Michael Strain on the Differing Economic Policies of Trump vs. Biden

Biden and Trump have very different economic visions for the future, and these differences have major implications for the American and global economy.

Michael Strain is the Director of Economic Policy Studies at the American Enterprise Institute, and a previous guest of the show. Michael joins Macro Musings for a special presidential election episode to discuss President Trump's economic record and what a Biden presidency might mean for the economy compared to a second term for President Trump. Specifically, David and Michael discuss the presidential candidates’ past records and campaign goals for trade, taxes, regulations, immigration, and more.

Read the full episode transcript:

Note: While transcripts are lightly edited, they are not rigorously proofed for accuracy. If you notice an error, please reach out to [email protected].

David Beckworth: Mike, welcome back to the show.

Michael Strain: Thanks for having me.

Beckworth: Great to have you on, and I just want to mention before we get going into our discussion, thank you for your recent tweet where you said, "Excellent mug, excellent podcast," and you have a picture of my Nominal GDP Targeting mug, your Nominal GDP Targeting mug. So thank you for plugging the podcast. You're a great supporter, and now a frequent guest of the show. So glad to have you back on.

Strain: Yes, and thank you for the wonderful podcast. I've learned so much from it over the years.

Beckworth: Both of us. I've learned a lot as well. So here we are on the cusp of a huge presidential election, probably the biggest in my lifetime, and probably every election we say this, but this seems like the biggest election in my lifetime in terms of consequences, and potential policy changes. And I think it's useful for us to look back and see, what has Trump accomplished in the past four years? And I like having you on, because I think you can give a balanced view. You're at the American Enterprise Institute, so there's some things you like about it, some things you don't. I think I'm in a similar boat with you. And I'm just thrilled to have you on to discuss his record, and again what it may be like moving forward under President Biden or President Trump for a second term.

Trump’s Trade War

Beckworth: So let's begin with I think his trademark issue, and that's his trade war. Other several trademark issues, but his trade war really does define a lot about him, what he believes, his core beliefs. And you had a recent discussion with another economist on this issue, Casey Mulligan, and I listened to that conversation, it was really entertaining, and he had a different view than you. And I share your view. But let's start this way. Did Trump succeed on trade policy by his own standards? And then maybe follow up with what you think on your standards was the outcome of his policies.

Strain: Yes. That's an excellent way to I think frame the issue. I don't think he succeeded by his own standards. The US trade deficit has not gone away. In fact, it's gone up. That was a major part of his own metrics of success. I do not believe that the evidence suggests that we've seen a resurgence of blue collar manufacturing jobs. That was another measure of his success. Another one of his metrics of success, I should say. And I don't think that the evidence suggests that he has really succeeded at quote-unquote "Making better deals" with our trading partners.

Strain: The USMCA, which succeeded NAFTA, is updated. I mean, NAFTA is kind of a pre-digital commerce trade pact. But I don't think that you could credibly argue that this is somehow a much better deal for America than NAFTA was. The president's negotiations with China have not really borne a whole lot of fruit.

Strain: Those are three big metrics that he, that the President himself, has set. Trade deficits are bad, better deals for America, return of blue collar manufacturing employment, and I think the evidence suggests that across those three metrics, he has not succeeded.

Beckworth: And what do you think of his policies in general? From your perspective, and I would argue probably from most economists' perspective, what were wrong with his policies on trade?

Strain: Well, I think that ... I guess I think that at least two of the three of those metrics are the wrong metrics. The trade deficit, we don't live in a mercantilist world where a larger trade deficit means that we're somehow losing, and a smaller deficit or a surplus means that we are winning. The president's tax cuts in deficit spending would of course boost the trade deficit. The trade deficit is driven by domestic decisions, it's not driven by trade policy.

Strain: I don't think our policy goals should be to return manufacturing employment to its 1950s era glory. That would not be in the best interest of the US economy. It wouldn't be in the best interest of US workers, certainly not over the long term. So I disagree with the president's goals. What did the trade war with China accomplish? The trade war with China increased the price of consumer goods. The trade war with China reduced the quality and variety of consumer goods available for purchase in the United States. The trade war with China reduced manufacturing employment. Because China didn't just sit on its hands. There was a tit for tat, there was retaliation. And as a consequence, if anything, manufacturing employment went down.

The trade war with China increased the price of consumer goods. The trade war with China reduced the quality and variety of consumer goods available for purchase in the United States. The trade war with China reduced manufacturing employment.

Strain: In addition, the trade war increased the cost of intermediate inputs to production for US companies, which further reduced domestic labor demands.

Strain: Those two factors increased intermediate goods prices and retaliation. It turns out we're stronger in terms of their effect of reducing unemployment than protection from imports was in terms of its effective, of increasing employment.

Strain: The President also, in engaging in the trade war in the way he did, antagonized our allies, weakened our alliances with European nations, with Canada as well, and weakened the foundations of important international institutions like NATO that have been a bedrock of US prosperity for seven decades.

Strain: I don't see anything good in an economic sense from the trade war. I do think that the US was inevitably going to escalate tensions with China. I think our posture toward China was more antagonistic under President Obama than it was under President Bush, it was more antagonistic under President Bush than it was under President Clinton, and if Hillary Clinton had won in 2016, it would have been more antagonistic under Hillary Clinton than it was under President Obama. But the way the President chose to engage with China, rather than rallying a coalition of nations to engage in a concentrated effort, and a coordinated effort to change Chinese practices, which China is a bad actor in international commerce, and something needs to be done. And rather than rallying our allies to support a common goal, the President picked fights with our allies. And China used that to its advantage.

Strain: I think you could and should give the President credit for elevating the importance of China and for elevating the importance of more aggressive US engagement with China. But he did it in a really counterproductive way, and in a way that hurt rather than helped the US economy. So I give him very low marks for the trade war.

I think you could and should give the President credit for elevating the importance of China and for elevating the importance of more aggressive US engagement with China. But he did it in a really counterproductive way.

Beckworth: Yeah, I agree with you completely on all those points, and just to underscore what you said, he should have stuck with TPP, Trans Pacific Partnership, would have put that concerted effort on China, had US joined, and all the years spent investing and forming that trade partnership completely just thrown away in a few months by this decision. Could have been a very different outcome.

Trump’s Tax Policy

Beckworth: Let's move on to his tax policy. Here's another area he's well known for, and this is somewhere where I think you have a unique perspective. His so called Tax Cut and Job Act, or TCGA 2017, was a big tax bill that made its way through. It had many features, it lowered the corporate tax rate, it eliminated some important deductions that were regressive, it minimized, didn't completely eliminate all of them. But the Household Interest Deduction was lowered if I remember correctly. It also lowered some marginal income tax rates.

Beckworth: What is your sense of that bill? Did it accomplish was it set out to do? And how do you respond to people who say, "Hey, where's the investment boom? You promised a great investment boom."

Strain: Yeah. My answer to this question is related to my answer to the previous question. Another thing that the President's trade war accomplished was creating a massive amount of policy uncertainty for businesses. So much has happened every day over the last four years with President Trump in the Oval Office that it's easy to forget. But a few years ago, what was dominating the headlines was the erratic nature of the trade war and how the President was changing his mind about whether to impose tariffs on hundreds of billions of dollars of Chinese goods, changing his mind every week for a period of time. And so businesses just didn't know what was coming.

Strain: That worked against business investment. Businesses said hey, we're going to just put our plans on ice until this shakes out. The President stimulated business investment with his right hand with the TCJA, with the tax cuts, and he discouraged business investment with his left hand with the amount of policy uncertainty that the trade war created.

The President stimulated business investment with his right hand with the TCJA, with the tax cuts, and he discouraged business investment with his left hand with the amount of policy uncertainty that the trade war created.

Strain: I think the TCJA on balance was, it pushed the US tax code in a better direction. If I were in Congress I would have voted for it. It wasn't perfect. I think a lot of the changes to the individual side of the tax code were not advisable. I don't think we needed to dramatically reduce marginal income tax rates at the top, for example. But the centerpiece of that law is the corporate tax cut. The corporate rate was reduced from 35% down to 21%, and that reduction is permanent.

Strain: Tax policy often happens through a process called budget reconciliation that is a way to avoid the Senate filibuster. This is all inside baseball stuff. But the bottom line is that many changes to US tax law are temporary changes because of the way that Congress enacts the law. And that was true of the TCJA. Many of the provisions will expire in the coming decade because, again, because of the legislative procedure that was used to put them in place. The corporate tax rate reduction was permanent. That is permanent law. It will not expire, it has to be affirmatively changed by Congress and the president. And it was long overdue. President Obama supported reducing the corporate tax rate. He did not want to take it down to 21%. If memory serves, he wanted to take it down to 28%. Which would have been a significant reduction from 35%. Republicans obviously support corporate rate reductions. The US had a much higher corporate rate than the typical developed country. It put the US at a competitive disadvantage. And it needed the change. I give the President a lot of credit for that important tax policy change.

Strain: Again, the bill wasn't perfect. A lot of the individual side provisions, I think we should have had a bill that reduced tax revenue by a smaller amount and that focused on those business investment provisions. But on balance, I give the President credit for that.

Beckworth: So just to recap, the investment boom would have been there had it not been for the, one, trade wars created by Trump, and two, the spillover uncertainty that those trade wars created. So all those things made it less likely for them to want to build a new plant, because they don't know what's going to be happening in the future.

Strain: Yeah, I think at this point we would have seen a stronger investment response. The debate around this issue was very confused by ... It was confused on supporters of the corporate rate cut, it was confused among opponents to the corporate rate cut. And this is important, because we're going to go through this debate again if Vice President Biden wins the election, because there's going to be a big push to raise the corporate rate.

Strain: Supporters of the reduction in the corporate rate argue that there would be really sizable increases, not just in wages but in household income, that would materialize very quickly. And when that didn't happen, that gave opponents a lot of ammunition. Opponents pointed to the fact that corporations were engaging in stock buybacks after the law went into effect as evidence that instead of using their tax savings to buy equipment and build factories and buy software and do that sort of thing, they were instead using their tax savings to just return money to shareholders.

Strain: Both of those stories illustrate a fundamental misunderstanding of how the economics of this actually would play out. What you would expect to happen is that because the after tax return on investment was higher that investment decisions that were on the margin when the rate was 35% would no longer be marginal investment decisions. They would clear that hurdle. So you would expect to see more investment. But that would take some time, because it takes time to buy things and build things and do that sort of thing.

Strain: Then you would expect to see that investment make workers more productive. That productivity increase makes workers more valuable to companies that would increase competition for those workers, it would increase the wages that businesses had to offer to recruit workers, it would increase the wages that businesses would have to pay to retain their existing workers. So you would see this wage increase.

Strain: That process takes some time. So supporters of the cut back in 2017 were just promising benefits much earlier than they could be realistically expected. Opponents of the cut were focusing on the use of immediate tax saving when really the economic story isn't about how immediate tax savings would be used, it's not like you cut the rate, there's a pool of money, how is that money divided up? Instead, the economics are forward looking, and point to returns from future investment decisions that haven't yet been made.

Strain: Look, it's complicated, and lots of things affect business investment, lots of things affect productivity, lots of things affect wages. If you cut the rate on investment, that doesn't increase the returns to monopoly profits, it doesn't increase the returns to the value of your brand, there are all sorts of complexities here.

Strain: But I think at the end of the day, our expectation should be that dramatically increasing the after-tax returns to investment will increase investment, and that that will increase productivity, that will increase wages. But it's hard to pull evidence of that from macroeconomic time series over a two or three year time horizon, especially when so much other stuff, notably a trade war, is happening.

Beckworth: The moral of the story here is do the right counterfactual. Don't look just at the time series and say, "Aha, gotcha." You need to think about where would it be in the absence of all these other developments coming out of the Trump administration as well as other developments around the world, in addition to maybe a longer time lag. So high marks for the tax policy, low marks for the trade war.

At the end of the day, our expectation should be that dramatically increasing the after-tax returns to investment will increase investment, and that that will increase productivity, that will increase wages.

Trump on Deregulation

Beckworth: Let's move onto another area that Trump I think has been very forceful but hasn't been as well covered, or maybe as appreciated. And that is his deregulatory efforts. And I'm a little aware of this, because I have colleagues at Mercatus who have this dataset called RegData, and they go through the federal registry and they track all the laws, all the regulations that say “should,” “would,” “must,” or do all these things. And they've created a nice time series of regulations over time. And if you look at Trump, under his presidency, it literally has declined. Now it's still a high stack of regulations outstanding, but he's one of the first presidents where during his term he's had an outright decline in the number of regulations.

Beckworth: I guess my question to you is has that mattered? Has it made a big difference, do you think? Again, there's a lot of other moving parts going on, like we just talked about with tax policy. But do you think that decline in absolute, and also relative to where it could be, really makes a difference?

Strain: Yeah, I think it does make a difference. I mean, it's extremely difficult to gather evidence for this proposition. It's hard to even measure the regulatory burden that businesses face. Some measures show a decline, some measures show a flatlining. I don't think there's any real question about the change that there has been a change relative to the Obama administration that immediately preceded the President. You can quibble, I mean a lot of the Obama regulatory increases were in health care, a lot of the Trump regulatory decreases are in energy, et cetera, et cetera. But I think the basic story is correct. I think it does make a difference. But I also think that it's temporary.

Strain: I think there's a limit to how much you're going to be able to strengthen the economy through changes that can be reversed by the next president just a few years later. And I think that there are ways for a president to try to have a more lasting impact on the regulatory environment in the United States. There are legislative ways to do that. And the President didn't really make that a priority.

Strain: I think that on balance, the Trump administration's approach to regulation has been the right approach, to have a higher bar for regulatory burdens, to look for opportunities to reduce regulation. But I don't think ... If Joe Biden wins in a few days, then I think that that legacy will not have had a particularly large impact.

Beckworth: Yeah. Executive order can go both ways here.

Strain: Sure.

Beckworth: If you can increase ... And again, to be clear, the data that I looked at, there's still a large amount of regulation. What the Trump administration did, as you mentioned, was more to flatline it. You could look at some small decrease, but in the grand scheme of things, it's more of a dent than a big, big change.

Trump’s Immigration Policy

Beckworth: Okay, let's move onto another area. We've done trade, we've done tax policy, we've done deregulation. Let's move on to immigration policy. And I bring this up because I believe, I think you do too, immigration policy is ultimately economic policy. It has a bearing on the long run productive growth of our country. On the show we've talked a lot before about our declining fertility rate, the importance of population growth. And immigration is a part of that conversation. And my understanding, based on my conversation with Matt Iglesias just recently on the show here, and some other readings, is that President Trump not only was about reducing illegal immigration but legal immigration. He wanted to cut in half the number of legal immigrants. And to me that just seems very misguided when we are headed into a world where our population growth may slow down when in fact we need it to continue to grow. What are your thoughts on that?

Strain: Yeah, look. I mean, I think the President's record on immigration has been a disaster. I think that it threatens the longer term prosperity of the United States in a significant way, not just the short term prosperity. I mean, you're right that the legislative proposal the White House got behind would reduce immigration. There wasn't a super strong push for that, because it's just hard ... This administration has had a hard time advancing legislation, particularly after 2017.

Strain: But that would take us in the wrong direction. I think that there is a legitimate argument to be had about the composition of the immigrants that the United States lets in. Right now, the US immigration system is heavily focused on family unification. If you are a spouse or a parent or something like that of a US citizen or permanent resident, it's pretty easy to get a green card for your immediate family. And for parts of your extended family as well. Maybe we should have an immigration system that focuses less on family unification and that focuses more on economic need.

Strain: We should care less about uniting, giving the marginal green card to a US citizen's uncle and care more about giving that marginal green card to a scientist or to an engineer, to an entrepreneur. There's a legitimate debate, I think, about how many immigrants we should let into the United States every year. But a proposal to reduce immigration by half would have significant economic consequences.

There's a legitimate debate, I think, about how many immigrants we should let into the United States every year. But a proposal to reduce immigration by half would have significant economic consequences.

Strain: I mean there are two ways to get your economy to grow. You can increase the size of your labor force, or you can make your labor force more productive. The United States has gotten a lot of growth over the last, well, over many decades, beginning in the mid-1960s, petering out 35 years later, from women entering the labor force. But that's done. There's not another giant group of people in this country already who we can get into the labor force. You mentioned demographics. Demographics are working against economic growth, because we are not increasing our population at a rate that will allow us to sustain the economic growth rates that we are accustomed to.

Strain: So the only option is to have more immigration. That's the only option.

Strain: Now that's not dispositive. I mean, you can reasonably say to me, "Well, you know, economic growth isn't that important, and there are other things that are important too." And I don't think economics should be the only factor in US immigration policy. But a reduction by half I think is just a dangerous, would be a dangerous policy change, and it would hurt the other goals that immigration restrictionists claim to have. If you care about cultural cohesion, and if you care about people being in a common political culture, that sort of thing, reducing economic growth that dramatically will work against cultural cohesion, it'll work against a common political culture.

Strain: But beyond that, the President's posture toward immigration, and the President's posture toward immigrants, has been I think deeply shameful and un-American. Starting from the very beginning with the discussion of characterizing immigrants as criminals as a presidential candidate, President gets into office and he starts to ban immigrants from Muslim majority nations, and on down the line. The President has essentially hung a sign on the front door of the United States that says, "You are not welcome here. And if you come here, you will not like it here."

Strain: The United States has benefited enormously from being a magnet for some of the world's best and brightest and most hard-working people. And if we lose that, if hard-working, talented people who were born in other nations, who are looking for another country to call home, do not want to come to the United States because of our posture toward immigrants, then that will accrue to the economic detriment of the United States, and it will fundamentally change our national character and our national self-conception.

Strain: I think that is, even in an economic sense, that is the biggest danger that the President has created vis-à-vis immigration, and I think it's potentially a very big one.

Beckworth: So far then, we've had failing grades, if I can say that, on his trade war and on immigration, and he's done fairly well on tax policy, deregulation. Let me throw something out there that's been proposed by our friend Adam Ozimek. He's called for, I believe the term is heartland visas. And his argument is that we should have a special visa program for the Midwest, the Rust Belt, areas that have been bleeding population, like Detroit, Cleveland, even some of the rural areas where people, young people leave home, they don't come back. Would you see that as a useful part of a reform package for immigration, or does it have problems?

Strain: Yeah, I'm certainly not sold on that approach. I don't think that we have the ability to micromanage immigrants' lives in that way. And I don't think that's economically desirable. I think what we want is we want immigrants to be in the city where they're going to be most productive, in the jobs where they're going to be most productive, and I think they know that better than the Department of Homeland Security knows that, or the immigration authorities would know that. And I don't see any reason why ... If immigrants are going to be much more productive in New York and much more productive in Florida than they are in Michigan, I don't know why we'd want to direct them to Michigan.

Beckworth: Fair enough. I'll mention one other area where Trump has been very vocal, and then we'll take a look at what a second term for President Trump might mean for economic policy. But that other area's been Fed policy, and Trump has been very vocal on the Fed not raising rates when it did over the past few years. And I'll just say, and we can move on if you want to add something you can, that he appears to be vindicated. The Fed's new framework would suggest that the Fed shouldn't have raised rates over the past few years when it did, and I think he'd be happy about that. Any thoughts, or do we want to move on to the next section?

Strain: I guess I don't have any thoughts. I mean I think in general, I think the president's been more right than wrong on monetary policy. I think it's similar to immigration in the sense that there's a longer term issue here of the President questioning the credibility of the Fed, the President calling into question the independence of the Fed, of the President attempting to influence the Fed in such a public way. If that continues, that could have real implications for inflation, it could have real implications for interest rates. So that's bad.

Beckworth: That's fair. It's not like the President had some disciplined model in his mind when he's making these critiques. It was very politically driven. So I should qualify what I said there. But absolutely. The way that he delivered the message is as important as the message itself.

Beckworth: All right, so I'm going to move forward, and let's say President Trump does win reelection, at this point it doesn't seem likely given the polls, but let's say that he does, and it's interesting to think what would be a signature feature of a second term? And I'm just going to read some tweets from the GOP, which I'm not sure we can take seriously as being what would be a part of his second term. But I found these interesting, and a bunch of other people did too, and it became kind of a joke. But what the GOP said was, "Establish a permanent manned presence on the moon, send the first manned mission to Mars, build world's greatest infrastructure system, establish national high speed wireless internet network." It went on to talk about vaccines, critical medicines and supplies, lower health care insurance, cover all pre-existing conditions.

Beckworth: But I think that first tweet was very interesting. It was a very ambitious space program, infrastructure program, and an internet network. Would that really be a part of his second term? Is there something else that would be a part of the second term of President Trump?

Strain: I don't think we know. I mean, the President himself has been very vague and hasn't spent much time at all on outlining what his legislative agenda for a second term would be. The White House has not been very successful at driving legislative initiatives. And I think it's a big question as to what the President's agenda would be. I mean, just over the weekend he promised to unveil his health care plan before the election, would that be part of a second term? The President's economics team has talked quite a bit about reducing tax rates on capital income in the second term, would that be part of the agenda? Obviously infrastructure is always, always there.

Strain: So I think it's tough to know.

Biden’s Tax Policy

Beckworth: Okay. Well in the time we have left, let's move to what a President Biden might do for economic policy during the next four years. We could go through that similar list. Let's start with corporate tax hike. You mentioned that. Is that likely?

Strain: Yeah, I think that is likely. I mean, I think that Vice President Biden has made it pretty clear that he's interested in raising taxes on corporations and on high income Americans. What that specifically looks like I think is an open question. A lot would depend on the composition of the US Senate. And if the Senate is still held by Republicans, or if the Senate is majority Democrat but just barely, I think that works against his ability to achieve those tax rate increases. But I think that'll be something that's on the minds of a Biden White House.

Beckworth: So there was a piece I believe today in The Hill, and the title is “The Triumph of the Trump Tax Cut,” and in the piece they argued there would be this increase, it would be from 21 back to 28, so it wouldn't go all the way back up to 35, and there might be an increase on the very top, marginal tax rates above $400,000. But they also make the point that everything else would probably stay intact. So they say 99% of individual income taxpayers would see no change, these deductions that the SALT, the State and Local Tax Deduction, would still be as it was, as same with the standard deductions, the changes in the mortgage interest rate deductions. You think that's a fair assessment? Biden's just going to touch a few knobs on the bill and leave everything else intact?

Strain: I mean, again, I think it just really depends on-

Beckworth: Too speculative at this point.

Strain: ... on composition.

Beckworth: Yeah.

Strain: Yeah, I think it's hard to know. I don't think that he wants to raise the corporate rate above 28. The campaign is talking about increasing payroll taxes on high income households, increasing capital gains tax rates, and increasing income tax rates on households above $400,000. How much of that actually happens, what does the constellation look like, I think that's harder to say.

Beckworth: Okay. Let's move from tax hikes to trade policy. What would happen under the Biden administration there?

Biden’s Trade Policy

Strain: Well I think that trade policy would be executed more competently than the Trump Administration has executed it. I think there would be more strategy and more coherence. I would, for example, I would expect that a Biden administration would not antagonize our allies. We would not be talking about raising tariffs on Canadian imports, on imports from the EU, on imports from the United Kingdom.

Strain: I would expect that the Biden administration would be more hawkish on China than the Obama administration was, and that that would continue. I would hope that that hawkishness would manifest itself in more productive and coherent ways in terms of our China strategy. But I think the hawkishness would be there.

Strain: Would we see a return to the bipartisan tradition of American presidents pushing for more globalization? That I think is the million dollar question, and is the hardest one to answer. President Clinton increased globalization. President Bush, President Obama, and then President Trump rolled it back. Would Vice President Biden be more protectionist, be more inward focused? He says he would be. That's been part of his campaign. But when he actually, if he actually were to take office, would he follow through on that? I don't know. But I hope not. I mean, I hope that a President Biden would continue to push for global integration and international commerce and a reduction of trade barriers. I think that is in the interest of the United States over the longer term.

Would we see a return to the bipartisan tradition of American presidents pushing for more globalization? That I think is the million dollar question, and is the hardest one to answer.

Beckworth: That will be interesting to follow, because it could be that one of Trump's lasting legacies is that he may have turned the direction of trade policy in the US towards a more inward looking policy, depending on what a President Biden does, it could reinforce that trend or he could have a course correction back to where we were before Trump. Now of course there's bigger global trends towards populism, so can a Biden, even if he really wanted to, step up against those forces and redirect where policy's heading? I mean this is the importance of leadership, right? You want people who can take a stand and say this is where we should be going even if everybody else is going a different direction.

Beckworth: All right, how about immigration? How would it be different under President Biden?

Biden’s Immigration Policy

Strain: Well, I think that a President Biden would resume the long standing US tradition of being welcoming toward immigrants, of acknowledging that the United States is a nation of immigrants, and furthering the United States' role in the world as being a destination for some of the most talented and ambitious and hardest working people who are born abroad. I mean I have very ... I have no doubt about that. This ugliness toward immigrants, this hostility toward immigration, I think would vanish. And hopefully that would go a long way toward repairing the US's image abroad, and toward maintaining the US as a magnet for immigrants.

A President Biden would resume the long standing US tradition of being welcoming toward immigrants.

Strain: In terms of what the immigration levels would be, the number of green cards given every year, would a President Biden move the US toward more of a skills based immigration system and away from a family based immigration system? I think that the indications that I see are that this would not be a super high priority for them. The Biden campaign seems to want to talk about tax policy, energy policy, health care policy, and of course dealing with the fallout from the pandemic. Unless the Senate goes ... Unless there's a Democratic wave that allows them to capture a really large number of seats in the Senate, I don't know, I think it would be unusual for a president to be able to pass big, sweeping legislation in that many areas.

Beckworth: Okay. We've already touched on regulations Biden might do when we were talking about them with Trump. Are there any other areas where you would see big changes? I mean I know one area, but I'm not sure how big it would be, there's talk of Lael Brainard, Governor Lael Brainard becoming the Treasury Secretary, and she's been much more for stringent regulation on banks, she's voted against the Board of Governors when they've had issues about countercyclical capital requirements, for example. I'm wondering, maybe there'd be some difference there, or any other areas where you would expect to see visible changes?

Strain: I mean I would expect that a President Biden would want to have a big win. And a big win, I don't think raising the corporate rate to 28% counts as a big win. You heard Vice President Biden refer to BidenCare in the last debate. That suggested to me that he's thinking of that as a legacy issue. So he may want to make health care reform a top priority. So we may see some pretty big changes in health care policy.

Strain: Even still, President Obama, he'd be building off President Obama's legacy there. So I think the area to me that seems to have the most potential for action is energy policy. Doing a big energy bill to address climate change, a long-standing Democratic Party goal, again, this has been a pretty policy free campaign. So there aren't really good indications of what Vice President Biden would want to do. But I think something like that would be a good bet.

I think the area to me that seems to have the most potential for action is energy policy. Doing a big energy bill to address climate change, a long-standing Democratic Party goal.

Beckworth: Okay. With that our time is up. Our guest today has been Michael Strain. Michael, thank you so much for coming back on the show.

Strain: Thank you.

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Hosted by Senior Research Fellow David Beckworth, the Macro Musings podcast pulls back the curtain on the important macroeconomic issues of the past, present, and future.