Inflation under Trump would be far worse

As the 2024 election approaches, voters are increasingly likely to face a matchup between two candidates who have both already had a go at the job: President Biden and former President Donald Trump.

This rerun can be pretty dispiriting. But, in some ways, it’s also kind of … useful? Usually, in an election year, voters can only speculate about how campaign promises might translate into real-life governing decisions. In this election, we have a rare opportunity to evaluate actual, existing track records before casting our ballots.

So let’s take a look at what these candidates have done — and might do going forward — on the issue voters care most about: inflation.

First, a caveat. Contrary to popular perception, presidents do not actually control economic conditions, whether that’s inflation, jobs or anything else. Presidents generally get too much credit when things are good and too much blame when things are bad. Their policy choices mostly affect things only around the edges, especially in the short term.

This means we can’t just take economic metrics at face value and assume they are a reflection of presidential omnipotence. In the case of the post-pandemic recovery, we can only look at how other similar countries fared — inflation has been a worldwide phenomenon, after all — and consider how administration choices might have made things a little better, or a little worse, on the margin.

So what choices might have moved the needle? Let’s look at Biden’s record first.

Some of the things Republicans claim Biden did to juice inflation are bogus. For example: No, Biden did not wage a war on American energy. To the contrary, U.S. crude oil production just broke another record, for the second month in a row. And Biden has approved about as many permits to drill on public lands as Trump did.

But other parts of Biden’s track record on prices are not exactly great.

Take his $1.9 trillion fiscal package, passed in early 2021. That law’s near-universal stimulus checks, among other things, boosted consumer demand when demand was already strong and supply was still constrained. This helped bid up prices. The U.S. economy probably would have experienced elevated inflation no matter what — once again, inflation has been a global phenomenon — but on the margin, Biden’s stimulus likely made it somewhat worse.

He has also extended most of the Trump-era tariffs, which are at least partially passed through to consumers in the form of higher prices.

On the other hand: This kind of stuff is small potatoes compared with Trump’s economic missteps. Trump, after all, also passed a major stimulus on his way out the door, in December 2020 — one with smaller but similarly designed stimulus checks.

Trump is also the person who levied all those dang tariffs in the first place. Further, he has announced plans to ramp up his trade wars with a worldwide 10 percent tariff. This would not only alienate all our allies, it would also create a massive price shock for U.S. consumers.

Both during and before the pandemic, Trump also worked to ratchet down immigration — especially legal, work-authorized immigration. As the economy exited the pandemic, Trump policies slowing down immigration processing worsened labor shortages, which probably contributed to inflation.

In fact, one of the underappreciated things Biden did to lessen inflation was to normalize the legal immigration system by undoing Trump-era sabotage. (You’ll rarely hear Biden boast about this success story, perhaps for obvious political reasons.)

In any case, by far, the worst policy choice Trump made relating to inflation involved his handling of the Federal Reserve.

The Fed is the primary institution tasked with maintaining stable prices, and it needs to be shielded from political influence to do its job. That’s because central bankers must be able to make politically unpopular choices, such as raising interest rates, when inflation rears its ugly head. Even the perception that politicians might control the money supply can harm a country’s long-term ability to fight back against inflation. Just ask Argentina, Venezuela or any other inflationary poster child.

For decades, presidents understood this and took pains to safeguard the Fed’s independence. When Trump was president, though, he threw this tradition out the window — by threatening to fire the Fed chair after rate hikes, and by trying to install his political lackeys on the Fed board.

Trump ultimately failed, for which we should be grateful. If he had succeeded in ruining the central bank’s independence, the country would probably be in a very different place right now. If the Fed’s commitment to administering tough medicine had been in doubt, the public might have begun to expect higher and higher price growth, which can then become a self-fulfilling prophecy.

Trump has lately signaled plans to strong-arm the Fed if he recaptures the White House and force it to cut rates. Biden, meanwhile, has returned to that long-standing tradition of staying out of the Fed’s way. This, arguably, is the most important thing Biden has done, and can do, in the fight against inflation.

You might not be happy about how prices look so far in the Biden presidency. But given Trump’s instincts and past choices, be assured it could be so much worse.