2009–2017 2.3%
Donald Trump 2017–2021 2.3%Joe Biden 2021– 2.2%
