The Most Important Thing Biden Can Learn From the Trump Economy

Macro or micro?

On March 18, 2019, a group of Mr. Trump’s economic advisers gathered in the Oval Office to show him the annual “Economic Report of the President,” a 700-page document that amounts to an official statement of the administration’s economic achievements, analysis and goals.

He was particularly excited about one page of charts, said Casey Mulligan, one of the advisers. They showed that the economy had created far more jobs and had a much lower jobless rate than the C.B.O. had projected just before the 2016 election. The president called in Dan Scavino, his social media director, and fired off a tweet about the results.

A central question for Mr. Biden will be: To what degree is the Trump-era economic success a result of policies that liberals disagree with, to what degree is it a result of policies that Mr. Biden might embrace, and to what degree is it just luck?

Mr. Mulligan and other allies of the president emphasize the role of deregulating major industries and lowering taxes on business investment — microeconomic strategies — as crucial to the economy’s success.

“The forecasts systematically overpredicted the Obama economy every year, and throughout the Trump administration, they underpredicted,” said Mr. Mulligan, an economics professor at the University of Chicago. “What nobody in the intelligentsia was paying attention to was the regulations that were holding us back.”

The Biden administration and Democratic Congress will view more aggressive regulation as a core goal, aimed at preventing corporate misbehavior, protecting the environment, and more. Indeed, left-leaning economists would argue that the very policies Mr. Mulligan credits with the boom are the least durable parts of the Trump-era expansion.

“It is true that the corporate giveaway aspect of the policies, cutting taxes and scaling back regulation and so forth, coincided with an unequal prosperity that lasted longer prior to Covid than I would have guessed it would,” said Mr. Summers, a prominent proponent of the “sugar high” theory of the Trump economy. “But I don’t think it had any particularly strong foundation in terms of increasing productivity or capital investment.”