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Biden Becomes the Supply-Side Candidate

In many, many ways, 2024 is its own beast – an election that will truly be unlike any other. This is no less true on economic policy – which has created a dynamic that was never supposed to happen. President Joe Biden, the last of Ronald Reagan’s 1980s foils, has become the better choice for supporters of supply-side reforms that Reagan championed. This is actually happening for one reason: the guy who’s running against Biden (Donald Trump) is even more hostile to supply-side policies than Biden is.

So here we are. How did it come to this?

It starts (and ends) with the former and would-be-again president, whose list of economic plans was carefully curated by WaPo columnist Catherine Rampell. It isn’t pretty.

Donald Trump [1], the presumed Republican presidential nominee, wants to kneecap the Federal Reserve. This should be a five-alarm fire for anyone who claims to care about inflation.

The former president and his advisers keep finding new ways [2] to outdo themselves on bad economic ideas. Should Trump be granted a second term, he plans to slash the labor supply [3] by ratcheting down immigration (including legalwork-authorized immigration [4]). He wants to devalue the dollar [5]. He’d levy worldwide tariffs of 10 percent [6] or higher, plus perhaps a 100 percent tariff on some Chinese goods, apparently failing to notice that the costs of his previous tariffs fell almost entirely on American consumers [7].

Now, according to a Wall Street Journal scoop [8], Trump also wants to strip the Fed of its political independence. Proposed changes include enabling the president to fire the Fed chair at will, or even play a role in setting interest rates himself.

Not only are all of these absolutely terrible economic ideas (yes, even the immigration one); they are also the complete opposite of supply-side policies. All of them would indeed spike inflation. More than a few would bring back the hideous “stagflation” of the 1970s.

I remember when Republicans opposed every single one of these policies, all of which were considered panaceas by 1980s populist left – and Donald Trump. If he gets a second term, Trump can empower only people who agree with this stuff in 2024.

He’s not walking away from them either (as he is trying to do, badly, on abortion, for example). If anything, he made it clear to Eric Cortellessa (Time [9]) that he’s looking for tariffs higher than 10%. For the record, a 10% tariff on all imports (data from St. Louis Fed [10]) would raise taxes by over $350 billion a year, easily dwarfing any effect from extending the 2017 tax cuts (most of which, save the corporate tax cut, will expire next year without extension).

I have repeatedly [11] complained [12] about President Biden’s unwillingness [13] to consider [14] supply-side reforms. Many of Trump’s tariffs are still, wrongly, in force. However, Biden isn’t proposing hundreds of billions in new tariffs. Nor is he anywhere near as restrictive on immigration as Trump is. Finally, he has no interest in taking over the Fed to lower interest rates. Meanwhile, as Rampell noted.

Trump also tried to bully the Fed [15] into cutting interest rates — presumably to help not only his polling [16], but also his own finances. (Lower rates are attractive if you happen to hold a lot of debt [17].)

Donald Trump has scrambled political coalitions and put American democracy at risk. Even seeing that, I never thought he’d make Joe Biden the preferred choice for supply-siders. It’s yet another political shock to which we all must adjust.