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America’s 25 Year Tax Cutting & Fiscal Train Wreck

Posted in Uncategorized, tagged , , , , , , on July 11, 2025| 1 Comment »

by Jack Rasmus

Last week the US Congress passed the Trump Tax Cuts. The mainstream media and economists have been mostly reporting the details of the cuts — i.e. which taxes got cut in the 2025 Act, how much accrued to businesses and wealthy as opposed to the rest of us, what’s the impact on GDP and maybe even government deficits and debt. 

All interesting facts. But not the most important. They purposely ignore the cuts in historical perspective and the bigger picture they represent.

That bigger picture is the looming fiscal crisis driven by the growing convergence of runaway tax cutting since 2001, chronic escalating defense and war spending, more frequent deeper crashes of the economy with slower economic growth between, and now since 2022 accelerating trillion dollar annual interest costs on the US national debt.

The US national debt is on track to reach $38 trillion by year end 2025. Interest payments to bondholders are already exceeding $1 trillion a year. The Congressional Budget Office, research arm of the US Congress, estimates the national debt will reach $56 trillion by 2034 with interest payments of $1.7 trillion — and all that before Trump just passed $5 trillion tax cuts.

Moreover, the US elite today show no sign of addressing the coming fiscal crash. It continues to:

  • cut taxes by trillions on corporations, investors and wealthiest 1% households
  • raise spending on the Pentagon, wars and other ‘defense’
  • allow health insurance and big Pharma to gouge the US Treasury
  • pay holders of US securities—foreign and US—trillions of dollars more every year

Multiple studies show that historically 60% of the US budget deficits and thus national debt are due to insufficient tax revenues — from chronic tax cutting, slow economic growth, legal avoidance and fraud. Here’s some interesting facts about cumulative tax cuts by both political parties together since 2001.

Cumulative Tax Cutting 2001-2025

George W. Bush’s tax cuts in 2001-03 amounted to $3.8 trillion over the decade 2001-10. Estimates are roughly 80% accrued to corporations, businesses, and wealthy individuals by focusing overwhelmingly on individual income tax rates, corporate capital gains and dividends, and the estate tax affecting the wealthiest 1% or less households. Bush then cut taxes in the spring of 2008 by another $180 billion as the economy began to slide into recession and the great crash of 2008-09.

When Obama took over in 2009 his American Rescue Plan stimulus for the economy passed that March provided for another $325 billion in tax cuts. His entire stimulus plan was $787 billion, another $280 billion of the remaining $487 billion went to the states which then hoarded most of it. 

So less than $200 billion went to stimulate consumption which immediately proved too little to reboot the US economy. He had to add another $25 billion for ‘cash for auto clunkers’ and another $25B for ‘first time home buyers’ later that year. Most of the latter, moreover, didn’t go to home buyers but to mortgage lenders as incentive to approve more mortgages.

When Bush’s tax cuts came up for renewal in 2010, Obama extended them for another two years through 2012. That amounted to another $803 billion in tax cuts, again mostly to wealthy and corporations.

In August 2011, in an agreement with the Republican Congress, Obama cut social program spending by $1.5 trillion in a new ‘austerity’ plan. $1 trillion was cut in just education and other social programs; $.5 trillion was supposed to be cut for defense spending but was kicked down the road and never applied. 

Austerity social program cuts always follow crisis bailouts. They did in 2011 after the 2009-10 bailouts. They’re occurring again today in 2025 after the 2020-21 Covid bailouts — more on which shortly.

The 2012 Obama tax cuts made the Bush tax cuts permanent. They cost another $5 trillion. They were supposed to avoid what the media, lobbyists, and propagandists called the pending ‘fiscal cliff’. They were supposed to boost the economy. 

They didn’t. US economic growth in GDP terms for the rest of the Obama term averaged only 60% of what was historically average during recovery periods from the earlier 10 US recessions since 1948.

Obama thus cut taxes on wealthy and corporations more than Bush did. To restate: Bush cut by $4 trillion ($3.8 trillion + $180 billion). Obama cut by $325 billion (’09) + $803 billion (’10-11) then by $5 trillion (2012). That’s $4 trillion (Bush) and $6.1 trillion (Obama). Then came Trump’s $4.5 trillion in 2018.

Trump promised during the 2016 election to cut taxes by $5 trillion. And he roughly did. The 2018 tax cut over the next decade cost $4.5 trillion.

His administration, with the media and professional economist class in tow, estimated the $4.5 trillion at only $1.9 trillion. Trump’s Treasury Secretary at the time, Steve Mnuchin, even publicly declared the Trump tax cuts would ‘pay for themselves’. 

By that he meant the tax cuts would boost US GDP and the economy so much that economic growth would result in a rise in so much more tax revenues over the decade that would offset the $1.9T. To quote Mnuchin at the time: “we believe the tax cuts will pay for themselves over a 10 year period of time.”

Proof that the Trump 2018 tax cuts were $4.5T — not $1.9T — was reflected in the Trump administration’s budget forecast and a US federal deficit reduction of $4.6 trillion over the decade 2018-28. An even more convincing later piece of evidence was the US Congressional Budget Office, the research arm of Congress, that estimated in 2025 that the cost of the 2018 tax cuts were at least $4 trillion total!

For several years in debates with professional mainstream economists like Robert Reich and Paul Krugman this writer kept showing the Trump tax cuts weren’t $1.9 trillion but actually $4.5 trillion. Here’s how.

First, the $1.9 trillion official estimate was based on the assumption that the US economy would grow over the next ten years, 2018-28, by 3%-3.5% annually. A forecast that proved grossly inaccurate in fact.

After a modest growth in 2018-19, the US economy crashed in 2020 as the government ordered a partial economic shutdown in response to Covid. The economy haltingly reopened and recovered in stages in 2021. Thereafter it grew only moderately from 2022-24.

That modest three year GDP recovery followed the massive $10.7 trillion fiscal and monetary stimulus by Congress and the Federal Reserve during the years 2020-22: $6.7 trillion in fiscal stimulus and another $4 trillion in monetary stimulus by the Federal Reserve Bank. In other words, a mountain of stimulus brought forth a molehill of GDP.

Second, the 2018 tax cut estimate grossly under-estimated and failed to account for the magnitude of tax cuts that accrued to US multinational corporations offshore.

The largest 108 US Fortune 500 corporations with offshore subsidiaries had accumulated $2.7 trillion in their corporate offshore accounts they weren’t returning to the US in order to avoid paying the then 35% corporate tax rate. Estimates of un-repatriated hoarded profits from the offshore operations of US multinationals were as high as $4 to $5 trillion. 

Trump’s 2018 tax cuts allowed them to bring back those profits and pay only 10%. That’s a 25% tax saving on at least $4 trillion. 

The US Commerce Dept. estimated in 2020 US multinationals brought back only $750 billion in 2018 and another $250 billion in 2019. They thus paid 10% or $100 billion instead of 35% or $350 billion. They pocketed the other $900 billion of the $1 trillion repatriated. No government records were kept after 2019 unfortunately.

What did they do with the $900 billion they did repatriate? As the Wall St. Journal reported on January 28, 2020: “Much of what firms retrieved went to buybacks”. After averaging about $125 billion per quarter in 2017, S&P 500 stock buybacks surged to $200 billion per quarter in 2018 and 2019.

And what happened to the other roughly $3-$4 trillion plus US corporations never repatriated? They hoarded the remaining $3 to $4 trillion profits in their offshore subsidiaries to avoid taxes. Another loophole allowed them to convert their cash profits from overseas operations into short term financial securities held offshore, on which they didn’t have to pay any profits.

And there was another way they avoided taxes: they manipulated their internal pricing — i.e. what US located operations charged or paid their foreign subsidiaries. They paid their foreign subsidiaries higher prices for components or final products, thereby shifting profits offshore where they were booked at lower tax rates, which also raised costs in the US and thus lower profits taxed at the higher rate.

The 2018 Trump tax act also raised the amount US multinational corps paid to foreign countries that they could then deduct from their US taxes owed.

The point is these offshore rules and loopholes that grossly reduced the total tax cuts by at least $2 trillion over ten years, 2018-28, that were grossly under-estimated or were not accounted for in the 2018 Trump official $1.9 trillion tax cut cost estimates.

In summary, phony assumptions about a decade of future GDP growth, reduced taxation on repatriated profits, and loopholes reducing taxes due on their offshore subsidiary operations all meant US multinational corporations’ tax cuts were far greater than reported. These assumptions and loopholes meant the 2018 cuts were $4.5 trillion not the ‘official’ $1.9 trillion.

Thus total tax cuts for 2001-19 were $14.6 trillion.

Thereafter followed the 2020 Covid fiscal stimulus package during Trump’s last year in office, 2020. Taxes were cut another $950 billion as part of the ‘CARES Act’ fiscal stimulus passed by Congress March 2020 and another $260 billion in tax cutting in the emergency ‘Consolidated Appropriations Act’ passed that December as the US economy faltered again.

That $1.2 trillion in 2020 tax cuts was followed in 2021 by Biden’s subsequent ‘AMERICAN RELIEF PLAN’ fiscal stimulus which cut taxes by a further $640 billion.

In 2022 Biden thereafter shifted some of the unspent relief for social programs in his American Relief Plan and redirected the funds to a new round of three business investment stimulus programs costing $1.7 trillion: 

  1. the Infrastructure Act
  2. the Chips & Modernization Act
  3. the misnamed Inflation Reduction Act which was mostly tax cuts and subsidies to energy companies, alternative and fossil fuel

Those three 2022 business investment Acts together cut taxes by another roughly $500 billion.

Adding all the tax cuts from 2001 thru 2024, both parties — two Republican and two Democrat administrations — together cut taxes by almost $17 trillion!

No one should therefore be surprised that Trump 2025 is cutting taxes again by another $5 trillion — and once more mostly for business, investors and wealthiest households. A massive tax cutting has been going on for a quarter century since 2001. (One can argue the trend extends even further back, to Reagan’s 1981 and 1986 tax cuts and Clinton’s 1997-98 cuts).

It’s all part of the long term Neoliberal era (1979-present) fiscal policy: 

  • cut taxes on the rich and their corporations
  • offset the cost of the tax cuts in part with social spending program cuts
  • increase spending on defense and wars
  • ignore the effects of all that on budget deficits and national debt that result in rising interest payments to US bondholders to $1 trillion dollars per year

Long term historical studies show conclusively that tax cuts, and reduced tax revenues from slow economic growth, fraud, legal avoidance, are responsible for 60% of budget deficits.

The other major forces driving US budget deficits and national debt since 2001 are: 

  • the $9 trillion spent on foreign wars in the first quarter of the 21stcentury
  • the two big bailouts of 2008-09 ($787 billion +), 2020 ($3.1 billion) and 2021 ($1.9 billion);
  • the chronic price gouging by health and insurance corporations escalating the costs of government health support programs (Medicare, Medicaid, Schip, ACA)
  • rising interest payments on the national debt to investors (US and foreign) purchasing US Treasury securities

So loss of tax revenue from 25 years of tax cuts and slower long term economic growth ($17 trillion), the $9 trillion thrown away in forever wars since 2001, the bailout costs ($5.8 trillion), and healthcare price gouging ($0.5 trillion?) together explain most of the current $36.2 trillion US national debt.

In short, a fiscal train wreck has been running down the tracks for at least the past 25 years and Trump’s $5 trillion ‘Big Beautiful Bill’ (BBB) — along with trillions more for defense and wars — are shifting that train into another higher gear.

Trump, Budget Deficits and National Debt

US budget deficits have been averaging $2 trillion annually and rising since 2016. They are projected to rise another $2 trillion in 2025 even before Trump’s tax cuts take effect this year.

The national debt is just the accumulation of annual budget deficits. In 2000 the US national debt was $5.6 trillion. After eight more years it nearly doubled to $10.7 trillion. It then did double under Obama to $20 trillion by end of 2016. Trump added $7.8 trillion in the four years of his first term and Biden added another $8.5 trillion in just four years more. By the end of his Biden’s term in December 2024 the national debt had risen to $36.2 trillion.

By the way, as that rises to $38 trillion by year end 2025 and $56 trillion by 2034, it does not include the Federal Reserve Bank’s balance sheet debt (now $8 trillion) or state and local governments’ debt load of several trillions$ more.

Future Consequences

It’s ironic Trump has chosen to call his tax cuts and defense spending hikes proposal the Big Beautiful Bill — or BBB as Congress refers to it. For in the world of business finance, BBB refers to the worst run corporations that are overloaded with high risk debt (triple B grade). Triple B rating makes them the most financially fragile and at greatest risk of default and bankruptcy.

While it’s not likely the USA federal government can ever go bankrupt or even default on its annual payments of $1 to $1.7 trillion to bondholders of the national debt. All it needs do is ‘print’ more money, either by adding accounts to the Federal Reserve electronically — or perhaps in the near future by creating digital currency. 

But while that may not mean bankruptcy, it could very well mean a collapse of the value of the US dollar globally. That in turn could result in the abandonment of the dollar as the global reserve and trading currency. And that in a collapse of the recycling of US dollars back to the USA by foreign holders of excess dollars. In such case, the US annual budget can’t be financed, requiring then massive spending cuts and tax hikes. In other words, the end of the US global empire.

Trump’s tax cuts and spending bill is just another iteration of Neoliberal fiscal policy, this time on steroids. But Neoliberal fiscal policy is broken. That is, it does not produce the same stimulus to the real economy, real investment, and GDP growth that it had in decades past. Increasing magnitudes of fiscal stimulus is required in order to generate the same, or even smaller, real GDP growth.

What fiscal policy does result in increasingly is a stimulus to financial asset markets, in US and globally, and thus a continued rise in stocks, bonds, forex, derivatives and other financial instruments’ price. Or the tax cuts are redirected by multinational corporations that receive them to offshore investment and operations. 

In other words, to subsidize the expansion of US capital expansion offshore. Both the financialization and globalization of investment are characteristic of trends in the 21st century capitalist economy. A similar effect applies to US monetary policy: more and more of the Federal Reserve’s injection of money into the economy gets diverted to financial markets and to offshore.

Perhaps the best evidence of this is the $10.7 trillion in fiscal and monetary stimulus by Congress and the Federal Reserve injected in 2020-22. It should have produced a massive GDP growth expansion in 2022-24. It produced a mere historical average of barely 2%.

All of the media, economists, and government officials’ about the Trump tax cuts and BBB Act stimulating the real economy — i.e. wages, jobs, investment, etc. — is just economic hype. The 2018 tax cuts didn’t. Nor did Obama’s and Bush’s before that. Trump’s current BBB Act won’t do any different.

Fiscal and monetary policy in the late Neoliberal era — in the 21st century American capitalism and global economic empire — are failing. Nevertheless, America’s elite are doubling down on their tax cutting for the rich and their wars of defense of Empire.Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020. He publishes at Predicting the Global Economic Crisis

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Biden’s Pernicious Presidential Legacies (print)

Posted in Uncategorized, tagged , , , , , , , , on January 24, 2025| 1 Comment »

Trump’s proposals to radically transform much of US economic and social policy are being rapidly rolled out during the first week of his administration. How much he succeeds or fails in that transformation will depend on a number of factors. High on the list of such factors is the residue of conditions and policies leftover by the Biden administration—i.e. the legacies of the Biden years. Those legacies will play an important role influencing, and perhaps even determining, how Trump may fare in implementing his plans.  So what are the legacy policies and conditions?

The most obvious economic legacy Biden leaves behind is the overhang of the worst inflation since 1980-81. Both a chronic high rate of inflation as well as a general price level that has risen at least 30%-40% over the four years of Biden’s term, when accurately estimated. Inflation has not been tamed and is now rising further—on a base level and rate already too high.

A second economic legacy—a consequence of the above—is that most US households’ real weekly earnings actually declined the past four years. Like the legacy of chronic inflation, that too promises to worsen in the very near future.

Biden’s third economic legacy is that despite a massive fiscal stimulus of $3.6 trillion during his first two years in office, in the second two years the US GDP economic growth rate has been a tepid average annual rise of 2%-2.5%. Thus a mountain of fiscal stimulus has produced a molehill of real economy recovery. More business-investor tax cuts by Trump will not change the tepid US economic growth of the Biden years—just as similar cuts in 2018 by Trump failed to do.

There was no molehill recovery, however, for financial asset wealth accumulation by wealthy investors and billionaires under Biden. In contrast to the anemic real economic growth legacy during his term, Biden’s $3.6 trillion fiscal stimulus of 2021-22 produced a record surge in 2023-24 in financial asset wealth accumulation and the creation of a record number of US billionaires. Income and wealth inequality in America accelerated. It will further under Trump, now on a base of an already record level.

A fifth economic legacy results from all the preceding four: during his four year term, no less than $7.65 trillion in cumulative US budget deficits also defines Biden’s economic legacy. As a consequence of the $7.65 trillion in budget deficits, the US national debt under Biden surged from $26.9 trillion in January 2021 to $36.2 trillion at year end 2024. That in turn resulted in annual interest payments to bondholders of $.95 trillion in 2024 alone.

A sixth economic legacy Biden leaves the US economy is a chronic and rising trade deficit of approximately $1 trillion annually.

These are all ‘legacies’, not just failed policies, since their effects will continue to be felt for years to come—by the US economy in general and especially by its middle and working class households.

But these economic legacies are not the entire story. There are more political legacies Biden leaves his successors. Here are another six political legacies worth noting as well:

In the realm of domestic politics there are at least three: first, during the Biden years, American democracy continued to atrophy and do so in a number of new ways; second, a national crisis in health care services affordability deepened; third, Biden leaves a strategically weakened Democrat Party an ineffective elections contender that will fail to recover for perhaps another decade.

It is in the sphere of geo-political action and US foreign policy, however, that Biden’s most enduring political legacies will leave an indelible imprint on the USA for years to come. These include the costly, lost US proxy war in Ukraine that has irreparably damaged US European allies’ economies; his unconditional support for genocide in Israel and GAZA that has undermined US influence throughout the middle east; and his policies of economic sanctions targeting Russia and China that have accelerated the expansion of the BRICS countries and their challenge to a US global economic hegemony that has prevailed for nearly a half century.

Let’s examine each critical legacy in more detail.

1. Chronic Inflation Rate & High Price Level 

As Biden leaves office it is clear that inflation has not been tamed and in fact has recently begun to rise again, leaving a base level and rate rise upon which inflation will almost certainly rise further in 2025 and beyond.

The inflation beast that arose in 2020-21 was tamed only in part and temporarily on his watch and has begun spreading its claws once more.

Inflation surged in 2021-22 to a 9% high as estimated by the US government’s official consumer price index (see BLS monthly CPI Reports, September 2021 thru December 2024). That rate of increase abated in 2023-24 as global energy costs and commodity prices slowed their rate of increase. However, in closing months of 2024 energy and goods prices in general have begun drifting upward once again. The inflation beast that arose in 2020-21 was tamed only in part and temporarily on his watch and has begun spreading its claws once more.

The official US estimate of the rise in the price level for consumers since 2020 is around 24% But that number obfuscates the far more severe impact on median and other working class households’ take home pay and disposable income. Prices for many basic food staples like bread, milk, eggs, chicken, etc. have risen 30%-40% since 2020. In 2024 a Wall St. Journal survey estimated the most often purchased grocery prices had risen 35% since 2020.

The true cost of shelter (home prices, rents) has risen even more. The prices for homes nation-wide are up 39% according to the Shiller home price index. But households’ mortgage costs—i.e. what households actually pay out of their monthly budgets— are up 113%! US official price indexes like the CPI do not include mortgage interest rates. Nor any interest rate hikes paid by households for that matter.  Mortgage inflation due to rising interest costs have thus risen far faster and higher at 113% than the 39% for the price of buying a house.

The inflation for shelter (houses and rents & related costs) is even higher if home insurance costs, home repairs, and other fees that define ‘shelter’ in government statistics are included. Rents for roughly 50 million renting households typically follow home prices up and in 2023-24 rents have often made up half of the monthly rise in services price inflation in the CPI. Other services prices have also risen 30% and more—i.e. for auto, home and medical insurance; for auto repairs; and for other key and often purchased services like travel or entertainment.

Interest rates in the Biden years accelerated after March 2022 and have remained chronically high ever since, severely impacting households’ budgets: for example, interest rates on credit cards rose from 16% to 24%, bank auto loans roughly doubled to 9% on average for car purchases, while student loans surged to 6.8% and more.

When interest inflation is properly accounted for—along with increases in local government property and other taxes, fees, and other charges not considered by the government’s Consumer Price Index—the true inflation experienced by US households since January 2021 is easily 35%-40% and therefore much higher than the official CPI number of 24%.

This 35%-40% is the price level legacy left by the Biden administration—the level from which the rate of inflation for goods and services and interest rates across the board promise to rise further in 2025 under Trump as he implements tariffs and implements other policy changes that will raise prices further.

The consequence of this inflation legacy is another Biden legacy: still further declining real take home pay for tens of millions of middle class and below households.

2. US Households’ Declining Real Earnings

While the mainstream media and politicians like to cherry pick wage data to try to show wages have risen under Biden they typically cite ‘wages’ that include salaries, bonuses, and other pay to CEOs, managers and the self employed; report for only full time employed workers; ignore seasonality adjustments; or cite wages unadjusted for inflation.

According to the Federal Reserve bank’s ‘FRED’ database, Median Usual Weekly Earnings adjusted for inflation actually declined during the Biden years. After rising slightly under Obama and then from $351 per week to $378 per week during Trump’s first term, during the Biden years real median weekly earnings actually declined from $378 to $373 per week.

This combination of rising prices, chronically high interest rates, and declining real earnings during Biden’s term is further reflected in the balance sheets of US households the last four years: Household balance sheets (difference between assets and debt) serve as a kind of aggregate indicator on how well those working for wages and salaries have been doing. And per the Federal Reserve’s Financial Accounts of the US, at the close of 2020 US households’ assets totaled $859 billion, and rose to only $883 billion by the second quarter of 2024. In contrast, US households’ total liabilities (i.e. debt from excess use of credit) rose from $17.1 trillion to $20.7 trillion. The latter number reflects the surging load of debt households took on during the Biden years.

3. Weak GDP Growth Despite $3.6 Trillion Stimulus

Gross Domestic Product (GDP)—the measure of how much the real economy grew—was not all that impressive, given the huge fiscal stimulus Biden introduced into the economy during his four year term. For example, his March 2021 ‘American Relief Plan’ designed to provide support to the general economy as it tried to reopen in 2021-22 from the 2020 shutdown amounted to $1.9 trillion in government spending and tax cuts.

However, that $1.9 trillion 2021 stimulus failed to quickly boost the US economy and GDP once the economy had fully reopened in 2022. The reopening in summer and late 2021 was followed by what’s called a technical recession in the first six months of 2022 when the US economy actually contracted for two consecutive quarters—or what some might legitimately call a double dip recession, despite the virtual blackout of the term at the time by the mainstream media and politicians.

As the recession unfolded in the first half of 2022, Biden’s response was to shift what remained of spending on households left over from the $1.9 trillion American Relief Plan of March 2021 (which by the way was intended to last only six months in 2021) and to transfer those funds to subsidize business investment instead of continuing households’ Covid relief.

To that unspent Covid funding was added additional funds by Congress as it passed Biden’s three business investment subsidy bills of 2022: the Infrastructure Act, the Chip & Modernization Act and the misnamed Inflation Reduction Act that subsidized energy companies, alternative and fossil fuels. Those bills amounted to another $1.7 trillion in fiscal spending and tax cuts.

Biden’s $1.9 trillion American Relief Act plus the subsequent three business investment subsidy Acts amounted to a combined $3.6 trillion fiscal stimulus in 2021-22.

Biden thus leaves the legacy of a failure to correct this apparent crisis of US traditional fiscal-monetary policies’ failure to stimulate real economic growth—or conversely, one might add, to significantly curb inflation long term as well.

The $3.6 trillion mountain of fiscal stimulus produced a molehill of real GDP growth! GDP recovered in the second half of 2022 after its first half recession, but recorded a meager 1.9% growth rate for 2022. That was followed in 2023 and 2024 with still tepid GDP growth of 2.5% and 2.3% (the latter estimated by the CBO), respectively. The $3.6 trillion total stimulus, in other words, did not result in GDP growth in 2022-24 beyond the typical long run average GDP gain for the US economy or around 2-2.5%. Where did the stimulus go if it didn’t move the dial on the growth of the economy beyond its historical average?

The stimulus picture is even more unimpressive when one adds the 2020 additional fiscal stimulus of $3.1 trillion provided by the 2020 Cares Act in March 2020 and the Consolidated Act passed in December of 2020. That’s $6.7 trillion of combined fiscal stimulus… producing only annual GDP growth 2022-24 averaging barely 2.3% a year!

The historic low GDP growth of the economy under Biden was even weaker if one adds to the $3.6 trillion fiscal stimulus the Federal Reserve bank’s additional monetary stimulus of $4 trillion more in 2020-2022.

In short, a more than $10 trillion fiscal-monetary stimulus in 2020-2022 produced nothing more than the historically average GDP growth rate during the last three years of Biden’s administration during which the US economy had fully reopened!

This fact strongly suggests that US fiscal-monetary policies are barely working any more as instruments of economic stabilization. Biden thus leaves the legacy of a failure to correct this apparent crisis of US traditional fiscal-monetary policies’ failure to stimulate real economic growth—or conversely, one might add, to significantly curb inflation long term as well. It’s a legacy Trump inherits in turn.

4. Record Asset Wealth Accumulation & Billionaire Creation

The failure to stimulate the real US economy under Biden contrasts sharply, however, with the success of those same policies in stimulating financial asset markets in the US. After a contraction in 2020 due to the Covid shutdown and a weak recovery in 2021-22, US financial markets surged to record levels in 2023-24. US Dow, S&P 500 and Nasdaq markets recorded gains of 25-29% and more in each of the last two years.  It’s not by accident the US economy created a record number of new billionaires under Biden, whose wealth is largely associated with rising financial asset prices from stocks, bonds, derivatives, and other. Record asset wealth surge is thus also a legacy of Biden’s regime.

The combination of record asset wealth amidst tepid real GDP growth, chronic inflation, and declining real earnings for a majority of Americans suggests the failure of the massive $10.7 trillion fiscal-monetary stimulus of 2020-22 might be due to the mis-allocation of that stimulus to financial markets at the expense of real growth. That’s for another analysis; however, at minimum, it’s a ‘smoking gun’.

5. US Budget Deficits & National Debt

The record $10+ trillion Biden era stimulus was diverted to asset markets nonetheless contributed in part to the record surge in the US budget deficits under Biden, and in turn to the accelerating US National Debt (which represents cumulative annual budget deficits).

Budget deficits are a function of both insufficient tax revenue collection, on the one hand, and accelerating government spending on the other.  Insufficient tax revenues are due in turn to weak economic growth and/or tax cuts (or fraud); while spending excesses are associated mostly with discretionary spending on Defense, Wars, social programs, and rising interest payments on the national debt. For a quarter century at least, the US has been exacerbating all the above.

The US Congress and presidents have together cut taxes by at least $17 trillion since 2001. Slow economic growth in the wake of the 2008-09 crash and the Covid 2020-21 shutdown also negatively impact tax revenues, which historically account for 60% of budget shortfalls. The other 40% is due to excess spending which, in turn, is comprised of defense and supplemental war spending, interest payments on the debt, and social programs including the bailouts of the economy in 2008-10 and 2020-22. Defense & War spending since 2001 for US middle east and terrorist wars has amounted to, at minimum, another $8 trillion. Bailouts account for another roughly $5 trillion.  That’s $30 trillion. Rising interest payments on the national debt, especially since March 2022, account for most of the rest of the current national debt.

Under Biden record annual budget deficits ranged from $2.7 trillion in 2021 to $1.8 trillion in 2024 for a total $7.65 trillion cumulative deficits over the past four years. From a level of $5.5 trillion in 2000, the National Debt in turn is now $36.2 trillion—having risen from$26.9 trillion at the end of 2020 just before Biden took office to the more than $36 trillion by today.

The interest payment in 2024 to bondholders who purchased US Treasuries to fund Biden’s budget deficits is now, per latest estimates, at $.95 trillion. Interest payments to bondholders thus now costs more than funding the Pentagon each year, approximately $885 billion per latest estimates. Moreover, the CBO (Congressional Budget Office) estimates that by 2034 the National Debt will rise, if continues at its current pace, to $56 trillion with annual interest payments of $1.7 trillion to bondholders by 2034. 

With accumulated annual budget deficits over his four year term of $7.65 trillion during his term, Biden has had the highest budget deficits and has contributed more to the national debt than any prior president.

This legacy of deficits and debt means in 2025 the US Congress will almost certainly initiate a major austerity spending policy cutting social and public spending programs, foreign aid, offshore supplemental spending, layoff 100,000 federal workers, and lesser categories of spending cuts by $200 billion or more per year.

While the problem of rising budget deficits and national debt reaches back to at least 2000, the Biden legacy is its policies have severely exacerbated the longer term trend. It provided useful political ammunition for Trump and his corporate backers to slash public spending and social programs as never before.

6. Trade Deficit & Economic-Tech War with China 

One of the economic hallmarks of the Biden administration has been to continue the trade and tech war with China that the prior Trump administration initiated in early 2018. Biden embraced and continued Trump’s tariffs as instrument of economic coercion. He then went several steps further beyond just a tariff strategy. Targeting primarily China, he launched legal actions against China companies, sought to drive them from US capital markets and prohibit their joint ventures in the US economy, pressured allies to raise tariffs and to embargo Chinese imports to their economies as well, and blocked the export of certain tech & business goods to China. Under Biden, Trump’s former tariff war with China morphed into a virtual US economic war against China.

This policy forced China to pursue access to other markets abroad and to accelerate its own internal tech development. Most notably China began penetrating markets and resource access in Africa and South America.

The record of US trade relations with most of the rest of the world was no less ineffective. The US trade deficit accelerated with rising imports into the US and slowing US exports to the rest of the world. According to the Trading Economics research site, the US trade deficit in goods alone is now running at -$1.2 trillion a year in 2024 and the overall deficit in goods and services nearly $1 trillion.

Biden leaves a legacy for the Trump administration that will make Trump’s return to raise tariffs even higher more difficult to succeed. The record trade deficit is likely an important motivator behind Trump’s policy to ‘drill baby drill’ to increase US oil and gas production in order to export to Europe to offset some of the trade deficit due to rising goods imports to the US. In other words, the Biden trade deficit legacy will be used by Trump to justify more oil and gas drilling and the further environmental issues in the US that will result.

7. Decline of Democracy in America

The Biden regime added new dimensions to the decline of American Democracy—a decline that has been occurring since at least the 1990s. These dimensions have now become embedded in the US electoral and political system. Among the changes on Biden’s watch:

The Democrat party’s adoption of a policy of systematic ballot denialism. This has included marginalizing of challengers to the Democrat party’s DNC leadership’s practice of pre-selecting its presidential candidates in lieu of an open, competitive primary system. The practice began in earnest in 2016, became even more evident with the South Carolina primary in 2020, and then deepened in the 2024 party primary cycle, as challengers such as RFkjr, Tulsi Gabbard, Maryann Williamson and others were systematically excluded from an already pre-determined primary outcome. Ballot denialism was also adopted as a policy by the DNC targeting outside third party challengers like the Greens and other 3rd parties.

Another contribution to the decline of intra-party and electoral democracy under Biden was a deepening of the influence of wealthy big donors within the party—reflected in part by those donors’ $2.9B contributions in just a few months in summer 2024; and likely more than $5B in the 2024 election cycle. The deepening of wealthy donors influence within the Democrat party extended to foreign entities as well. The Israeli political action committee, AIPAC, was allowed and encouraged by the DNC to interfere in the party’s primaries, as well as the general elections, by contributing hundreds of millions of dollars to select pro-Israel party candidates.

Further indicators of democracy decline on Biden’s watch was the cynical manipulation of the US legal system (i.e. lawfare) against challengers; a policy of enabling non-citizen immigrants to vote in elections; continuing support for the gerrymandering of seats in the US House of Representatives; and an extreme abuse of the powers of the presidential pardon system as was evident in Biden’s last actions as president—including the pre-emptive pardoning of family members and himself—that has punctured the popular myth that in America no one is above the law. All these changes are now embedded in the party system in general.

The decline of democracy in America has occurred not only within the electoral system and intra-political party practices and norms. The last quarter century has witnessed the decline of the US electoral democracy along multiple legal fronts, enabled by the US Supreme Court. From the Court’s Bush v. Gore decision in 2000 when it in effect selected the president, to its 2010 Citizens United decision which ruled spending money in elections was an act of ‘free speech’ for corporations and rich donors (including foreign), to decisions legitimizing the extreme gerrymandering that has resulted in no more than 40 seats in the US House of Representatives ever being competitive, to approving the spying, surveillance and denial of 1st amendment rights as result of the Patriot and subsequent National Defense Acts.

Among the Biden administration’s political legacies is how it presided over the atrophy of democracy within the Democrat party’s primary system, how it allowed rich donors deeper influence and control of its DNC, and how it introduced questionable anti-democracy practices like ballot denialism and non-citizen voting among its election practices.

8. Increasingly Unaffordable US Health Care

The failure to stem and reverse the increasingly unaffordable healthcare system in the USA is another political legacy of the Biden years. Much is made by the party elite and its associated mainstream media how the Obama Affordable Care Act has succeeded in providing affordable health insurance. But facts reveal it has not.

The average cost of private health insurance for a typical family of four is now more than $25,000 per year, according to Kaiser Family research. And that’s just monthly premiums. It doesn’t count additional copays or deductibles now averaging $1 to $5k per year. Nor do those costs include dental, hearing or vision services. Hearing aids cost $4-$5k and the cost of a single tooth implant is $10,000 or more. Then there’s the ever-accelerating cost of prescription drugs, often hundreds of dollars per pill (costing less than $10 if purchased from the same company in Canada or abroad).  A consequence has been millions of Americans are forced to forego use of health care services even if they are formally covered by bare bones insurance with unaffordable deductibles and copays.

The Biden legacy is to have allowed the crisis in affordability to continue and worsen, citing the Affordable Care Act which is financed in large party by $900 billion a year in government subsidies to Health Insurance companies. Biden introduced a few band-aid solutions, such as limiting the cost of insulin drug costs to $35/month (but just for Medicare enrollees). The vast majority of the population of millions of diabetes patients must still contend with health insurance insulin coverage denial. Another Biden token solution to escalating prescription drug prices was to limit the cost of just six of the most often purchased drugs—which will not to take effect until 2026, however.

Also left virtually unaddressed during the Biden years has been the triple Social-Healthcare crises: the escalating national suicide rate (now >48,000/yr), chronic gun deaths (averaging 45,000/yr since 2021), and accelerating drug-related deaths from opioids. At 70,000 in 2019 US drug related deaths surged to more than 100,000 in every year of the Biden administration.

The Biden legacy to allow the continuation of the Health Care affordability crisis in America. Like Medieval physician practices of centuries ago, the unaffordable health system is ‘bleeding’ American dry. And little to nothing has also been done to reduce the epidemic of deaths from suicides and addiction. The Biden legacy is to have looked away while the patient slowly succumbs leaving the health of the nation much worse off as he leaves office.

9. Crisis Within the Democratic Party

Biden leaves his own Democrat Party in political shambles, from which it is uncertain it may recover; or if it does, not soon. Insisting on running for re-election in 2024, Biden reversed a pledge made in 2020 he would not do so. His declining mental capacities revealed in the first presidential debate in the summer of 2024 for all to see, set in motion a disastrous chain of events where party elites—led by Obama and Pelosi—removed him as presidential candidate after just months earlier maneuvering to nominate him as such. The oligarchic nature of the party was thus revealed to all.  That political oligarchy then selected an alternative weak candidate in VP Harris who publicly vowed to continue the policies of the Biden administration, thus ensuring her defeat in the general election. At the core of those policies was a strategy of Identity Politics which had increasingly defined the party since 2016. Fundamental economic issues for voters were largely ignored in the 2024 election. The Democrat party now drifts, essentially leadership and without a strategy and proposals that appeal to the voters. That drift promises to continue for years to come, during which its Republican opponent may well deepen its coalition and control of government for several election cycles to come. Biden thus leaves a Democrat party deeply and perhaps mortally wounded—thereby leaving Trump and the Republicans to run roughshod over the political system with their own anti-democracy plans in turn.

10. Costly Lost Proxy War in Ukraine 

When Biden quickly ‘cleared the deck’ with a chaotic withdrawal from Afghanistan in August 2021 it was to focus on provoking a proxy war in Ukraine. That decision has proved the most disastrous US foreign policy decision since president Lyndon Johnson’s decision in 1965 to send 500,000 US troops to Vietnam.

Nearly all military analysts now admit the proxy war in Ukraine is lost. All that remains is how the US extricates itself. The political and economic fallout from Biden’s failed military adventure in Ukraine will be felt for years yet to come: Europe has been destabilized economically and politically as result; Russia has been permanently driven into long term military alliances with China, No. Korea and Iran; US weapons inventories have been seriously depleted; Russia has war mobilized its economy and accelerated its advanced weapons development faster than the US; global trade has been restructured to the disadvantage of the USA; US ability to compete with China has been set back for years or perhaps longer; US budget deficits have been raised by at least $250 billion in US aid to Ukraine the past three years. And that’s just a short list. It’s also a Biden failed foreign policy legacy.

11. Sanctions, Rise of the BRICS & Decline of US Hegemony 

History will likely show that Biden has done more to undermine US global economic hegemony and political influence than Russian and China presidents Putin and Xi together.

The Biden sanctions on both countries, especially Russia, have been counterproductive, impacting European allies negatively more than Russia or China. More important, Biden sanctions have likely accelerated the shift of the economies of the Global South toward the BRICS, the members of which have expanded significantly since 2022.

With the BRICS’ expansion has begun an inevitable shift in the global economy: from the central, dominant role of the US dollar as a global transaction and reserve currency to alternative currencies; a move by many economies away from the US bank-managed SWIFT International Payments system; and plans by the BRICS to create an institutional alternative to the IMF.

Biden thus leaves a most difficult legacy to Trump and presidents thereafter to address how to counter and compete with the BRICS and the emergence of an alternative global financial structure. History will therefore show Biden accelerated the decline of the US global empire by weaponizing the US dollar and escalating sanctions policies.

12. Support for Genocide in GAZA

Biden’s regime will likely mark a clear turning point in the history of US global dominance and the end to the US unipolar world that existed since the collapse of the Soviet Union in December 1991.

A close second to Biden foreign policy debacles in the proxy war in Ukraine and mishandling of sanctions and the US dollar is the Biden policies supporting genocide by Israel in GAZA. The US has become inextricably associated in world opinion with allowing the genocide with its unlimited military funding support to Israel—currently amounting to around $50 billion since October 2023—and US unlimited shipments of US bombs and advanced weaponry to Israel. The result has been perhaps 500,000 Palestinians killed, maimed and homeless and the virtual loss of US political influence and soft power throughout most of the Arab and Muslim world.

The legacy of Biden policy in support of genocide will mean the continued diminishment of US political influence in the region, as well as US moral influence throughout the world.

Biden foreign policy legacies will haunt US attempts to re-establish US influence and authority in the world. Biden’s regime will likely mark a clear turning point in the history of US global dominance and the end to the US unipolar world that existed since the collapse of the Soviet Union in December 1991.

Biden’s departure on January 20, 2025 also closes the book in the latest period in the history of Neoliberalism in the USA that has defined US policy and its evolution from the late 1970s to the present. Launched initially in the closing years of the Jimmy Carter presidency around 1978, Neoliberal economic and political policies expanded and deepened throughout the 1980s and 1990s, reaching a kind of apogee of effectiveness around 2005-07. Neoliberal policy then hit a wall with the financial crash and great recession of 2008-09. Thereafter such policies recovered only partially under Obama and Trump 2017-20 before hitting another wall with the Covid shutdown and recession of 2020-21.

Throughout Neoliberalism’s ‘weak restoration period’ of 2010-20, the internal contradictions within the Neoliberal policy mix have intensified. Those internal contradictions have deepened with the failed policies of the Biden regime.

Thus the beginning of the end of the Neoliberal restructuring of America that began in the late 1970s-early 1980s—and that has continued ever since—may well be recognized in years to come as the most notable historic legacy of the Biden years.

About the Author

Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020. He publishes at Predicting the Global Economic Crisis. 

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