With the 2020 Presidential Election looming ever closer, voters must decide between republican President Donald Trump and democratic presidential nominee Joe Biden. These two candidate appear to be polar opposites, but at least one theme ties them together (and highlights their differences): redistribution.
Redistribution is the planned movement of resources between groups in an economy. Both Trump and Biden champion policies of redistribution, albeit with different targets. In fact, redistribution is not just prominent in this election but in every election. In American politics, it is never a question of if politicians will redistribute, but a question of to whom and from whom.
Biden and other progressives have proposed raising taxes on the wealthy to distribute resources to the poor, a familiar approach to redistribution. In contrast, Trump and his fellow conservatives often suggest redistribution in disguise. For example, Trump sought to protect farmers and manufacturers with price support policies that redistributed costs from producers to consumers. Although the candidates differ in their approaches, both embrace the power of redistribution to select winners and losers. This creates a significant problem for our economy, because redistribution is unsustainable and will lead to an inevitable collapse.
Our national financial situation has become increasingly dire as the outer limit of what taxpayers can pay moves closer every day. The U.S. federal government spends about 37.8 percent of the GDP generated in the U.S. each year, far outstripping the total taxes it takes in. As a result, national debt will roughly equal 98 percent of the American economy by the end of this year. However, this issue isn’t as simple as questions of dollars and cents, it’s also about helping those in need and the ongoing push to use redistribution to do so.
The CARES Act is a recent and relevant example of a redistributive policy driven by a desire to help. Senate Majority Leader Mitch McConnell (R-KY) described the bill by saying,
“This isn't even a stimulus package. It is emergency relief. Emergency relief. That's what this is."
A similar message was echoed by President Trump at the bill’s signing:
“This will deliver urgently needed relief to our nation’s families, workers, and businesses. And that’s what this is all about.”
Ultimately, the $2 trillion spent package was divided up by appropriating $560 billion to individuals, $337 billion to small business, and over $500 billion dollars to large corporations. Many have disagreed over the to whom portion of this policy, and politicians continue to disagree about how to redistribute funds in the next relief package. However, the from whom is clear: current and future taxpayers are responsible for the costs.
It is clear that the question currently facing voters isn’t, “Who will redistribute?” but rather, “How will they redistribute?” Redistribution like that done in the CARES Act demonstrates the importance of examining the effectiveness of these policies. We should encourage robust discussion about whether redistribution actually makes more people better off or even helps those most in need.
Meet the Author
Austin Cherkas is a Mancur Olson Research Fellow at the NDSU Center for the Study of Public Choice and Private Enterprise. He is an undergraduate studying sociology, applied statistics, and economics at North Dakota State University.