What Grumpy Old Trump Doesn’t Want Us to Know About Inflation and the Economy
Trump is incorrect when he blames Biden for the previous spike in inflation. In fact, the inflation was caused by the deficits created by Trump. Biden’s policies reduced the budget deficits and brought inflation down, without a recession, so that wages have been rising at a rate that exceeds price inflation.
Trump’s economic policies amounted to incurring debt irresponsibly and unsustainably. On the other hand, Biden’s economic policies have been responsible and sustainable.
The contrast of economic policies can be demonstrated as follows: People spending more than they are currently earning by borrowing might feel wealthier in the short term (essentially Trump’s economic policy). However, when the bills come due, they will have to tighten their spending to avoid going broke (fiscal restraint taken during Biden’s administration).
Let’s compare the deficits of the last three presidential terms. First to fairly attribute the proper years to each of the presidents, the year that the budget is approved should be considered for each. There was little that Biden could do to the budget deficit in 2021, because the budget for that year was approved during Trump’s administration. So the proper comparison is Obama’s last four budgets (for years 2014-2017), Trump’s four budgets (years 2018 through 2021), and Biden’s four budgets (2022-2024 actual and 2025 projected).
Obama’s final four budgets had an accumulated deficit of $2.19 trillion. Then under Trump the four-year budget deficit ballooned over 250% to $7.67 trillion, which caused inflation to spike. The four years attributable to Biden show a reduction, by 12.5%, of the budget deficit, and moderation of inflation.
This graph illustrates the relative budget deficits of the Obama, Trump and Biden years:
Regarding inflation, it’s important to understand that inflation doesn’t increase immediately when deficit spending increases, as it takes some time for the market forces to adjust to the additional deficit spending. Furthermore, inflation cannot be reduced rapidly without causing serious damage to the economy and a recession.
Trump inherited from Obama an economy with low inflation, having been under the 2% annual target during the latter half of the Obama years, thanks to low budget deficits of Obama. The acceleration of annual inflation to 4.7% in 2021 and 8% in 2022 were due to budget deficits from the Trump years. The Biden administration policies cut inflation in half in 2023, resulting in inflation normalizing in 2024, with total year inflation projected to be at the Federal Reserve target of 2% in 2025 and going forward.
This graph illustrates how Trump’s budget deficits caused the inflationary spike:
Grumpy old Trump is well aware that his budget deficits caused inflation to spike, He also knows that inflation was subdued under Biden, and now the economy is surging ahead and wages are growing faster than prices.
Economists who have analyzed Harris’ and Trump’s economic proposals have determined that Harris’ economic plan would continue the progress made by Biden, with low inflation and higher wage growth, but Trump’s tax cuts for the wealthy would again be inflationary.
Grumpy old Trump is trying to hoodwink us, by blaming Biden for inflation caused by Trump’s budget deficits, and by misrepresenting the current state of the Biden economy. Let’s not fall for it.