Beyond 2020: Post-Election Policies

From Goldman Sachs Research, this is Allison Nathan. Welcome to Top of Mind, a podcast that explores macroeconomic issues on the minds of our clients. In this episode, we're focusing on the policy implications of the fast approaching US presidential election, which is shaping up to be one of the most contentious and consequential in modern history. Given the candidates radically different world views, the potential impact of the election on policy and in turn the economy is top of mind. To start, I tried to get a sense of the economic policy priorities of the candidates by speaking with policy

president has talked a lot about his priorities for a second term, and I think on taxes, there are a number of things expiring that I'm sure he would wanna make permanent. On tax rates, the Tax Cuts and Jobs Act ended up being a little bit short of the rates the president pursued. Now I haven't heard that he wants to take a second stab at that, but I would expect another tax proposal of some type that would include additional middle class tax cuts. And finally, one of the things we worked out of the White House the most while I was there that didn't end up becoming legislation was a big infras

then turned to the other side of the aisle and asked Bernstein to lay out what he thinks will be the economic priorities of a Biden administration.

So I think the priorities actually do lend themselves to a sequencing, which is, one, buyers control, two, relief recovery, and three, what the vice president calls his building back better agenda. The vice president shares share Powell's view that a sustainable robust recovery absent virus control is quite unlikely to occur. And this has been an epic failure of the current administration. So controlling the virus has to be step one, and Biden has an elaborate plan in that regard. It involves much more of a role for the federal government organizing governors and then within state actors to ad

In order to pay for this agenda, Biden proposes tax increases. I asked Bernstein whether raising taxes would hurt an already weak economy.

It's important to recognize the difference between countercyclical and more permanent policies. Countercyclical policies are traditionally deficit financed for very good reasons, and that makes particular sense in our current fiscal climate with interest rates locked in at such a low level for so long. But the permanent measures, the kinds of things in the Building Back Better agenda that Biden envisions as sticking around to achieve this structural improvement in our policy infrastructure require pay fors. Otherwise, they are very difficult to sustain. And so he has a set of highly progressiv

then turn to one of the most important economic issues of our time, trade, and ask both Hassett and Bernstein about the approach each candidate is likely to take on the issue. Here's Hassett on the Trump administration's approach to trade policy.

Given where we are today, if he's reelected, do you think that he'll continue with tariffs?

He stated that his objective is no tariffs and no non tariff barriers. But with asymmetric trade deals that he inherited, people didn't really want to come to the table because they had such an advantage in the existing deal. No. I think the president's approach has been very effective by Sabre Radley with tariffs. We've got the Europeans to up their contributions to NATO. We got the new NAFTA pass with a lot of concessions America's been seeking for a long time from Canada and Mexico. Similarly, President Trump was able to extract some great concessions from the Koreans.