Research Briefing | Jul 3, 2024

Modeling the economic impact of a Democratic sweep

A Democratic sweep of the 2024 presidential and congressional elections would mean major changes to social benefits programs and tax policy. According to our modeling, a Democratic trifecta that enacted its agenda would lead to a stronger economy in the medium and long run.

What you will learn:

  • Inflation would be moderately higher during a second term for Joe Biden, but longer term, the policies enacted would not lead to faster inflation.
  • The main thrust of a Democratic agenda would be family-targeted policies that lower the cost of child care and promote greater parental labor market involvement, particularly among mothers. We estimate that a program of free or low-cost child care would increase the labor force participation rate by 0.6ppts.
  • In a Democratic trifecta, our base case scenario assumes a sweeping package of social benefits investment, only partially paid for by higher corporate taxes. We also constructed a second ‘full-blown Biden’ scenario in which Democrats enact larger tax increases such that their legislation is deficit-neutral over the next 10 years. In this scenario, the economy still ends up larger despite a higher tax burden.

For more insights on the 2024 US Presidential Election, click here.

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