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US presidents may not control the economy as much as you think
President Joe Biden and former President Donald Trump will face off in the first presidential debate on Thursday, June 27. The two candidates will debate their economic agendas, but Yahoo Finance Senior Columnist Rick Newman joins Market Domination to explain how US presidents exercise less control over the economy than most people realize.
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This post was written by Nicholas Jacobino
Video Transcript
President Joe Biden and former President Donald Trump will meet for their first debate on Thursday with a focus on topics such as the economy, gas and oil prices, as well as each of their views on the rest of the world.
But after the election is over, how much control does the president actually have over these topics?
Yahoo Financeâs Rick Newman joins us now with more Rick.
How much control, Rick?
Not as much as most people think.
Uh, and you know, this is nothing new in 2024.
Presidents always say Iâll be better for the economy.
Uh, and voters more or less buy it, uh, voters.
Clearly in their minds, they associate, uh, the state of the economy and their overall sense of well being with whoever happens to be president at the time.
But thereâs honestly not much any president can actually do to affect the economy.
And if you doubt it, look at inflation under Joe Biden.
If if Joe Biden had the if there were some button the president could push in the Oval Office, Biden would have pushed it.
He would have prevented inflation from hitting 9%.
Trump would have pushed it to prevent a covid recession.
Both of them would have pushed that button to keep the national debt by rising by at least $8 trillion under each president.
And every president whoâs ever been in office during a recession obviously would have tried to prevent that recession.
The Federal Reserve is the most powerful financial institution in the world.
I mean, everybody on Wall Street, I think, would agree with that.
And even the Fed canât prevent recessions, and the Fed could not prevent inflation from hitting 9%.
So itâs a little bit if you back away from it, to think that the president has all these powers he can use.
He doesnât.
But thatâs not going to change the conversation.
I mean, the president gets credit or blame for what happens in the economy, and thatâs going to be the case in 2024.
Well, letâs back up a little bit, Rick, because there certainly have been a lot of folks who have argued that the immense stimulus that was pumped into the economy was a contributing factor to inflation.
So Iâm putting Stimulus in a different category.
Julie, Um, 1st, 1st of all thatâs in those are emergency measures.
Uh, and thatâs not something the president does alone.
Uh, all of this.
Well, letâs see, we had four major, uh, fiscal stimulus bills during covid.
Three of them were bipartisan.
Uh, that, uh, got that.
Congress passed when Democrats had control of the house.
So Democrats had to vote for that bill and President Trump signed them.
And then we had 1/4 bill that was somewhat partisan.
That was Bidenâs American refuge plan in 2021.
Uh, and then we had the fiscal, uh, sorry.
The Federal Reserve that did tonnes of, uh, monetary stimulus.
That was at least as important as all that fiscal stimulus.
Thatâs why interest rates on on mortgages went below 3%.
So Iâm kind of leaving that aside because those are emergency things that tend to happen on a bipartisan basis.
Even back in 2009, during the financial crash, we had bipartisan, um, bipartisan stimulus that Congress passed.
But thatâs the point, though that is bipartisan, that not something that the president can do on his own.
And when you get the whole of the government behind something, yes, that can be extremely forceful.
Uh, but thatâs not something the president does on his own.
So So, Rick, you know, as you point out, if if presidents donât have relatively too much impact and influence here, um but as you also rightfully point out, it doesnât really matter.
Theyâre getting the credit of the blame either way.
So what is Biden this kind of game plan, then?
Rick, if you if you know, inflation is top of mind, Um, is he sort of handcuffed?
There is the game plan.
Basically.
OK, Iâll just I just gotta hope inflation continues to moderate into November.
Bynes game plan is to take credit for the things that are going right and blame that things are going wrong on other factors so we can break this down.
So itâs correct that Biden is right when he says weâve had record job growth during his administration, almost 16 million new jobs.
That is not because of anything Joe Biden did.
Thatâs because Joe Biden came into office in 2021 just as all of these stimulus measures were gathering force and by, by the way, as usual, when we have some kind of global downturn the America sucks less.
We suck the least.
So America is the place place where everyone to be.
Everybody wants to be, whether youâre an investor or business owner or even a worker during a downturn.
So you know, United States attracts all this, and thatâs why weâve had this record job growth under Biden.
And then Biden also says, Uh, inflation predates me.
Thereâs a lot of truth to that as well, because the forces for inflation were basically in the pipeline when Biden took office again.
Thatâs all that stimulus spending.
Itâs the huge shift in demand, from services to goods that happened during covid supply chain snafus and then the whips off.
In fact, as we went back to services, which is where, where all the inflation is right now, My contention is that if Trump had won a second term, we would have had about exactly the same amount of job growth and about the same amount of inflation which would have changed in area.
Thatâs counterfactual.
Thatâs weâre not going to be hearing much about that in the debate.
But Biden just has to hope that inflation comes down enough by election day and everything else.
Job growth and economic growth stay solid enough that voters start to feel a little bit better about we call the Biden economy.
Either that or everyone will read your column and theyâll realise that he doesnât They?
Neither of them has that much control.
They have control over other stuff.
They have.
They have control over immigration regulation.
Uh, to some extent, abortion policy.
Those are things.
Yes, the president makes a difference.
What?
What?
Whatâs gonna happen with taxes?
That makes a difference.
But the overall economy is a beast of its own.
Rick.
Thank you.
Hi, guys.
US presidents may not control the economy as much as you think
WTH? Some conservative court! Still, all hope is not lost for the 1st AMendment. We still have Kennedy v. Biden. (Thatâs the awesome Kennedy, btw RFK)