Economy

Trouble Explaining Middle Class Tax Breaks?

The upside is that President Joe Biden and Vice President Kamala Harris cuts taxes for working families and the middle class. These tax cuts cut child poverty in half in 2021 and are saving millions of people an average of about $800 per year in health insurance premiums today. Going forward, in addition to honoring his pledge not to raise taxes on anyone earning less than $400,000 annually, President Biden’s tax plan would cut taxes for middle- and low-income Americans by $765 billion over 10 years You can read the FACT SHEET about how the wealthy individuals and corporations are paying more, and how the rest of us are paying less in taxes.

Still having trouble explaining how the Biden/ Harris really helped the middle-class with taxes. Check out this Tax Bracket Calculator. Broader tax brackets = decreased taxes. Two examples for the 22% tax bracket for 2023, 2022, and 2021 follow.

Single Filer:

Married jointly:

In other words, since Biden and Harris were elected, middle class Americans can earn more, but are NOT taxed more. That equates to a tax break. Run your numbers here.

The U.S. Economy by Frank Merritt

Most Americans have believed that the U.S. economy is weak, or even in recession, and that it fared better under the Trump administration.  But “Nearly everything Americans believe about the economy is wrong.” [1]

The data are now pretty clear about this.  Earlier this month, the World Bank upgraded its forecast for the 2024 world economy based  “on the strength of sustained growth in the United States.”  The Associated Press reported[2] on June 13 that:

“Stronger-than-expected growth in the United States – the world’s biggest economy – accounted for 80% of the World Bank’s upgraded outlook.  … ‘U.S. growth is exceptional,’ Ayhan Kose, the bank’s deputy chief economist, told the Associated Press.”


Faced with the two dangers of a recession due to the pandemic and consequent lowered GPD on the one hand, and rising inflation due to the scarcity of goods and increased demand after the covid pandemic on the other, the Biden administration was able to steer a path between these.  In mid-2024, it is now clear that a recession has been avoided, and average wage growth has exceeded inflation for the last 12 months.


Another critical component of the economy is job growth.  The Biden administration has seen significantly greater job growth in general, and especially in manufacturing jobs, than the Trump administration -- even after excluding the pandemic-related job losses in the last year of the Trump administration[3].


The signature economic initiatives of each president have been starkly different.  For Trump, this was the major  tax cut package of 2017 which strongly benefited the top 1%; the “trickle-down” effect on the whole economy never quite materialized.   For Biden, it was the American Rescue Plan, the CHIPS and Science Act, and the Inflation Reduction Act (more on these later), which resulted in a faster recovery from the pandemic and the praise from the World Bank given in reference [2].  


References:

The Trump Economy, Josh Boak, AP (May 19, 2024) 

Inflation in the U.S. – Past, Present, and Future 

Inflation is the biggest economic problem Americans have faced over the last 3 years, spiking at 9.1% in June 2022.  But the policies of the Federal Reserve and the Biden administration have been successful, and inflation is now under control.


Inflation was triggered by the scarcity of goods and the increased demand at the end of the pandemic, and exacerbated by the invasion of Ukraine in 2022.  The Federal Reserve tried to steer a narrow path to reduce inflation but more importantly to avoid a predicted recession, and in mid-2024 it’s clear that it was successful.  Recession is no longer a threat, and inflation is below 3%, approaching the 2.3% average of the period 1990-2020.  Inflation was a world-wide phenomenon, and the recovery in the U.S. has been faster than most.  In 2023 the yearly inflation in the U.S. (4.1%) was lower than that of most of the G7 nations2.  


Looking ahead, Joe Biden and Donald Trump have very different economic plans.  These are compared in a highly recommended report by Paul Davidson3.  He reports that Moody’s Analytics says “Biden’s policies are better for the economy.  They lead to more growth and less inflation,”  and that “Trump’s plan would trigger a recession by mid-2025 and an economy that grows an average 1.3% annually during his 4-year term vs. 2.1% under Biden.” 


In addition, 16 of the world’s foremost economists (all Nobel Prize winners), have written a letter warning that Trump’s plans would stoke inflation.  They write “We all agree that Joe Biden’s economic agenda is vastly superior to Donald Trump’s.  … During Joe Biden’s presidency we have also seen a remarkably strong and equitable labor market recovery, enabled by his pandemic stimulus.”


The Biden administration has faced far greater economic challenges than the Trump administration, and has handled them very well.



References:

16 Nobel Prize-Winning Economists, Aimee Picchi, CBS News (June 25, 2024)