Trump Paints Election as Choice Between Depression, Prosperity

(Bloomberg) -- President Donald Trump claimed that his re-election would bring prosperity but that a victory by Democrat Joe Biden would lead to recession, in an escalation of his economic attack on the frontrunner weeks before the election.

“It’s the choice between historic prosperity under my pro-American policies or very crippling poverty and a steep depression under the radical left,” Trump said Wednesday. “It’s a choice between a socialist nightmare and the American dream.”

Trump, speaking from the White House Rose Garden, delivered an online economic address to Wall Street and corporate leaders just weeks before the election. He borrowed heavily from his standard campaign speech and broadly pledged new cuts to business and personal income taxes if re-elected, without giving specifics.

Trump is lagging behind Biden in national polls and in surveys in key swing states, as the coronavirus pandemic and its economic fallout weigh heavily on his campaign. The president has stepped up warnings in recent weeks that Biden and Democrats would hurt the economic recovery while claiming his re-election would lead to rapid job growth.

Biden has positioned himself as a moderate Democrat and has disputed Trump’s assertion that he’s a socialist. Biden also has said that he’d speed the recovery by taking stronger steps to contain the spread of the virus.

Markets have responded favorably to Biden’s lead in polls in recent weeks, driven in part by expectations of new stimulus spending if Democrats win both the White House and a majority in the Senate.

Trump’s Virus Approach

Voters have soured on Trump’s handling of Covid-19, which has left more than 215,000 dead in the U.S. The president said during the speech hosted by the Economic Club of New York and others that he would “eradicate the coronavirus.”

Trump said that under his watch, “we will continue our V-shaped recovery.”

The U.S. economy experienced a quick rebound from the initial impact of pandemic lockdowns in March and April, but the pace of that progress has slowed significantly in recent weeks -- especially when it comes to job growth.

Economists and policy makers have said that returning to a faster pace of recovery would require a new stimulus package. But Democrats and Republicans have been locked in a stalemate over a new spending bill.

Trump tweeted on Tuesday that Congress should “go big or go home” shortly after Republican Majority Leader Mitch McConnell promised action next week on a bill targeted at small businesses. Treasury Secretary Steven Mnuchin said Wednesday, however, that finalizing a package before the Nov. 3 election will be difficult.

Trump Invokes Debt

Trump called on Democrats to relax their bargaining position to reach a stimulus deal, which has stalled in Congress for months. He also said Wednesday that the rising national debt is “certainly on my mind,” but that they had no choice but to spend to cushion the blow of the pandemic.

“We are trying to help and we’re trying to get some stimulus money, which I think is very important for certain industries, certainly the airline business,” Trump said. “This thing is going away and it’s all going to come back.”

The president also said the U.S. will report “phenomenal” economic numbers in the third quarter. Currently, third quarter gross domestic product, which will be reported in late October, is expected to grow an annualized 29.9%, and that’s largely due to reopenings. While that would be a record increase, it follows a 31.4 % decline in the second quarter, and would still leave U.S. output behind where it was pre-pandemic.

Moreover, fourth-quarter growth is projected to slow sharply, to just 4%, as the pace of reopening cools.

He said that in a second term, he’d cut middle-class taxes, further reduce regulations, revive Puerto Rico’s pharmaceutical industry and impose tariffs on companies that move from the U.S. to other countries. He criticized the European Union for trade barriers that he said are unfair because of U.S. military support in the region.

Biden’s Tax Plan

Trump claimed without citing evidence that Biden’s election would lead to “the highest business tax rate in the developed world” and that millions of jobs would move “out of America and into China.”

He said Biden wants to raise taxes by $4 trillion, a reference to a plan by Biden that stretches over a decade and is aimed at high-income earners.

Even as cases of the coronavirus spike in parts of the U.S., Trump said “we’ve seen the smallest economic contraction and the fastest recovery of any major Western country.”

But months after the initial economic shock from the pandemic, lower-income workers in the leisure and hospitality industry continue to bear the brunt of pandemic shutdowns.

Other parts of the economy -- particularly the housing and auto sectors -- have bounced back better than expected. Home sales have surged, especially for affluent buyers and sellers as mortgage rates dropped and urbanites relocated to more-spacious suburbs amid lockdowns.

Consumer spending also rebounded, boosted in part by government stimulus checks that allowed many to stay current on or pay down bills. The pace of those spending gains have moderated, though, after the expiration of enhanced unemployment benefits.

Trump said he’d support expanded federal infrastructure spending, including on roads, bridges, highways and tunnels, but did not specify a proposal.

Trump spoke 13 days after testing positive for the virus, his voice at times hoarse. He resumed holding political rallies on Monday and used his speech Wednesday to call for a further reopening of the U.S.

“The cure cannot be worse than the problem itself,” he said, criticizing measures to slow the spread of the virus. The risk is “exceedingly low” for the young, he said, and criticized “the media’s constant efforts to stoke panic and hysteria” over the virus.

©2020 Bloomberg L.P.