WASHINGTON (AP) — Fed up with high prices and unimpressed with an economy that by just about any measure is a healthy one, Americans demanded change when they voted for president.
They could get it.
President-elect Donald Trump has vowed to topple many of the Biden administration’s economic policies. Trump campaigned on promises to impose huge tariffs on foreign goods, slash taxes on individuals and businesses and deport millions of undocumented immigrants working in the United States.
With their votes, tens of millions of Americans expressed their confidence that Trump can restore the low prices and economic stability they recall from his first term — at least until the COVID-19 recession of 2020 paralyzed the economy and then a powerful recovery sent inflation soaring. Inflation has since plummeted and is nearly back to normal. Yet Americans are frustrated over still-high prices.
“His track record proved to be, on balance, positive, and people look back now and think: ‘Oh, OK. Let’s try that again,’ ” said Douglas Holtz-Eakin, a former White House economic adviser, director of the Congressional Budget Office and now president of the conservative American Action Forum think tank.
Since Election Day, the Dow Jones Industrial Average has skyrocketed more than 1,700 points, largely on expectations that tax cuts and a broad loosening of regulations will accelerate economic growth and swell corporate profits.
Maybe they will. Yet many economists warn that Trump’s plans are likely to worsen the inflation he’s vowed to eradicate, drive up the federal debt and eventually slow growth.
Trump policies could boost inflation
The Peterson Institute for International Economics, a leading think tank, has estimated that Trump’s policies would slash the U.S. gross domestic product — the total output of goods and services — by between $1.5 trillion and $6.4 trillion through 2028. Peterson also estimated that Trump’s proposals would drive prices sharply higher within two years: Inflation, which would otherwise come in at 1.9 percent in 2026, would instead jump to between 6 percent and 9.3 percent if Trump’s policies were enacted in full.
Last month, 23 Nobel-winning economists signed a letter warning that a Trump administration “will lead to higher prices, larger deficits, and greater inequality.”
“Among the most important determinants of economic success,” they wrote, “are the rule of law and economic and political certainty, and Trump threatens all of these.’’
Trump is inheriting an economy that, despite frustratingly high prices, looks fundamentally strong. Growth came in at a healthy 2.8 percent annual rate from July through September. Unemployment is 4.1 percent — quite low by historic standards.
Among wealthy countries, only Spain will experience faster growth this year, according to the International Monetary Fund’s forecast. The United States is the economic “envy of the world,” the Economist magazine recently declared.
The Federal Reserve is so confident that U.S. inflation is slowing toward its 2 percent target that it cut its benchmark rate in September and again this week.
Americans are deeply unhappy with prices
Consumers, though, still bear the scars of the inflationary surge. Prices on average are still 19 percent higher than they were before inflation began to accelerate in 2021. Grocery bills and rent hikes are still causing hardships, especially for lower-income households. Though inflation-adjusted hourly wages have risen for more than two years, they’re still below where they were before President Joe Biden took office.
Voters took their frustration to the polls. According to AP VoteCast, a sweeping survey of more than 120,000 voters nationwide, 3 in 10 voters said their family was “falling behind’’ financially, up from 2 in 10 in 2020. About 9 in 10 voters were at least somewhat worried about the cost of groceries, 8 in 10 about the cost of healthcare, housing or gasoline.
“I don’t think it’s either deep or complicated,’’ Holtz-Eakin said. “The real problem is the Biden-Harris team made people worse off, and they were very angry about it, and we saw the result.’’
The irony is that mainstream economists fear Trump’s remedies will make price levels worse, not better.
Tariffs are a tax on consumers
The centerpiece of Trump’s economic agenda is taxing imports. It’s an approach that he asserts will shrink America’s trade deficits and force other countries to grant concessions to the United States. In his first term, he increased tariffs on Chinese goods, and he’s now promised much more of the same: Trump wants to raise tariffs on Chinese goods to 60 percent and impose a “universal’’ tax of 10 percent or 20 percent on all other imports.
Trump insists that other countries pay tariffs. In fact, American companies pay them — and then typically pass along their higher costs to their customers via higher prices. Which is why taxing imports is normally inflationary. Worse, other countries usually retaliate with tariffs on American goods, thereby hurting U.S. exporters.
Kimberly Clausing and Mary Lovely of the Peterson Institute have calculated that Trump’s proposed 60 percent tax on Chinese imports and his high-end 20 percent tariff on everything else would impose an after-tax loss on a typical American household of $2,600 annually.
The economic damage would likely spread globally. Researchers at Capital Economics have calculated that a 10 percent U.S. tariff would hurt Mexico hardest. Germany and China would also suffer. All of that depends, of course, on whether he actually does what he said during the campaign.
Deportations would rattle the U.S. job market
Trump has threatened to deport millions of undocumented immigrants, potentially undermining one of the factors that allowed the United States to tame inflation without falling into recession.
The Congressional Budget Office reported that net immigration — arrivals minus departures — reached 3.3 million in 2023. Employers needed the new arrivals. After the economy rebounded from the pandemic recession, companies struggled to hire enough workers, especially because so many native-born baby boomers were retiring.
Immigrants filled the gap. Over the past four years, 73 percent of those who entered the labor force were foreign born.
Economists Wendy Edelberg and Tara Watson of the Brookings Institution’s Hamilton Project found that by raising the supply of workers, the influx of immigrants allowed the United States to generate jobs without overheating and accelerating inflation.
The Peterson Institute calculates that the deportation of all 8.3 million immigrants believed to be working illegally in the United States would slash U.S. GDP by $5.1 trillion and raise inflation by 9.1 percentage points by 2028
Big tax cuts could swell the federal deficit
Trump has proposed extending 2017 tax cuts for individuals that were set to expire after 2025 and restoring tax breaks for businesses that were being reduced. He’s also called for ending taxes on Social Security benefits, overtime pay and tips as well as further reducing the corporate income tax rate for U.S. manufacturers.
The University of Pennsylvania’s Penn Wharton Budget Model estimates that Trump’s tax policies would increase budget deficits by $5.8 trillion over 10 years. Even if the tax cuts generated enough growth to recoup some of the lost tax revenue, Penn Wharton calculated, deficits would still increase by more than $4.1 trillion from 2025 through 2034.
The federal budget is already out of balance. An aging population has required increased spending on Social Security and Medicare. And past tax cuts have shrunk government revenue.
Holtz-Eakin said he worries that Trump has little appetite for taking the steps — cuts to Social Security and Medicare, tax increases or some combination — needed to bring the federal budget meaningfully closer to balance.
“It’s not going to happen,” Holtz-Eakin said.
Biden, Trump to meet at the White House on Wednesday
WASHINGTON/REHOBOTH BEACH, Delaware (Reuters) -U.S. President Joe Biden and President-elect Donald Trump will meet on Wednesday at the White House on Biden’s invitation, a White House spokesperson said on Saturday.
Trump will take office on Jan. 20 after defeating current Vice President Kamala Harris in the Nov. 5 presidential election.
“At President Biden’s invitation, President Biden and President-elect Trump will meet in the Oval Office on Wednesday,” Press Secretary Karine Jean-Pierre said in a statement.
Biden, a Democrat, had initially sought reelection but dropped out of the race in July after a disastrous debate against the Republican Trump.
“I’m going to see him on Wednesday,” Biden told reporters on Saturday, when asked whether Trump was a threat to democracy.
Biden spoke after leaving a church service in Rehoboth Beach, Delaware, where he traveled for the weekend. The president did not respond to questions about what he would say to Trump.
(Reporting by Jason Lange in Washington and Gabriel Araujo in Rehoboth Beach, Delaware; Editing by Diane Craft and Daniel Wallis)
Biden addresses nation after Trump’s win: “America endures”
WASHINGTON – President Joe Biden addressed the nation Thursday following Donald Trump’s decisive win over Vice President Kamala Harris in the U.S. presidential election.
Biden, speaking from the Rose Garden, said he spoke on the phone with Trump Wednesday to congratulate him and to assure there will be a smooth transfer of power.
US President Joe Biden arrives to speak during an address to the nation in the Rose Garden of the White House in Washington, DC, US, on Thursday, Nov. 7, 2024. Photographer: Tierney L. Cross/Bloomberg via Getty Images
“That’s what the American people deserve,” Biden said. “In a democracy, the will of the people always prevails.”
Biden said now that the heated election is over, he hopes Americans can come together and “bring down the temperature.”
“We accept the choice the country made. You can’t love your country only when you win. You can’t love your neighbor only when you agree,” Biden said. “Something I hope we can do no matter who you voted for is see each other not as adversaries, but as fellow Americans.”
The president reiterated that the U.S. election system “is honest, it is fair, and it is transparent. And it can be trusted, win or lose.”
He closed by saying that defeat doesn’t mean one is defeated.
“America endures,” he said. “We’re going to be OK, but we need to stay engaged.”
In a statement released Wednesday, Biden noted the “extraordinary circumstances” of Harris’ campaign.
“Under extraordinary circumstances, she stepped up and led a historic campaign that embodied what’s possible when guided by a strong moral compass and a clear vision for a nation that is more free, more just, and full of more opportunities for all Americans,” Biden said.
“As I’ve said before, selecting Kamala was the very first decision I made when I became the nominee for president in 2020. It was the best decision I made,” he continued. “Her story represents the best of America’s story. And as she made clear today, I have no doubt that she’ll continue writing that story.”
Transition discussions are expected to ramp up later in the week, as attention turns to naming an inaugural committee and a formal transition team.
Trump and Harris also spoke on a call where the president-elect “acknowledged Vice President Harris for her strength, professionalism, and tenacity throughout the campaign, and both leaders agreed on the importance of unifying the country,” according to Trump spokesman Steven Cheung.
Trump, Putin speak as Biden plans to lobby Trump to stick with Ukraine
Ukraine’s foreign ministry said it was not informed in advance of the call between Trump and Putin and subsequently could neither endorse or object to it.
“We do not comment on private calls between President Trump and other world leaders,” said Steven Cheung, Trump’s communications director, when asked about the phone call, which was first reported by The Washington Post.
The Russian embassy in Washington did not immediately respond to a request for comment.
Republican Trump will take office on Jan. 20 after defeating Vice President Kamala Harris in the Nov. 5 presidential election. Biden has invited Trump to come to the Oval Office on Wednesday, the White House said.
U.S. National Security Adviser Jake Sullivan said on Sunday that Biden’s top message will be his commitment to ensure a peaceful transfer of power, and he will also talk to Trump about what’s happening in Europe, in Asia and the Middle East.
“President Biden will have the opportunity over the next 70 days to make the case to the Congress and to the incoming administration that the United States should not walk away from Ukraine, that walking away from Ukraine means more instability in Europe,” Sullivan told CBS News’ “Face the Nation” show.
Sullivan’s comments came as Ukraine attacked Moscow on Sunday with at least 34 drones, the biggest drone strike on the Russian capital since the beginning of the war.
When asked if Biden would ask Congress to pass legislation to authorize more funding for Ukraine, Sullivan deferred.
“I’m not here to put forward a specific legislative proposal. President Biden will make the case that we do need ongoing resources for Ukraine beyond the end of his term,” Sullivan said.
UKRAINE FUNDING
Why AP called Arizona for Trump
WASHINGTON (AP) — The Associated Press declared President-elect Donald Trump the winner in Arizona on Saturday night after vote updates in Maricopa and other counties added to his overall lead, putting the state out of reach for Vice President Kamala Harris.
At the time the AP called the race at 9:21 p.m. ET, Trump led Harris, 52.6% to 46.4%, a margin of about 185,000 votes. Harris needed to win about seven out of every ten votes of the roughly 443,000 uncounted ballots remaining, a percentage that has steadily grown as additional votes were counted.
Trump has now swept all seven of the hotly contested presidential battlegrounds, winning 312 electoral votes, compared to 226 for Harris. The number needed to clinch the presidency is 270.
In 2020, President Joe Biden carried the state narrowly over Trump, but he won Maricopa County by a margin of 50 percentage points to 48. On Saturday, Trump was leading Harris 52 to 47.
The AP only declares a winner once it can determine that a trailing candidate can’t close the gap and overtake the vote leader.
Here’s a look at how the AP called this race:
CANDIDATES: President: Harris (D) vs. Trump (R) vs. Chase Oliver (Libertarian) vs. Jill Stein (Green).
WINNER: Trump.
POLL CLOSING TIME: 9 p.m. ET Tuesday. Arizona does not release votes until all precincts have reported or one hour after all polls are closed, whichever is first, usually 10 p.m. ET.
ABOUT THE RACE: Both Harris and Trump crisscrossed this border state, where immigration is a prominent issue, multiple times before Election Day.
Trump put immigration at the center of his candidacy, promising to deport people without legal documentation while Harris called for pathways to citizenship as well as tighter security at the border.
Independent voters are the largest bloc in the state, followed by Republicans then Democrats, who have succeeded in winning Senate contests and the governorship since 2018.
Biden became just the second Democrat to win the state in more than 70 years.
Both candidates made a play for vote-rich Maricopa County, which is home to Phoenix, Mesa and Tempe. Trump carried the county by 3 points in 2016, while Biden won with a 2-point margin four years later. Arizona is primarily an early voting state. In 2016, just over three-quarters of the votes were cast early. In 2020, that climbed to nearly 90%.
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