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Electing America’s Economic Future

Summary:
Next year's US presidential election will have far-reaching consequences, not least for the economy. Given the stakes of the outcome, rigorous analysis of the candidates' sharply diverging – and often risky – policy platforms is urgently needed. STANFORD – A year from now, the United States will elect its next president. The stakes are high, and the outcome will reverberate across the world in a number of spheres, not least the economy. Yet, thus far, most discussions of candidates’ economic policy proposals have been based more on feelings or ideology than rigorous analysis. Why Rich Cities Rebel Pablo Rojas Madariaga/NurPhoto via Getty Images

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Next year's US presidential election will have far-reaching consequences, not least for the economy. Given the stakes of the outcome, rigorous analysis of the candidates' sharply diverging – and often risky – policy platforms is urgently needed.

STANFORD – A year from now, the United States will elect its next president. The stakes are high, and the outcome will reverberate across the world in a number of spheres, not least the economy. Yet, thus far, most discussions of candidates’ economic policy proposals have been based more on feelings or ideology than rigorous analysis.

Barring a major unforeseen catastrophe, US economic performance will play a decisive role in the election. If the economy remains strong – unemployment is at a 50-year low for all workers, and its lowest-ever level for African-Americans and Hispanics – President Donald Trump stands a good chance of winning a second term.

Yet downside risks are mounting. If they materialize, a Trump victory would become less likely. According to recent models by Moody’s Analytics, it would take a tanking economy – or unusually high voter turnout among Democrats, but not Republicans – for Trump to lose in 2020.

As center-left former Vice President Joe Biden, the early frontrunner for the Democratic Party nomination, loses ground to the far-left US Senator from Massachusetts, Elizabeth Warren, Trump’s chances of success may be rising. Then again, in the 1980 election, the most conservative Republican candidate, Ronald Reagan (whom I advised), was also labeled unelectable.

If Trump does win a second term, he cannot always be expected to pursue traditionally conservative economic policies, such as his 2017 Tax Cuts and Jobs Act,...

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