Trump vs. Obama on Their Economic Policies

The 45th Republican President of America is Donald J. Trump. His current term started in 2017 and continues till 2021. His campaign promises were typical of Republican interests. They include boosting the expenditure in defense, tax cuts, lowering the national debt, and reducing the trade and budget deficits. 

The 44th American President was Democrat Barack H. Obama. He was elected for a second time, and he sat in the White House from 2009 till 2017. His campaign promises were typical of Democratic interests. They include strengthening regulations, improving the healthcare system, and increasing tax on the wealthy. 

Given below is comprehensive comparison between Trump vs. Obama. We will look into several of their significant decisions. The areas covered will be defense, recovery from the recession, trade, health care, national debt, climate change, and regulations. 

Trump Vs. Obama On Defense

Both presidents have spent more in the defense system than any president since World War II. A total of $567 billion was set aside by Trump for the 2020 Department of Defense. However, this budget is only a small part of military spending. Emergency fundings are not accounted for in the budget for the Department of Defense. Congress also funds wars happening overseas. A hefty total of $750 billion was budgeted by Trump. 

The Energy Department finds the National Nuclear Security Administration, which comes under military spending. The FBI is funded by the Department of Justice. Furthermore, the State Department, Veterans Administration, and Homeland Security also fund the defense system. All in all, military spending for the year 2020 comes up to $989 billion. 

Meanwhile, during Obama’s term, there were several military operations that hiked military spending. One such popular instance is the elimination of Osama bin Laden. He was the mastermind behind the 9/11 attacks in America. In 2011, Osama’s compound in Pakistan was attacked by American Navy SEALs, killing the terrorist leader in the process. In the same year, American troops were also withdrawn from Iraq. However, after three years, the reemergence of terror groups necessitated the deployment of American troops back in Iraq. 

The Iraq war is crucial in determining America’s economy as the conflict includes the waterway that supplies crude oil globally. 

The war in Afghanistan was ended by Obama in 2014. Military spending should have seen a significant reduction after the end of the Afghanistan and Iraq war. However, with more than $600 billion, it was the largest military spending since WWII. 

The massive military spending majorly caused national debt and budget deficit. Currently, another $2 trillion has been added to American debt by the heavy expenditure on War on Terror. 

In 2015, a nuclear peace agreement was facilitated by Obama with Iran. As a welcoming gesture, the Obama administration lifted the 2010 economic sanctions on Iran. After the nuclear peace agreement was signed, Iran saw significant growth in the global economy. However, Trump has pulled the US out of this deal as of now. 

A reduction of 10% in America’s nuclear warhead stockpile was also done by Obama. He additionally reduced the Iran conflict, for which he received the Nobel Peace Prize. Despite all this, Obama’s military spending crossed all the previous records. In the 2010 financial year, a total of $531 billion was spent in DoD alone. The final military spending was at $693 billion. The military spending peaked in 2011, with a total of $708 billion. 

Recovery From The Recession

One of the spearheading promises of Trump was economic growth. Trump had promised his voters to grow the economy by 4%. However, many economists believe that fast economic growth is dangerous and not sustainable. It is called the Boom and Bust cycle. Moreover, the bust leads to recession. 

In February this year, the US officially witnessed a recession. A contraction of 5% was witnessed in the US economy. The stock market crashed due to the COVID-19 pandemic. It started on 9th March and lasted till 16th March. 

A national emergency was announced by Trump on 13th March because of the global pandemic. All public venues were shut down, including schools and businesses. This step was taken for the safety and welfare of the American population. 

Some of the acts passed by Congress are:

  1. H.R. 6074, which provides federal institutes $8.3 billion to deal with the global pandemic. 
  2. H.R. 748. Coronavirus Aid, Relief, and Economic Security Act. A total of $2 trillion was deposited in this act. It included unemployment insurance, financial help to local governments and businesses, and a round of stimulus checks. 
  3. H.R. 266. Paycheck Protection Program and Health Care Enhancement Act. Independent businesses, testing, and hospitals received $483.4 billion under this act. 

Over 20.5 million Americans lost their jobs in April this year. The unemployment rate has plummeted to 14.7%. A significant drop of 16.4% in the United States retail sales happens in the same month. Prior to April, approximately 881,000 people lost their jobs by March. 

During Obama’s tenure, America had faced a recession from 2008-2009. Obama addressed the issue by signing the American Recovery and Reinvestment Act. This fiscal policy created several jobs in the infrastructure and education sector. The recession was dealt with by the second half of 2009. 

In the same year, Obama’s government also took control of Chrysler and General Motors. It saved over 3 million employees from losing their job in the American auto industry. 

The Home Affordable Refinance Program was introduced with the help of the Troubled Asset Relief Program by Obama. This policy helped thousands of homeowners reeling under heavy mortgages. 

Trump Vs. Obama On Healthcare

President Trump has approached the American healthcare system by wearing the Obamacare/Affordable Care Act. Insurers who have customers from low-income backgrounds are not reimbursed anymore. This resulted in a 20% rise in premiums. 

Short-term insurance is more readily available now. This insurance is more affordable than Obamacare. However, it does not give the same number of benefits. Medicaid receipts are also required to have work by their states under the Trump administration. 

Furthermore, the Tax Cuts and Jobs Act was signed by Trump, which repealed Obama’s ACA clause that mandated everyone to have a health insurance plan. Those failing to do so were taxed. The repealing of this mandate resulted in higher premiums as it allowed healthy individuals to withdraw their insurance plans, which left unhealthy people to pay more. 

Obamacare was heavily criticized by Republicans. Many of Trump supporters complained about the cost of Obamacare. Because of one uniform healthcare system for Americans, several employers had dropped their insurance. This was another reason for Obamacare’s unpopularity amongst the Republicans. 

Another reason for criticism was that it covered maternity healthcare in the essential benefits, which many deemed unfair. The policies under Obamacare were slightly more expensive due to lifetime and annual limitations. It also made compulsory for insurers to cover all Americans, despite some suffering from pre-existing conditions. 

Obama also changed some policies if Medicare. The changes included prioritization of healthcare quality over quantity of tests and covering the cost of prescription drugs. 

Trump, on the other hand, has not tried to reform any of these ACA policies. 

In 2013, people eating more than $200,000 were taxed as per ACA rules. And in 2014, people who failed to register for any insurance plan were taxed as well. Congress, on the other hand, tried to repeal this aspect of the ACA. 

In 2010, Obama had pushed for ACA to reduce the cost of healthcare in America. Statistics show that medical conditions are one of the main reasons why most Americans go bankrupt. Even people who have insurance face tough times. For instance, chronic diseases exceed the lifetime or annual limitations in insurance plans. 

The ACA policies came into effect by 2014. The ACA provides every American with a sustainable healthcare insurance plan. It significantly reduced the national cost of healthcare. The act further made preventive medical care possible for everyone so that they could get it treated before it became more severe and expensive. 

A total of $1.1 trillion was spent by the Obama administration in improving the ACA. Children’s Health Insurance Program and Medicaid were the major recipients of this budget. 

Trump vs. Obama On Trade

The Trans-Pacific-Partnership could have been the larger global free trade market, but Trump has withdrawn America from it. The deal was negotiated by the Obama administration. Trump has also threatened to leave NAFTA, the largest free trade market agreement as of now. Trump claimed that he wants to negotiate a higher bilateral agreement. 

In 2012, Obama closed a bilateral agreement with South Korea. In 2011, another bilateral deal was closed in Colombia and Panama. In 2009, it was Peru. Obama has also negotiated for the Transatlantic Trade and Investment Partnership. However, the Obama administration did not close the deal. It is still unclear whether Trump will continue the TTIP negotiations. 

Trade protectionism has been Trump’s leading moto. A trade war was launched by Trump in 2018. In January, Chinese washing machines and solar panels saw significant quotas and tariffs. In March, Trump announced that aluminum will carry a tariff of 10%, and steel imports a tariff of 25%. Approximately $34 billion of imports from China saw the hiked tariffs in July. Again, $16 billion Chinese products saw a tariff of 25% in August the same year. It is still not clear what the final result of these trade wars will be. However, several economists say that such a prolonged trade war will hurt American consumers and businesses more. They predict that even a recession could be in its way.

Trump had also promised that he would label the Chinese government of manipulating its currency. He claimed that they artificially undervalue their currency by at least 15-49 percent. However, the duties were imposed without Trump labeling China of being a currency manipulator. Data, on the other hand, shows that China overvalued its currency. 

Trump Vs. Obama On Regulations 

In 2010, the Dodd-Frank Wall Street Reform Act was signed by Obama, which aimed to regulate non-bank financial agencies. It was to ensure avoiding another Wall Street crisis. The act also regulated debit, prepaid, and credit cards. The payday loan from the Consumer Financial Protection Bureau was also ended. 

Trump has publicly claimed that he wants to repeal the Dodd-Frank Act in its entirety. He said that the act prevents banks from lending to small business owners. On 22nd May 2018, several rules from the act were rolled back by Congress. The rollback allowed banks with at least $250 billion more flexibility. Some of the banks given eased regulation under this act are Ally Financial and American Express. 

The Economic Growth, Regulatory Relief, and Consumer Protection Act has given these banks the freedom to not hold assets that would have protected the economy during times of cash crunch. They are also released from “stress tests” by Feds. This means that only 12 American banks are mandated to follow the Dodd-Frank Act. Additionally, these “smaller” banks don’t need to follow the Volcker Rule. 

Debt And Deficit

Both Trump and Obama’s administrations have raised record budget deficits. In 2009, the budget deficit was a record $1.4 trillion. The stimulus plan introduced by Obama created a budget deficit of $253 billion. On top of that, $600 billion was caused by the recession. 

In 2010 and 2011, the budget deficit dropped to $1.3 trillion because of Obama’s tax cut extension. And, as the American economy saw improvement, the budget deficit reduced year after year. By 2016, it was reduced to $585 billion. 

Under the Trump administration, the budget deficit increased to $966 billion, even though it has not faced any significant recession. 

All the deficits go on adding a significant amount to the national debt. One St. Louis Federal Reserve economist revealed that the deficit reported by the president leaves money borrowed from the Social Security Trust Fund. The economist added that many presidents use this to reduce the on-paper deficit. The amount borrowed from SSTF is called “off-budget.” 

Furthermore, it has been assessed that Trump will add another $9 trillion national debt. As seen, he has added a whopping $5 trillion in just his first 4 years. That’s equal to Obama’s when America was facing one of the worst economic recession. 

The Trump administration plans to drop the national debt by boosting the national economy by 6%. However, as of now, Trump has only made use of tax cuts to bring this change. Economists project that the national debt will balloon up under the Trump administration. 

Trump’s plans of cutting down on unnecessary expenditures include reducing foreign aid, cutting entitlement programs, and increasing defense expenditure. Several economists have criticized this move. 

Actions On Climate Change

The Paris Climate Agreement was finalized on 12th December 2015. Obama was one of the leading figures in securing this deal. The agreement mandated participating member countries to trade carbon and reduce carbon emissions. On top of that, a total of $100 billion per year was agreed upon by developed nations as funds for developing markets.  

In 2014, the Obama administration announced that it will regulate carbon emissions to reduce harmful greenhouse gases. In 2015, the Clean Power Plan was introduced by Obama. The aim of the act was a 32% reduction in carbon dioxide levels by 2030. The American power plants were supposed to set goals in reducing carbon emission. By the year 2030, 30% of the power plant’s energy was supplied to be renewable. It also allowed trading of carbon emission caps. It meant that states who emit less carbon dioxide could trade whatever surplus that had with states that emit more than their share. 

In 2017, the Trump administration announced its withdrawal from the Paris Climate Agreement. Trump has also promised his supporters that he will end the Waters of the United States rule and the Climate Action plan. The construction of the Dakota Access pipelines and the Keystone XL has been given a green light by Trunk. These pipelines are supposed to transfer Canadian crude oil to Gulf refineries.

Trump has further promised his supporters that he will bring the coal industry back and running. He has also pledged his loyalties to clean coal technology. 

Several acts and policies from the Obama administration regarding climate change have been flagged, rescinded, or suspended. The program to address the relationship between defense and climate change has also been rescinded by Trump. The Obama administration’s Clean Power Plan is also up for review as it regulated the coal industry. Trump has discussed plans of allowing states to set their personal limits on the rate of coal emissions. 

The above is the policy comparisons between Trump vs. Obama.