Trump vs Biden: The U.S. Treasury Through Two Presidents

The 2024 US presidential election is set for November 5th. Who fared better for the US Treasury—Donald Trump or Joe Biden? Find out as we analyze the Treasury performance across both presidents from 2017 to 2023.

Cash is king, whether it's a Fortune 500 company or a country!

This is especially true for a nation like the United States, with its significant economic influence and political spotlight due to the upcoming presidential elections. Cash or treasury management takes on both financial and political dimensions, with the potential to shape the nation’s future and impact the lives of its citizens for the next four years.

Currently, a rematch is happening between Joe Biden and Donald Trump, two figures whose political stances and fiscal policies sharply divide America. Trump advocates for deregulation and tax cuts, while Biden aims to increase taxes on high earners.

So the question arises—who showed more fiscal prudence during their tenure, Biden or Trump?

To answer this, we’ll analyze the publicly available US Treasury Data from 2017 to 2023. Our evaluation will be based on three key points, taking into account the geopolitical and economic scenarios at the time:

1. Who generated more cash (tax revenue)?
2. Who spent more cash?
3. Who was more successful in maintaining the fiscal deficit?

Let’s start by analyzing former President Donald Trump before transitioning into the tenure of the current President, Joe Biden. Ready to dive in?

Treasury Trends under Trump: Increased Spending, Rising Debt and Fiscal Deficit

Donald Trump, the 45th president of the United States (2017-2021), is expected to be the Republican Party’s nominee for the 2024 US presidential election. His economic agenda, known as Trumponomics, emphasizes deregulation, tax cuts, protectionism, and an aggressive trade stance.

During his presidency, the US economy also faced a severe hit from the Covid-19 pandemic, forcing nationwide business closures. This caused an upheaval in the status quo, leading to a historic drop in growth in the second quarter, followed by an unprecedented bounce in the third quarter.

Apart from the increase in spending due to the Covid-19 pandemic, Trump approved significant increases in government spending and introduced the 2017 tax cut. By the end of 2019, the deficit had reached nearly $1 trillion, and the U.S. national debt had increased by 39%, totaling $27.75 trillion by the end of his term in 2020. As a result, the US debt-to-GDP ratio rose to its highest level since post-World War II.

Now let’s look into the treasury data, and see what we can observe:

1. Tax revenue collection had a Compound Annual Growth Rate (CAGR) of 0.89% from 2018 to 2020.
2. Total spending rose by 47% in 2020 compared to the previous year.
3. The fiscal deficit reached -$3.13 trillion in 2020—a whopping 218% increase from the 2019 level.
4. Debt-to-GDP ratio soared to 128% in 2020.

We have observed that while the government spending has increased and the fiscal deficit has reached a record-high, the growth rate in tax revenue collection has remained almost flat. Additionally, the debt-to-GDP percentage has reached 128%—a new record high for the US Treasury.

Let’s deep dive and see what led to that!

Factors Contributing to Increased Spending & Debt

COVID-19 relief and Trump’s 2017 tax cuts were the two primary factors leading to this spending and Debt increase:

• Trump signed the Tax Cuts and Jobs Act into law in 2017. The most significant change was reducing corporate income tax from 35% to 21%, among other changes. According to The Hill, “Trump’s signature Tax Cuts and Jobs Act added $1.9 trillion to the national debt.”
• From 2019 to 2020, the national debt increased by 18.50%. The government had to increase its spending to combat the virus and support the economy. Of the $2.6 trillion allocated for COVID-19 relief, $1.6 trillion was spent, according to USAFacts.

Reasons for the 218% Increase in Fiscal Deficit in FY 2020

According to the Manhattan Institute, there are two schools of thought:

• Critics’ Perspective: Trump’s critics argue that his tax cuts and spending increase led to a $3 trillion budget deficit. They contend that under his administration, the debt exceeded 100% of the economy, even though he inherited a healthy economy, declining rates, and relative global peace.
• Defenders’ Perspective: Trump’s defenders counter that he inherited large budget deficits, which were already projected to grow due to rising social security and Medicare costs. They assert that the 2017 tax cuts significantly contributed to the growing economy through 2019.

Let’s now examine the US Treasury trends under President Joe Biden.

Treasury Trends under Biden: Reduced Spending, Reduced Fiscal Deficit, and a Rising Debt

Joe Biden is the 46th and current president of the United States of America and is the 2024 US presidential nominee from the Democratic Party. He was also the 47th vice president under Barack Obama from 2009 to 2017.

Joe Biden’s economic agenda, principles, and policies—known as Bionomics—focus on public investment, empowering middle-class workers, and promoting business competition.

Biden, in 2021, inherited a challenging economic and budgetary situation, mainly due to the continuing pandemic. His response was the American Rescue Plan Act—a $1.9 Trillion economic stimulus package to help people with the pandemic. In addition, his first year in office saw a significant growth in GDP, accompanied by an increase in inflation due to the pandemic-linked recession. The government’s expenditure recorded a decrease, whereas the tax revenue exhibited an increase. However, the national debt level witnessed a surge of $4.7 trillion in the period spanning 2021 to 2023, which is a trend similar to that of the predecessor.

But how did the US Treasury perform under him? Here are the trends that we uncovered:

1. Tax revenue collection saw a CAGR of 3.14% (2021 to 2023)
2. Total spending decreased by -10.07% in 2023 from the previous year
3. Fiscal deficit decreased to -$1.79 Trillion—46% less than the peak value of 2020 (-$3.13 Trillion). But it again saw a 23.25% increase from 2022 to 2023.
4. Debt-to-GDP percentage at 121% in 2023—approximately 7 percentage points less than the 2020 value (128%).

Overall, we saw an increase in tax revenue collection, a spending decrease, and a reducing fiscal deficit and debt-to-GDP ratio.

But what were the reasons behind an improvement in the fiscal posture?

Changes in Tax Collection Policy helped Tax revenue to increase

Biden, within the first two months of his presidency, advanced on the pivotal aspects of his Build Back Better program, which are underpinned by substantial tax law amendments.

Below is a summary of these changes:

• Increased maximum tax rates for individual, corporate, and capital gains income.
• Elimination of the step-up based on classifying death as a taxable event.
• Major reforms to international taxation.
• Introduction of a range of new minimum taxes for individuals, businesses, and multinational corporations.

These measures have led to a rise in the total tax revenue during Biden’s era.

Why did the deficit increase in FY 2023?

To understand this 23.25% increase in deficit, let’s look at the change in total receipts and total outlays from 2022 to 2023:

Year	Total Receipts (Trillion)	% Increase/ Decrease	Total Outlays (Trillion)	% Increase/ decrease	Surplus or Deficit (Trillion)	% increase/ decrease
2022	$4.90	–	$6.27	–	-$1.38	–
2023	$4.44	-9.33%	$6.13	-2.19%	-$1.70	23.25%

Data from Bureau of the Fiscal Service, Financial Report 2023

As shown in the table, a decline of 9.33% in total receipts (tax revenue) in FY 2023 explains most of the increase.

According to Brookings, the reasons for the decline in tax revenue can be:

• The IRS delayed both corporate and individual income tax filing deadlines for Californians affected by severe winter storms to November 2023 (which falls in FY 2024).
• Refunds from the pandemic-era Employee Retention Tax Credit surged in FY 2023 as businesses submitted amended returns.
• High interest rates reduce Federal Reserve profits.

Trumponomics or Bidenomics: America's outlook!

This study from the Pew Research Center offers insight into Americans’ current perceptions of the economy.

The study mentions, “The public is far less upbeat today than it was from 2018 through early 2020, during Donald Trump’s presidency and prior to the outbreak of the coronavirus pandemic”.

Although the economy under Biden was viewed positively in the initial months of his term, this perception decreased over time.

The survey indicates that in 2024, 72% of Americans rate economic conditions as poor or only fair, citing high inflation and cost of living, including food and groceries. Conversely, the remaining 28% have a positive view of the economy, attributing this to factors such as low unemployment, decreased inflation, and wage growth.

Final Verdict: Who Won?

Overall, Biden was more fiscally prudent. The fiscal policies during Trump’s administration led to a steady rise in national debt and an expanding deficit.

In contrast, Biden’s administration has yielded more favorable financial outcomes. There’s been an uptick in tax revenue and a reduction in the deficit, despite an overall increase in debt.

But hold on, context is crucial!

The Trump era was grappled with the most severe economic disruption since the Great Depression. This period demanded quick response strategies, which led to increased borrowing and a ballooned deficit.

The subsequent Biden period has focused on recovery, steering the economy towards stability—not as robust as pre-pandemic levels, yet arguably, much more resilient.

Moving forward, with the national debt at unprecedented levels, the imperative is clear. The next administration, irrespective of the result whatsoever, faces the challenge of navigating America towards a path to financial sustainability while also focusing on growth, simultaneously.

Yes, it’s not going to be an easy task!

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