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.

This research report was compiled before President Biden stepped down as the presumptive Democratic nominee for the 2024 US Presidential election.