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Economic Research: U.S. Election: Promises, Policy, And The Potential Effects On The Economy And Corporate Credit


Global Economic Outlook Q2 2023: Real Resilience Meets Financial Fragility


Economic Research: Economic Outlook Canada Q2 2023: A Dip Is Expected, Though Resilience Persists


Economic Outlook Emerging Markets Q2 2023: Global Crosscurrents Make For A Bumpy Deceleration


Economic Outlook U.S. Q2 2023: Still Resilient, Downside Risks Rise

Economic Research: U.S. Election: Promises, Policy, And The Potential Effects On The Economy And Corporate Credit

As the historically unusual election season in the U.S. nears its Nov. 3 climax--with the race thrown even further into uncharted waters with President Donald Trump's contraction of COVID-19--S&P Global Ratings has analyzed the platform of the president's Republican party and that of presidential nominee Joe Biden and the Democratic party.

With 35 of 100 Senate seats (23 Republican, 12 Democratic) and all 435 seats in the House of Representatives at stake, we remain impartial to the politics and rhetoric of the race. Instead, we focus on the stated policies of the two camps, as well as what, if implemented, they would mean for the broader economy and for the credit quality of borrowers, including nonfinancial corporates, banks, and states and municipalities.

We also recognize that promises often go unfulfilled, and that much of what can and will be done depends heavily on the partisan makeup in Washington. A so-called "blue wave," in which Mr. Biden wins the White House and Democrats retake the Senate and hold the House--or, on the flip side, a second Trump term combined with the Republicans retaining the Upper Chamber and retaking the House--would be far more consequential from a policy-implementation standpoint than a continued split of power. Based on the polls, it seems likely that President Trump, if reelected, would face a divided Congress, which could reduce the chances of his enacting significant policy changes during his term.

In addition to the possibility that clarity about who has a rightful claim to the presidency could take weeks beyond Election Day, ultimate control of the Senate is also complicated by special elections in Arizona and Georgia. In the latter, which is also in the unique position of having both Senate seats up for grabs, the lack of a candidate garnering a majority of votes (a near certainty, given the size of the field) would lead to a runoff election, which wouldn't be held until Jan. 5.

Still, we expect all of these issues to be resolved in advance of Inauguration Day, Jan. 20. In anticipation of that, we've looked at the differences--and, in some cases, the similarities--between the major parties' platforms in the areas of: taxation, trade, infrastructure, health care, and regulation (including climate policy and immigration).


Among the biggest differences between the parties and their platforms at this point are their approaches to:

  • Taxes, with Mr. Biden looking to claw back a chunk of the Trump Administration's corporate tax cut;
  • Further fiscal stimulus to battle the economic effects of the coronavirus pandemic;
  • Regulation; and
  • Immigration.

Surprisingly, the two camps share some similarities on:

  • Trade; and
  • Infrastructure investment, with both candidates promising significant investments in infrastructure. Mr. Biden has made a $2 trillion promise, so far, and the Trump campaign has been less clear on size of the investment.

S&P Global Ratings' analysis shows that the effective tax rate that our publicly rated universe of U.S. companies paid fell about 9 percentage points under the Tax Cuts and Jobs Act of 2017 (TCJA), bolstering businesses' bottom lines (see the "Taxes" section).

Regarding pandemic-related stimulus, the string of relief bills earlier this year added 4.7% to full-year GDP, with the potential to tack on another 3.1% to the world's biggest economy next year, according to the nonpartisan Congressional Budget Office (see the "Economic Stimulus" section).

And our analysis earlier this year shows that if the U.S. were to increase infrastructure spending by $2.1 trillion (in line with the Biden plan) over a decade, the economy would add almost $5.7 trillion to GDP in the next 10 years. That's $2.70 in economic activity for every dollar spent. (In fact, the so-called multiplier effect would be even stronger now, given our weaker-than-expected outlook for the economy.)

But whether promises become policy depends on the overall structure of Congress and the White House. Given the painfully slow economic recovery, the size and shape of the stimulus may depend on the composition of Congress and who sits in the White House.

We don't see the U.S. economy reaching its real nominal GDP level of year-end 2019 until late next year--and that assumes passage of a $500 billion stimulus package before year-end. Even with that boost, by the fourth quarter of 2023, real GDP would still be $115 billion (or 2.2% smaller) than what we expected in our December 2019 forecast. Adding to the pain is that the U.S. unemployment rate is unlikely to fall to its precrisis low until mid-2024.

Economic Stimulus

The harsh reality is that whoever the president is on Jan. 20 has his work cut out for him. While the U.S. is no longer careening toward a depression, labor market data shows the economy mired in a weak recovery, with the unemployment rate still high, at 7.9%--above or equal to the peak of eight of the past 11 recessions (see chart 1). (Adjusted for the decline in labor-force participation, as well as misclassification of workers by the Bureau of Labor Statistics, it's worse than all but one of the previous 11 downturns.) Adding back those who have left the labor force since February, the September unemployment rate would have been 10.3%. With no vaccine available to contain the coronavirus during the fall flu season, no agreement on emergency stimulus, and a trade dispute with China still on the boil, we think the economy faces a 30%-35% chance of falling back into recession.

To be fair, while President Trump's fourth year in office is now saddled with significant unemployment rates, his first three years celebrated one of the strongest job markets in history, with the unemployment rate reaching a 51-year low of 3.5% in November 2019.

Chart 1


Chart 2


Looking deeper into the unemployment numbers shows that the headline jobless rate isn't dropping just because people are finding work, but rather that many have left the job market altogether. More than 30% of unemployed Americans are what the Bureau of Labor Statistics classifies as workers suffering permanent job loss, and the temporarily out-of-work are now at greater risk of finding themselves permanently so. While the economy has added jobs, more than half of the 22 million lost because of the effects of the pandemic are still gone.

The single most important economic imperative is simple: Create jobs. Good jobs. When pumping money into the U.S. economy is done right, it's not just spending, it's investing. And the return comes in the form of both jobs and growth, which can lead to a virtuous cycle of more good jobs and growth through the multiplier effect--which measures the economic benefit of spending, over time.

However, first on the president's list will be to throw a lifeline to those in need.

While surges of COVID-19 cases in parts of the country didn't curb economic activity as much as we had expected (perhaps because of lockdown fatigue and policymakers' reluctance to mandate social restrictions), the recovery may face more challenges now that extended federal unemployment benefits have expired and job gains have slowed.

Federal fiscal stimulus and unemployment benefits (now expired) were critical to the economy's climb out of the coronavirus-induced shock. With both the Trump-Pence and Biden-Harris campaigns focusing their agendas on economic recovery and jobs, premature fiscal austerity could result in another slump in public-sector demand before private-sector demand fully recovers, which could, in turn, weigh heavily on GDP growth and weigh on credit quality across sectors, including state and local governments.

For now, legislators on Capitol Hill remain far apart in their views on what is needed. The Senate is set to vote on a scaled-down package later this month, although it is almost certain to fall far short of the $2.2 trillion House Democrats are pushing for and the $1.8 trillion proposal Treasury Secretary Steven Mnuchin has outlined. Even the chance of repurposing roughly $130 billion in unused Paycheck Protection Program (PPP) funds seems unlikely in the near term, and the chance that no stimulus will be passed this year has heightened the risk that our forecast for fourth-quarter GDP growth of 3.5% may be too high.

U.S. state and local governments are eagerly awaiting some help from the federal government, as they are under increasing budget pressures, with tax revenues tumbling and virus-related government spending costs climbing. The lack of movement in Washington would draw out the time frame for state and local governments to regain their fiscal balance, weighing on U.S. GDP in the process (given that state and local governments account for about 11% of the world's biggest economy). Many states and municipalities have already started slashing their budgets, and will have to cut even deeper without additional stimulus. This is crucial given that, in times of deep imbalances, governments often make choices that hurt their long-term credit stability, such as reducing pension contributions or deferring maintenance of and investment in key infrastructure.

On another front, Mr. Biden's campaign has been far more aggressive. The former vice president supports raising the federal minimum wage to $15 per hour, from the $7.25 it has been at since 2009. Mr. Biden has also said that he would endeavor to pass the Paycheck Fairness Act to ensure women are paid equally for equal work, and push through universal paid sick days and 12 weeks of paid family and medical leave.


The gap between the approaches of President Trump and Democratic presidential nominee Biden is perhaps widest with regard to what Corporate America should pay in taxes.

President Trump's most impactful initiative (pre-pandemic) may have been the TCJA, which, among other things, closed certain loopholes, and reduced the alternative minimum tax for individuals and eliminated it for corporations. (It also struck the penalty related to the so-called "individual mandate" in the Affordable Care Act (ACA) that required Americans to have health insurance. See the "Health Care" section for a more detailed discussion.) However, the main thrust of the legislation was the reduction in tax rates for individuals and businesses, with the nominal rate on the latter falling to 21%, from 35%. One key intent of the bill was to make the U.S.'s corporate tax regime more competitive with those of other developed economies, to encourage the repatriation of cash that American companies had been hoarding overseas, and to spur job creation by putting more money into companies' coffers.

And the data on effective tax rates shows that most companies benefited significantly from the TCJA rate reduction and other changes. A review of our universe of publicly rated U.S. nonfinancial corporates indicates that the average pre-TCJA effective tax rate was 22%, and that it fell to 13% after the law took effect.

An unintended side effect, however, was the increase in the national debt, given that the boost to the economy fell short of offsetting the hit to government tax revenues. This may have been largely due to companies using the bulk of the benefit (as well as the majority of cash they brought back home) for shareholder-friendly activities, such as dividends and stock buybacks (see chart 3), rather than to invest in their businesses or hire workers.

Chart 3


The fiscal multiplier is generally smaller during expansions than during recessions, and the Congressional Budget Office has said that the multiplier on corporate tax cuts can range from 0.0-0.4. The timing of the TCJA was such that the multiplier was less than it could have been, given where the U.S. was in the economic cycle. We estimated in January 2018 that the fiscal multiplier from the tax package would likely be no more than 0.4 (that is, the return on growth is about 40 cents for every dollar of the tax cut), meaning that the boost to real annual GDP growth in the first two years would be about 0.3 percentage points--an estimate in line with the effect reported by the Government Accountability Office in 2019.

Mr. Biden has pledged to reverse some of the Trump Administration's tax cuts, and he has campaigned on the premise that the federal income tax regime needs to be retooled to level the playing field. Most notably, Mr. Biden proposes raising the nominal corporate tax rate to 28% from 21%. Although, that would still claw back only half of the cut under the TJCA.

A bigger difference in the candidates' approaches can be seen in Mr. Biden's plans to reinstate the corporate alternative minimum tax, which was repealed by the TCJA, to 15% of book income for companies that have more than $100 million of net income and pay less than the 15% of book income in taxes. Such measures could hurt companies' bottom lines and cash flows, though it is too early to draw any broader conclusions. (For more on this subject, see "U.S. Corporate Tax Policy Post-Election Won’t Likely Affect Ratings, Regardless Of Election Results," published today.)

From a corporate-credit perspective, the conventional wisdom is that Democratic policies are less business-friendly than Republican policies, and that a Biden win, especially if combined with a Democratic Congress, could have a cooling effect on the economy. This could, in turn, weigh on consumer confidence and spending, hitting sectors such as retail and restaurants, which have already suffered tremendously because of the pandemic and secular shifts.

Banks, meanwhile, have benefited significantly from the Trump Administration's corporate tax cut. Although we don't expect a further reduction in the tax rate in a second Trump term, it's likely that the current rate wouldn't change, which would be more supportive of bank profitability, given the expected declines in net interest income and sharply higher provisions. One wild card in terms of profitability for the industry in a continued Trump Administration is the unlikelihood of additional federal fiscal stimulus, which could result in elevated provisions and weigh on bank profitability.

The main initiative that could hurt banks' bottom lines after a "blue wave" would be an increase in the corporate tax rate back to where it was, above 30%. This would be especially punitive if banks' profitability continues to be pressured by the pandemic. Still, it's possible that the hit to bank profitability from a tax rate rollback could be somewhat offset if a Biden Administration were able to reach consensus on a larger stimulus package--i.e., with higher unemployment benefits and additional small-business lending programs.


With regard to the U.S. approach to trade--in particular, the dispute with China--the two camps show more similarities than differences. In their public stances, they've converged on the idea that U.S. trade policy hasn't worked to America's advantage, and neither candidate wants to be seen as soft on China, which is on pace to become the world's biggest economy within a decade.

What differences there are between the camps may have more to do with tone and tack. President Trump's second-term efforts would likely maintain his "America First" approach to foreign policy, whereas Mr. Biden would be more likely to build a coalition with allies to achieve the U.S.'s trade and economic goals.

Both promise to reduce our reliance on China. President Trump promises to offer tax credits for companies that bring back jobs from China. Mr. Biden has promised a national commitment to "buy American" by tightening domestic-content rules and extending government assistance.

This isn't to say there wouldn't be distinctions in policy between the two. While President Trump has levied tariffs on certain goods from Europe and, closer to home, on Canada and Mexico--and negotiated the United States-Mexico-Canada Agreement (USMCA) to replace NAFTA--a Biden Administration could look to bring the U.S. back into the Trans-Pacific Partnership, from which President Trump withdrew in 2017. Mr. Biden has said he will seek to renegotiate with particular emphasis on labor and environmental standards.

At this point, we believe the tariffs on Chinese goods will likely remain in place for the foreseeable future. We expect the tariffs, combined with retaliation from China, will directly shave off about 20 basis points (bps)-30 bps from U.S. GDP in the next 12 months. More important may be the secondary effects, such as increased uncertainty and the resulting reduction in business investment. That will slow growth in an economy that is only slowly getting back on its feet.

While headlines have focused on tariffs, the deeper story involves less tangible issues such as reciprocal bilateral investment opportunities, intellectual-property protection, and level playing fields for domestic and foreign companies. The question is: Will the levers the U.S. can pull--such as investment restrictions, export controls, and, to a lesser extent, tariffs--lead to a new strategic dialogue between the two economic giants?

We suspect that under President Trump, the continued dispute with China will focus more on nontariff barriers, including bans and sanctions. There is a risk that the trade war may widen to other partners, including the EU and smaller countries. While the new USMCA probably means that a détente will hold with Mexico and Canada, we could see conflicts with Vietnam or other small Asian countries flare up. And while not expected, there may be an attempt to pull the U.S. out of the World Trade Organization.

It is unclear if and when a Biden White House might remove the tariffs that are currently in place, given growing anti-China sentiment on both sides of the political aisle. Rather, a Biden Administration would probably refocus U.S. demands on structural changes to China policy of forced technology transfer and push for a level playing field between domestic and foreign business in Chinese markets.

Either way, the confrontation with China will likely dominate trade policy in the near term, regardless of who is president. With the Phase One deal at a virtual standstill and tensions rising elsewhere, more protectionist policies could add downside risk for the U.S. economy. On the other hand, some corporate sectors such as autos, technology, and capital goods could benefit from less uncertainty around tariffs and more clarity in decision-making.

For U.S. auto manufacturers, any increase in stability around tariff policy could ultimately reduce the risk of supply-chain bottlenecks and higher costs to consumers. Similarly, tech companies could find it easier to plan their business strategies--even if the stance is anti-China. On the other hand, a second Trump term (especially combined with a Republican Congress) that continued the current approach to tariffs, or took a more aggressive stance, could hurt companies in the capital goods sector, particularly those with a sizable export base. Similarly, a Trump triumph could weigh on makers of durable goods, which were hit hard by steel tariffs.

We reiterate our view that the first-order effects on credit are generally low to moderate for issuers we rate in both countries. Both countries have diversified export markets, their own domestic markets are very large and businesses cater to them, and a large number of rated corporates still have some flexibility in managing their costs, including, in some cases, the option of passing on additional tariff-related expenses to customers.

For the U.S., the direct economic effects from the tariffs in and of themselves aren't enough to threaten the U.S. expansion. However, on top of the other protectionist policies in place and in the midst of a sluggish recovery, they don't help. Tariffs on intermediate goods hurt American companies, and tariffs on end products hurt American consumers. Nontariff barriers would make the economic conditions even worse for the U.S. companies that do significant business with China. And all lead to fewer jobs for American workers.


Infrastructure enjoys bipartisan support, comparatively speaking. The prospects for job creation and kick-starting the economy through the multiplier effect (which is greater when the economy is in recession or early recovery, as we are now) appeal to both parties' bases.

The differences are in the details.

The Biden campaign has laid out a plan to pump $2 trillion into physical infrastructure, including roads, bridges, water systems, electricity grids, and universal broadband, while also investing in care services and facilities. While less specific, President Trump's second-term agenda, "Fighting For You," lays out his desire to "build the world's greatest infrastructure system" and "win the race to 5G and establish a national high-speed wireless internet network."

Success in any endeavor will depend on support from Congress. Indeed, President Trump's push early in his administration to invest $1 trillion in infrastructure stalled amid opposition from both parties. Then, in April 2019, the White House and House Democrats tentatively agreed to pursue a $2 trillion package, but negotiations ended as President Trump objected to the investigations into his administration.

S&P Global Economics has published extensively on the potential economic benefits of infrastructure investment, and we believe the causal link between prudent spending and the benefits to an economy is undeniable. This can boost an economy in many ways, including adding jobs--mostly middle-class jobs (and not just during a project's construction)--increasing income, and raising property values. With interest rates at historic lows, materials costs affordable, and high unemployment, now could be the time to strike.


Given years of neglect regarding American infrastructure (with independent analysts putting the U.S. behind many of its peers), the current environment represents a great opportunity to invest as a means to improve the economic outlook. In our analysis earlier this year, we found that a $2.1 trillion boost to public infrastructure spending over a 10-year period could add as much as $5.7 trillion to U.S. GDP in the next decade. That's 10x what we lost during the recession. It would also create 2.3 million jobs by 2024 as the work is being completed, and the additional 0.3% boost to productivity per year that it would generate would add a net 713,000 jobs by 2029 (see "Infrastructure: What Once Was Lost Can Now Be Found--The Productivity Boost," published May 6).

Assuming that the spending is prudent (that is, it avoids projects such as the proverbial bridge to nowhere), the productivity gains would generate an even bigger boost to economic activity, with yet more jobs at higher wages, adding fuel to the post-pandemic rebound. A multiplier of 2.7 translates to a return of $2.70 for every dollar spent, much larger than average estimates of 1.3x-1.8x for infrastructure spending and the 0.0-0.4 multiplier for the corporate tax cut (1).

Outside research (from the San Francisco Fed, in particular) shows that, during periods of high economic slack, each dollar of infrastructure spending increases economic activity roughly 4x more than average. Since we ran our analysis in April, our outlook for the U.S. economy has grown gloomier. Our September forecast, for example, now sees unemployment 50 bps and 60 bps higher in 2023 and 2024, respectively, than in our April estimate. With more slack in the economy than we thought, the 2.7 multiplier we estimated in May would likely be much higher, providing even more economic bang for the buck.

Health Care

Health care has been a top campaign issue, as it has in every presidential race in recent memory, and the loss of insurance for many Americans during the pandemic-induced recession has cast a brighter spotlight on the issues of coverage and cost. For now, there seems to be more momentum for change on the Democratic side, as the Biden-Harris campaign has stated its intention to expand the ACA, and has considered exploring a public option for coverage. As the debate about Obamacare raged in 2009, the Congressional Budget Office estimated 6 million people (or less than 2% of the U.S. population) would be covered by the public option within a decade.

For their part, President Trump and his fellow Republicans have stated their desire to repeal the ACA, but have run into difficulties in doing so. However, they did remove the penalty related to the individual mandate. What form this continued effort to chip away at Obamacare will take remains to be seen, but a full repeal now seems extraordinarily unlikely--and the president has pledged to make sure Americans aren't denied coverage because of a preexisting condition (as under the ACA).

For U.S. health insurers, policy remains the top risk. The ACA is now 10 years old, but its coverage, affordability, and cost-reduction merits remain subject to political disagreement, meaning that future policy changes are always lurking.

Under a Biden Administration, we could see policy changes amounting to "ACA 2.0," including a federal public option, new funding incentives for states to expand Medicaid, early buy-in for Medicare, and expanded subsidies for ACA individual products. However, many of these policy changes may be difficult to implement because they may require more than a simple Democratic majority in the Senate. Conversely, a second Trump Administration could mean more of a status quo position (assuming the Supreme Court validates the ACA in the California v. Texas case next year), with a continued focus on promoting Medicare Advantage and enhancing state-level Medicaid flexibility (via block grants, etc.). Both candidates support drug-pricing reforms. Either way, future policy risk will depend on the details, how much input the industry has, and the time frame for any change.

Broadly, the downside credit implications for health insurers would vary based on the extent of availability of a public option, which is undoubtedly a competitive threat given the likely cost advantage and potential for subsidization, perhaps resulting in some private insurers withdrawing from the market.

Where the two campaigns are closer in approach involves pharmaceutical costs--with President Trump recently signing a series of executive orders designed to lower drug prices. Mr. Biden, too, has addressed drug-price inflation, although the overall pace of the increase in health care costs has slowed.

As with almost all issues, the consolidation of power with one party would be the bigger disruptor. But even in a Democratic sweep, policy might be slow to change as Mr. Biden spends his early political capital on spurring GDP growth, perhaps through new fiscal stimulus to help those hurt by the pandemic, or on infrastructure, rather than on fortifying or enhancing the ACA, which would be more stable under his stewardship. Still, we see more likelihood of significant policy changes under a Biden administration than in a second Trump term.

Regulation, Climate, And Immigration

To see where the Trump and Biden philosophies differ most, look no further than regulation, broadly speaking, and the fight against climate change, specifically.

In 2018, the Trump Administration announced that it would eliminate the Environmental Protection Agency's "once in, always in" policy under the Clean Air Act, a decades-old air emissions policy opposed by fossil fuel companies that determined how major sources of air pollution are regulated. More notably, the president last year officially withdrew the U.S. from the Paris Agreement, making the U.S. the only country to abandon the accord and one of just eight (and by far the largest) not participating. President Trump has long criticized the global initiative, calling it "a total disaster" and arguing that his predecessor's promises to cut carbon emissions as part of the agreement would have "hurt the competitiveness" of the U.S.

Mr. Biden has pledged to reinstate the Clean Air Act, rejoin the Paris Agreement, and tighten environmental rules generally, which could add to costs (while also potentially creating jobs in "green" industries as an offset). Mr. Biden is in favor of introducing a climate (carbon) tax at the border. Such tax would echo a policy proposal of the EU's "Green Deal" with implications for the trade relationship with China. His clean-energy plans could have a profound and direct effect on offshore oil and gas production, and the U.S. energy sector more broadly. A promise to ban "new oil and gas permitting on federal lands and waters" could weigh on many oilfield-services companies, especially offshore drillers, given potentially significant effects on capital spending. For midstream energy, it would remain difficult to build greenfield pipelines regardless of who occupies the White House. Refineries could benefit from a second Trump term, but would likely continue to diversify into renewables projects to offset slowing demand growth.

In line with this thinking, S&P Global Platts Analytics estimated that a ban on new federal drilling leases could reduce U.S. production by up to 2 million barrels per day (b/d) by 2024 versus our existing outlook. It would also become harder to build pipelines crossing the U.S. border (the 830,000 b/d Keystone XL) or federal lands and waterways (the 570,000 b/d DAPL). (see "US election: Significant oil market implications, led by fate of Iran sanctions," published Sept. 1, 2020.)

Beyond the differing approaches to climate change, the two camps would likely come at other regulatory frameworks from opposite ends.

For example, the Trump Administration has rolled back a number of regulations for the banking industry that were put in place under President Barack Obama. These rollbacks came largely after the signing of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2015, which loosened rules imposed by 2010's Dodd-Frank Act designed to improve accountability and transparency in the financial system after the global financial crisis of 2007-2008. The Trump Administration's rollbacks raised the asset threshold for banks subject to "enhanced" supervision and eased regulation on community banks.

S&P Global Ratings' view is that looser regulation could allow for greater risk-taking, and a reduction in capital and liquidity for some regional and community banks. However, regulation for the eight U.S. global systemically important banks (GSIBs), the largest regional banks, and a number of U.S.-based foreign banking organizations (which collectively hold roughly two-thirds of assets in the U.S. banking system) remains largely in place.

It's possible that a Biden Administration, assuming a Democratic Congress, could reverse some of the regulatory rollback. This would be a slight positive from a ratings standpoint, as long as banks' profitability isn't hurt significantly by such moves. But given that we hadn't lowered ratings due to the regulatory relief--as we believed it was marginal--it's unlikely that stricter bank regulation on its own would result in higher bank ratings.

Finally, immigration is an area in which the two candidates are perhaps farthest apart.

The approach of President Trump, whose highest-profile campaign promise was to build a border wall between the U.S. and Mexico, takes a number of other forms, including an overhaul of the H-1B visa program for highly skilled foreign workers, other restrictions on legal immigration, and the deportation of immigrants who arrived to the country as children. On this last point, the Supreme Court in June rejected the president's bid to end the so-called "Dreamers" program, but left open the possibility that the administration could again seek to do so.

Mr. Biden has embraced citizenship rights for 11 million undocumented immigrants and has said he would look to increase the number of visas awarded for permanent, employment-based immigration.

In most cases, immigrant labor largely complements--rather than displaces--the domestic workforce; concerns that immigrants will "take our jobs" are often overblown. S&P Global Ratings believes immigration reform that would further open U.S. borders to a significant number of highly skilled foreigners who could lawfully enter the country permanently or temporarily would be a boon to the economy (see "Adding Skilled Labor To America's Melting Pot Would Heat Up U.S. Economic Growth," published March 19, 2014). We've found that such a measure could add roughly 3 percentage points to real GDP in a 10-year period, and that the tax revenue generated would chip away at the government's budget problems.

Moreover, highly skilled workers generally earn much-higher-than-average wages, with those in the STEM fields (science, technology, engineering, and math) earning almost twice the average. An influx of young, skilled labor would spur economic growth, reduce the federal deficit, add to innovation, and help offset the economic drag of an aging U.S. population. In addition, if reform focused on highly skilled immigrants, the ripple effects on productivity, the tax base, and jobs would be even larger.

Appendix: An Overview Of Policy Positions

Various Policy Positions
Former Vice President Biden President Trump
Taxes • Reverse some of Trump’s tax cuts for corporations, and impose common-sense tax reforms that ensure the wealthiest Americans pay their fair share. • Pass special manufacturing communities tax credit that promotes revitalizing, renovating existing - or recently closed down facilities. • Cut taxes to boost take-home pay and keep jobs in America. • Expand opportunity zones to encourage investment into underdeveloped communities.
U.S.-China relations/trade • Set forth clear demands and specific consequences if China’s government does not cease cyber espionage against U.S. businesses. • Develop new sanctions authorities against Chinese firms that steal U.S. technology that cut them off from accessing the U.S. market and financial system. • Bring back 1 million manufacturing jobs from China. • Tax credits for companies that bring back jobs from China. • Allow 100% expensing deductions for essential industries like pharmaceuticals and robotics that bring back their manufacturing to the U.S. • No federal contracts for companies that outsource to China. • Hold China fully accountable for allowing the virus to spread around the world.
Infrastructure investment • $2 trillion investment in infrastructure (roads, bridges, green space, water systems, electricity grids, universal broadband), auto industry, transit, power sector, buildings, housing, innovation, agriculture and conservation, and environmental justice. • Infrastructure investment in care services and facilities. • Build the world’s greatest infrastructure system.
Technology • Make a new $300 billion investment in research and development and breakthrough technologies. • Win the race to 5G and establish a national high-speed wireless internet network.
Education • Provide free, high-quality pre-kindergarten (3 and 4 year old). • Invest in career/technical education for high school students. • Provide two years of community college or other high-quality training program without debt; make a $50 billion investment in workforce training, including community-college business partnerships and apprenticeships. • Make public colleges and universities tuition-free for all families with incomes below $125,000. • Invest over $70 billion in historically black colleges and universities, tribal colleges and universities, and minority-serving institutions. • Provide school choice to every child in America.
Heath care • Defend the Affordable Care Act, and expand coverage of low-income adults. • Provide a public option and lower costs for care and for prescription drugs. • Preserve and strengthen Social Security and Medicare. • Cut prescription drug prices. • Put patients and doctors back in charge of the health care system. • Lower health care insurance premiums. • End surprise billing. • Cover all preexisting conditions. • Protect Social Security and Medicare. • Protect veterans and provide world-class health care and services.
Climate change/energy • Achieve net-zero emissions, economy-wide, by no later than 2050. • Achieve a carbon pollution-free power sector by 2035. • Apply a carbon adjustment fee against countries that are failing to meet their climate and environmental obligations. • End subsidies for fossil fuels. • Continue deregulatory agenda for energy independence. • Support the development of all forms of energy that are marketable in a free economy without subsidies. • Oppose any carbon tax. • Continue to lead the world in access to the cleanest drinking water and cleanest air. • Partner with other nations to clean up oceans.
Immigration • Immediately reverse the Trump Administration's policies that separate parents from their children at U.S. border, and end Trump's asylum policies. • Surge humanitarian resources to the border and foster public-private initiatives. • Remove uncertainty regarding DACA by reinstating the program. • Reform visa program for temporary workers in select industries. • Block illegal immigrants from becoming eligible for taxpayer-funded welfare, health care, and free college tuition. • Mandatory deportation for non-citizen gang members. • Dismantle human trafficking networks. • End sanctuary cities to restore neighborhoods and protect families. • Prohibit American companies from replacing U.S. citizens with lower-cost foreign workers.
Labor • Federal minimum wage at $15 per hour. • Restore workers' rights to organize, join a union, and collectively bargain; pass the Protecting the Right to Organize Act, providing public service and federal government workers with bargaining rights. • Pass the Paycheck Fairness Act to ensure women are paid equally for equal work. • Pass universal paid sick days and 12 weeks of paid family and medical leave. • Support strong and independent trade unions in the U.S. and in its trading partners. • Extend UI benefits for the duration of training, up-skilling, and re-skilling programs. • Create 10 million new jobs over 10 months.
Sources: Trump Campaign site and Biden-Harris Campaign site.


1) Various studies on multipliers include: Bivens, Josh, EPI Briefing Paper #374, "The Short- And Long-Term Impact of Infrastructure Investments on Employment and Economic Activity in the U.S. Economy," July 2014; CBO, "Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from April 2011 Through June 2011," 2011; Council of Economic Advisers (CEA), "The Economic Impact of the American Recovery and Reinvestment Act, 2009 Seventh Quarterly Report. Washington, D.C.: Executive Office of the President;" CBO, "Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from October 2011 Through December 2011," February 2012.

This report does not constitute a rating action.

U.S. Chief Economist:Beth Ann Bovino, New York (1) 212-438-1652;
Secondary Contacts:Joe M Maguire, New York (1) 212-438-7507;
Shripad J Joshi, CPA, CA, New York (1) 212-438-4069;
Gregg Lemos-Stein, CFA, New York (1) 212-438-1809;

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