the times | Saturday November 14 2020 1GM 57

Business

When it comes to economics, Biden

and Trump are not so different after all

Democrats will,” Randall Kroszner,

economics professor at the University

of Chicago Booth School of Business,

said. In the spring, Congress approved

a $3 trillion rescue. The $1 trillion

package, 5 per cent of GDP, is now

widely expected.

Covid may be the immediate threat,

but there is a longer-term challenge

on jobs. Mr Trump brought

unemployment to a 50-year low of

3.5 per cent before the outbreak, but

labour force participation remains

historically weak. Mr Biden wants to

“build back better”, by which he

means green jobs in industries of the

future, such as renewables. Mr Trump

wanted to “make America great

again” (again) by protecting jobs in

industries of the past.

Both require massive stimulus.

Moody’s, the ratings agency, says that

Mr Biden plans to borrow around

$2.5 trillion a year, increasing the

national debt to 119 per cent of GDP

by the end of his first term. Mr Trump

spent his way to growth in his four-

year term and planned to borrow a

further $2 trillion annually, raising the

debt to 114 per cent of GDP in 2024.

Helping to finance all that

borrowing are low interest rates. Mr

Trump repeatedly harangued Jerome

Powell, the Federal Reserve chairman,

for not cutting rates. Since Covid, they

have been cut to zero and the Fed has

pledged not to raise them until

employment is well above neutral

levels, which markets assume means

no change for three years. In effect,

because of the pandemic, Mr Biden

inherits what Mr Trump ordered.

Again, the difference between the

two plans is one of order, not

magnitude. Mr Trump wants to

protect existing jobs by taxing rival

imports, largely from China, which is

certainly easier to deliver than

creating new industries. Mr Biden

may be able to generate green jobs by

retrofitting houses and installing

electric car charge points on a mass

scale. His “Buy American” pledge

guarantees an extra $400 billion state

spending on US-made goods and

$300 billion for research and

development in US technology

companies, which may crowd in

employment. But he will need a

transition to prevent job losses if

America is to begin its journey to net

zero by 2050, as he plans. Regulations

to phase out fossil fuels will cost jobs,

particularly in fracking.

On that front, Mr Trump may have

given Mr Biden a helping hand. In the

Beyond their age, it

is hard to find any

obvious similarities

between Donald

Trump and Joe

Biden. The president-elect is a lifelong

member of the Washington

establishment. The outgoing president

is a political amateur who wanted to

drain that swamp. Mr Biden is a

progressive liberal, President Trump a

reality TV populist. One is genial, the

other combative. But when it comes

to economics, you find a surprising

amount of common ground.

Politics is presentational and Mr

Trump’s style was spikily aggressive.

Mr Biden can soften those edges,

strike a different tone and pursue

much the same economic goals while

appearing to reset the US agenda.

Precious little was heard about policy

in the election campaign, largely

because it was fought on personality

but also because the candidates’

agendas overlapped.

Both men planned fiscal blowouts.

Both prioritised jobs and growth. Both

want to isolate China. Both want

super-low interest rates. Neither are

pure free traders. Where Mr Trump

had “America First”, Mr Biden has

“Buy American”. The difference

between them in many areas of

economic policy is little more than

degree and approach.

Where that is most apparent is Mr

Biden’s jobs agenda. Unemployment

in the United States has fallen from a

peak of 15 per cent at the height of the

pandemic but remains at almost 7 per

cent. That’s 11 million people out of

work and many more under-

employed. Both men pledged to

address the crisis, but would come at

it from different angles.

Right now, the threat to jobs is from

the coronavirus. Mr Trump’s approach

is laissez-faire, to let voluntary social

restrictions slow the spread while

keeping the economy open. Mr Biden

has toyed with the idea of a lockdown

to buy time to improve testing and

allow greater economic activity after

reopening. Where both agree is on

the need for stimulus to pump-prime

the economy and protect workers. Mr

Trump held the country hostage

before the election by pulling a

$1 trillion support package, not

because he or Republicans opposed

the deal but because Democrats

wanted $2 trillion.

“There is a myth that Republicans

won’t be willing to spend and

Philip Aldrick

Lloyds £1bn

fraud report

is delayed by

another year

James Hurley Enterprise Editor

A review into whether executives at

Lloyds Banking Group covered up a

£1 billion fraud has been delayed again,

prompting dismay among those who

lost their livelihoods to the scam.

Dame Linda Dobbs, who is leading

an investigation into the bank’s hand-

ling of the HBOS Reading fraud, said

yesterday that her report would not be

finished until next year, more than four

years after it was commissioned.

The former High Court judge was

appointed in April 2017 and the report

initially was expected in 2018. In March

this year, Dame Linda, 69, said that the

complexity of the exercise meant that it

was taking “much longer” than expec-

ted, but added that it was due to be

finalised by the end of this year.

Yesterday she admitted that the

timeline had slipped again, saying that

interviewing of witnesses would not be

completed until the first half of 2021 at

the earliest and that she aimed “to

submit my report as expeditiously as

possible thereafter”.

Dame Linda is leading a team of

about 50 barristers reviewing Lloyds’

handling of the scam, which took place

before the bank rescued HBOS in

2009. The fraud involved bankers and
      business consultants who exploited
      reckless credit policies to steal from
      HBOS, wrecking scores of small and
      medium-sized businesses. Six people
      were jailed in January 2017.
      Lloyds has been accused of covering
      up the affair. The review focuses on an
      eight-year period between 2009 and
      January 2017 when the criminal trial
      concluded, but Dame Linda is consider-
      ing issues dating back as far as 2002.
      In a statement yesterday, she said the
      review was still receiving documents,
      some of which were “highly significant”.
      The delay means that the cost of the
      affair will continue to mount for Lloyds,
      which is paying for the review. It is also
      in the process of a “re-review” of a re-
      dress scheme for victims after its first at-
      tempt was found to have been botched.
      Nikki and Paul Turner, small busi-
      ness owners who helped to expose the
      scam, said that many victims remained
      in limbo. “Some are now critically ill,
      many are mentally exhausted and
      many are financially distressed,” they
      said.
      A Lloyds spokeswoman said that the
      bank had paid more than £100 million
      in compensation to 71 businesses and
      their directors and that an ex-gratia
      payment of £35,000 had been made to
      customers pending the re-review.

short term, his trade war with China

will preserve Rust Belt jobs in areas

like Michigan and Pennsylvania,

states that turned blue in the election.

There is no hurry among Democrats

to lift Mr Trump’s tariffs and, by

stating his support this week for

Japan’s claim to the disputed Senkaku

islands, Mr Biden was clearly telling

Beijing not to expect any easing of

tensions.

Oxford Economics expects Mr

Biden to scrap the 7.5 per cent tariffs

on $110 billion of Chinese consumer

goods “as a sign of goodwill and to

reduce the burden on businesses and

consumers paying the price of those

duties”, but to “maintain most tariffs

on China”. His China reset is likely to

be a Trump-Obama hybrid, keeping

tariffs in place while reviving the

Obama administration’s

internationalist efforts to encircle and

isolate Beijing.

Like Mr Trump, Mr Biden is no fan

of China. As vice-president, he

championed the Trans-Pacific

Partnership, which was designed to

drag the region into Washington’s

regulatory ambit and to contain

Chinese expansionism. In 2013, during

TPP talks, he accused Beijing of

“wholesale theft of proprietary

technology”. To apply more pressure

on China, he is expected to repair

relations with European allies,

starting by scrapping tariffs on

European imports. Again, same

objective as Mr Trump. Different

approach.

Mr Biden may be the multilateralist

Mr Trump abhors, but when it comes

to trade there is a hint of “America

First”. No new trade deals will be

negotiated “until we’ve made major

investments at home, in our workers

and our communities”, he has said.

Like Mr Trump, he is concerned

about factory jobs.

Where Bidenomics and

Trumpenomics differ is on regulation

and taxes. Mr Biden plans to increase

corporation tax and to hit wealthy

Americans with higher income taxes.

In rejoining the Paris climate

accords, he will have to regulate

against, and possibly tax, fossil fuels.

But for two such

different characters,

their economics

looks surprisingly

alike.

‘‘

’’

Philip Aldrick is Economics Editor of

The Times