Sixteen Nobel Prize-winning economists have issued a stark warning about the potential economic consequences if former President Donald Trump were to win the upcoming presidential election. They argue that Trump’s proposed policies could reignite inflation and cause lasting harm to both the U.S. and global economies.
The economists, who include notable figures such as Joseph Stiglitz, George A. Akerlof, and Sir Angus Deaton, have lent their academic prestige to a political argument that the Biden administration has been making for weeks: that inflation would be worse under Trump. In a letter first obtained by Axios, they state, “While each of us has different views on the particulars of various economic policies, we all agree that Joe Biden’s economic agenda is vastly superior to Donald Trump’s.”
Since the summer of 2022, when prices spiked, Democrats have been on the defensive regarding the economy. Despite various explanations and efforts, including the term “Bidenomics” and significant media campaigns, voters remain skeptical about the economy, which the White House insists is strong. Now, Biden’s team aims to go on the offensive by highlighting Trump’s actual proposals, such as imposing fresh 10% duties on all imports and minimum 60% tariffs on Chinese goods.
The economists’ claim is part of a broader attempt by Biden’s campaign to frame the 2024 election as a choice between the two candidates’ plans for the future, rather than a referendum on Biden’s record. “We believe that a second Trump term would have a negative impact on the U.S.’s economic standing in the world, and a destabilizing effect on the U.S.’s domestic economy,” the economists write. They add, “Many Americans are concerned about inflation, which has come down remarkably fast. There is rightly a worry that Donald Trump will reignite this inflation, with his fiscally irresponsible budgets.”
The message was spearheaded by Joseph Stiglitz, who won the Nobel Prize for economics in 2001. He was joined by other laureates, including George A. Akerlof (2001), Sir Angus Deaton (2015), Claudia Goldin (2023), Sir Oliver Hart (2016), Eric S. Maskin (2007), Daniel L. McFadden (2000), Paul R. Milgrom (2020), Roger B. Myerson (2007), Edmund S. Phelps (2006), Paul M. Romer (2018), Alvin E. Roth (2012), William F. Sharpe (1990), Robert J. Shiller (2013), Christopher A. Sims (2011), and Robert B. Wilson (2020).
The economy is expected to be a focal point in the upcoming presidential debate, with both candidates sharpening their approaches to economic issues. Trump has promised to lower the corporate tax rate from 21% to 20% and eliminate taxes on tipped wages for workers in the leisure and hospitality industries. In contrast, Biden plans to raise taxes on corporations and has promised that households earning less than $400,000 a year would not see a tax increase.
Behind both approaches looms a growing federal debt, with tax cuts and spending during Trump’s first term adding nearly twice as much to the debt as Biden’s, according to a new nonpartisan analysis. Biden has presided over a period of solid growth, a strong labor market, and stubbornly high inflation. However, voters don’t give him much credit for the first two but blame him for the third, with many wrongly believing the U.S. is in a recession.
A recent Fox News survey found that 68% of Americans think the economy is “not so good” or “poor,” while only 32% say it’s “excellent” or “good.” This poll showed some improvement over earlier, grimmer surveys. The Biden administration is trying to meet voters halfway, asking them to accept that inflation has come down while acknowledging there’s more work to do. Officials are also using available measures to convince voters they are focused on lowering prices, such as Treasury Secretary Janet Yellen’s recent $100 million plan to support affordable housing financing.
The White House is also warning that a Trump presidency would take inflation to new heights and that attacks on democratic institutions could undermine global economic stability. Joseph Stiglitz, who led the effort to publish the letter, said he felt compelled to act based on recent polling showing voters trust Trump over Biden to manage the U.S. economy. “A lot of people think Trump would be better for the economy than Biden,” Stiglitz told CNBC. “I thought it would be important for Americans to know that at least a group of credible economists differs very strongly.”
The timing of the letter is notable, coming just days before Trump and Biden are scheduled to face off in the first presidential debate of the general election. The debate, hosted by CNN, is expected to dedicate significant time to the economy and specifically, inflation.
The Trump campaign has staunchly rejected the Nobel economists’ position. “The American people don’t need worthless out-of-touch Nobel peace prize winners to tell them which president put more money in their pockets,” Trump campaign spokesperson Karoline Leavitt said in a statement to CNBC.
Under Trump, the December year-over-year Consumer Price Index fell during three of his four years in office. The Biden campaign seized the opportunity to tout the letter, stating, “Top economists, Nobel Prize winners, and business leaders all know America can’t afford Trump’s dangerous economic agenda.”
The Nobel laureates’ letter contained both a political and economic perspective. Many of these economists signed a similar letter in September 2021 expressing support for President Joe Biden’s Build Back Better package. Critics at the time argued that the massive spending packages would drive up inflation. Stiglitz observed that some people “invoked fears of inflation as a reason to not undertake” the Build Back Better investments, calling this view “short-sighted.”
This time, Stiglitz and his co-signers took a more cautious approach to inflation, after the U.S. economy spent the last year recovering from 2023’s inflation spike. The higher prices were partly due to pandemic-era supply chain snarls, which left the global trade system unable to meet the pent-up demand of American consumers. This demand was itself the result of a U.S. economy that weathered the pandemic better than many had anticipated, thanks to generous government subsidies like the expanded Child Tax Credit and the Paycheck Protection Program.
Since then, Stiglitz said, Biden has helmed a successful effort to cool those inflation peaks. “Inflation has been brought down, actually, remarkably quickly,” he said. “I would say it’s because of Biden.”
Source: Axios, CNBC, Al Jazeera, UPI
