Editor's Note: Liberty Nation's Washington Political Columnist Tim Donner and Economics Correspondent Andrew Moran sit down to discuss what's happening in the Swamp. This is the transcript of Liberty Nation Radio heard coast-to-coast on the Radio America Network. A podcast version or a videocast of this program is also available by clicking the links.
If President Donald Trump were going to win the 2020 election, he would have needed to do it on the strength of the economy, which was chugging along in fine shape until the coronavirus hit. Despite the economy showing surprising strength in bouncing back from COVID-19's staggering consequences, the new wave of the virus promises to pack a wallop. According to what we've been told, 5 million more people voted against Trump than for him, and his path to a second term is a longshot. It looks like the voters might well get what they voted for, a Joe Biden economy, and just what might that look like? Joining us to answer that question is the man on all things economic, fiscal, and incomprehensible, geekish Andrew Moran.
Tim Donner: Andrew, what would be the most immediate impact on the economy of a Joe Biden presidency?
Andrew Moran: Well, I think that depends on whom he surrounded himself with. So far, he's surrounding himself with a lot of Obama officials, and he's having a lot of people who support lockdowns. I remember one of his key COVID-19 advisers appeared on CNBC, and he was talking about how the nation will have to shut down for six to eight weeks to contain it. Then, he said tergiversationally that, "Well, that wasn't a policy suggestion." But if Biden has people with these ideas surrounding him, then if there's a dramatic spike coming Inauguration Day, what would prevent Joe Biden from saying, "Okay, let's shut down the country and let's hurt these businesses even more?"
But I think if he's able to get a lot of the fiscal stimulus passed that he wants, and he wants to spend more, then I think the economy will be fine in the short term. If you look at all the data and the way the markets are performing, they really need that stimulus, both monetary and fiscal. Without it, the training wheels are just going to come off, and they're going to fall off the fiscal cliff.
Tim: Now, Trump was saying the stock market would collapse if Joe Biden was elected, but the market's held up well. What do you surmise in the reaction of markets to Biden's apparent victory?
Andrew: Well, I don't think it's so much that the markets were cheering Joe Biden. I think they were cheering based on the fact that there's more certainty that Joe Biden's going to win. There isn't going to be this political chaos, we're not going to be fighting in the streets. Well, at least not on a widespread scale. Because if there's one thing that markets don't like, it's uncertainty. If you're heading into November or December, and there still isn't a clear winner, then you're going to have a major sell-off going on. And so they know what they're getting with Joe Biden. They just wanted to know, "Okay, fine. This is who we're getting, and that's it." I mean, it wouldn't have mattered if Biden or Trump won, the markets were still going to react.
But it is interesting, however, because I've seen a lot, at least on Twitter, when it comes to Biden supporters, and they were talking about, "Well, Trump warned that 401ks would crash," as you just said. If you look at the stock market, it hasn't really soared on a Biden presidency. It didn't really soar that much on announcements that Pfizer and Moderna were producing a coronavirus vaccine. You would expect that the markets would soar up 2,000 points every single day with those vaccine announcements, but that doesn't happen. That to me suggests how weak the economy is right now because of the coronavirus pandemic, and then all these businesses shutting down, retailers are closing, shoppers are staying home, nothing's really going on. So you need even more stimulus from the Fed, from Congress, in order to keep the thing going.
I would say, however, to look at gold and silver markets. They can provide a good example or a good measurement of what could happen. There has been some sell-off going on in gold and silver, but it still remained at multi-year highs because everyone's expecting higher inflation coming. Of course, it does depend on the make-up of the U.S. Senate, but for the most part Biden will probably use executive action, and you'll have these trillions of dollars being spent and then trillions more being printed. And that's going to lead to massive, rampant price inflation.
I wrote a few months ago, talking about the COVID-19-induced inflation going on, and you are starting to see a huge spike in it, at least when it comes to the key ones of food and shelter. Those are skyrocketing right now. The things that people want, things are going up. Things that people don't want, it's going down.
Tim: The worst possible combination. Now, Andrew, there will obviously be large tax increases proposed by Democrats in the White House and the House of Representatives. The Senate may block if it's controlled by Republicans, which is yet to be finally decided. What impact would reversing the Trump tax reforms and tax cuts be likely to have on a staggering, or recovering, or soon to be staggering again economy?
Andrew: Well, one of the main reasons Trumponomics was such a success, and why the financial markets popped, and why the economy grew at a remarkable pace was because of the tax cuts. At first, I was skeptical. I thought it was just reshuffling of the deck chairs and would lead to too much growth, but good thing I was incorrect. And the tax cuts benefit more than just corporations; 82% of Americans benefit from the tax cuts.
If you reverse them or raise taxes at a time when nobody has any money, businesses are shut down, and corporations are not expecting to grow their operations anytime soon, you're going to have a stagnating economy with rampant price inflation and an economic downturn. When it comes to small businesses, I mean, if Biden leaves them be, then perhaps they can recover. But there's always a trickle-down effect when it comes to raising taxes on corporations, because a lot of their customers are small businesses. So if you're going to raise taxes dramatically, or at least get rid of those Trump tax cuts, then you're not going to have much growth. So a Biden presidency will not lead to much ... It won't lead to happy days are here again.
Tim: Well, there are taxes and then there are regulations. And in the grand scheme of things, Andrew, how important has Trump's deregulation been to the economy as opposed to tax cuts and tax reform?
Andrew: Well, I think the deregulation was great for business, but I think it was even better for the consumer. Consumers have saved thousands of dollars thanks to the deregulation. I remember I wrote a few months ago on Liberty Nation about how much consumers have saved. If you look at the cost of an automobile, for instance, the average family is saving around $3,000 because of the deregulation when it comes to green energy or fuel efficiency, or whatever ... I think that for every one new regulation, three were removed. But he went as far as going to eight. That led to greater benefits for consumers.
Actually, I was researching a couple of weeks ago on this, and even the federal government saved money on deregulation because the average department saved around $18 billion in regulatory cost savings because they had to spend less time on investigating problems, which freed up more manpower. The deregulations benefited everybody except Trump's opponents, because they led to economic growth, and then they couldn’t say, "Oh, the economy is suffering and Trump's evil, and Trump's Hitler," and all that stuff.
Tim: Well-stated. Finally, Andrew, how big a challenge does COVID-19, now in a third wave, continue to present to the economy?
Andrew: Well, I think Pennel Bird, who seems to be the COVID correspondent at Liberty Nation, has written extensively on this, talking about how the response to it has been more destructive than how the virus has been. Corporations, small businesses, households -- everyone has suffered from it.
Pfizer said its coronavirus vaccine is 95% effective; Moderna says its is 94% effective. But will it be that good? Will people want to take it, considering how new it is? If there hasn't been that extensive research, are there going to be side effects? So a vaccine isn't the panacea that we all expect it to be. It's not going to erase the whole pandemic. You already see the great reset going on. And people like Dr. Anthony Fauci are saying, "You still have to wear masks, you still have to social distance, even with these vaccines."
As long as these public health guidelines are implemented for the next couple of years, there's not going to be a tidal wave of economic growth happening, which is why the Fed keeps talking about both, you're going to need fiscal stimulus, and the Fed is going to be there to support both the economic downturn and the economic recovery. You're going to have all this money spending and money printing for the next several years going on, which takes away from the private economy, which then leads to higher price inflation.
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