Trump and Biden on Inflation, Taxes and Social Security: Who Told the Truth at the First Debate?

Beneath the blather and accusations at the first 2024 presidential debate, money took center stage Thursday in Atlanta. President Joe Biden and former President Donald Trump faced off on topics including but not limited to Social Security, taxes, the cost of child care, housing affordability, inflation, jobs, tariffs, Pell Grants and the price of eggs.

(Whew.) (It was a long 90 minutes.)

The 2024 election is unprecedented in many ways. It features a rematch of the two oldest major presidential candidates ever, one of whom is a convicted felon still facing three other criminal cases, and another whose debate performance was so shaky many of his supporters are hoping he will bow out of the race.

The election also comes at a strange time for the economy. Though the pandemic is mostly in the rearview, inflation is still running hotter than the Federal Reserve would like. The stock market is booming and unemployment is at a historic low, but the vibes are off: A recent survey found that 56% of Americans think the United States is in a recession — it’s not.

As a result, pocketbook issues are a major focus for voters and candidates alike heading into November. It can be hard to keep up with who said what and which claims are true, so we’ve put together a quick roundup and analysis of remarks from Trump and Biden’s first 2024 debate.

Here’s a fact-check of four big money topics that could affect your wallet:

Inflation

• Trump said “inflation’s killing our country” and also suggested that food prices have “doubled, tripled and quadrupled.”

• Biden said “if Trump is re-elected, we’re likely to have a recession, and inflation is going to increasingly go up.”

The first question of the debate centered on inflation and the pain felt by consumers, putting Biden on defense. He blamed “corporate greed” and the economic conditions he inherited from Trump.

However, as Trump noted, the annual inflation rate was low when Biden took office — 1.4% in January 2021 per the consumer price index measure. Inflation peaked at 9.1% in June 2022, and it’s back down to 3.4%. Trump, for his part, exaggerated how bad inflation has been. Food prices, for example, have not doubled, let alone quadrupled: They’re up about 23% over the past four years.

While it’s true that inflation has soared during Biden’s presidency, global economic conditions and central bank policy have a greater impact on inflation than the actions of any particular country’s leader. Also, inflation is hardly a problem limited to the U.S.: Globally, headline inflation rose above 9% in 2022, according to the International Monetary Fund.

Later in the debate, Trump said inflation “blew up under [Biden’s] leadership because they spent money like a bunch of people that didn’t know what they were doing.” While government spending likely contributed to inflation, it’s important to note that both presidents advanced stimulus relief in response to the pandemic. Biden has approved $4.3 trillion of new 10-year borrowing so far in his presidency, which is only about half as much as Trump approved ($8.4 trillion) in his four years.

Will inflation climb if Trump gets another term? Maybe.

Biden’s claim is based on a letter signed Tuesday by 16 Nobel Prize winners who are concerned about the economic consequences of another Trump administration. They fear that Trump’s “fiscally irresponsible budgets” will reignite inflation. Economists also say that a Trump proposal to impose a 10% blanket tariff on imports would lead to higher prices. But overall it’s impossible to predict with any certainty where inflation is headed in the next four years.

The economy

• Biden said “we have the fastest-growing economy in the world” and claimed “the economy was flat on its back” when he became president.

• Trump said “we had the greatest economy in the history of our country” during his presidency.

Economists often judge the strength of the economy under a president looking at the growth of real gross domestic product (GDP). Real GDP growth ranged from 2.5% to 3% during Trump’s first three years in office, before decreasing to -2.2% in 2020. Real GDP growth has been stronger under Biden, but that includes 5.8% growth in 2021, which was a recovery year.

On the economy, Trump also touted the stock market’s performance during his presidency. However, the S&P 500’s growth under Biden is at 43%, compared to 35% for the same period of Trump’s time in office.

Biden and Trump went back and forth throughout the debate on jobs, with Biden pointing out that the unemployment rate peaked at 15% under Trump. His point lacked the context that unemployment spiked to that level in April 2020 at the height of the COVID-19 shutdown.

Trump countered that “the only jobs [Biden] created are for illegal immigrants and bounce-back jobs, they’re bounced back from the COVID.” In reality, the strength of the labor market has been impressive under Biden, with jobs numbers routinely exceeding expectations despite forecasts of a recession. In May, the unemployment rate was only 4%, which is considered full employment. One reason the Federal Reserve has been cautious regarding interest rate cuts is because job growth has been so strong, as has the U.S. economy in general.

Taxes

• Trump said he led Congress to pass “the largest tax cut in history,” boasting that “nobody ever cut taxes like us” and saying Biden “wants to raise everybody's taxes by four times."

• Biden said “we have to make sure that we have a fair tax system,” repeating his claim that nobody who makes under $400,000 “had a single penny increase in their taxes” — which will “be the case again” if he’s re-elected.

Trump was referring to the Tax Cuts and Jobs Act of 2017, which drastically changed the U.S. tax system. Among other changes, the TCJA nearly doubled the standard deduction, reduced income tax rates, increased the child tax credit, nixed personal exemptions and slashed corporate income tax rates.

TCJA was a big deal, to be sure. One analysis found the law reduced the average American’s taxes by roughly $1,600, though households making between $308,000 and $733,000 benefitted the most. But it was not the largest tax cut in history, according to the Committee for a Responsible Federal Budget.

Many of those TCJA provisions are set to expire at the end of 2025, teeing up a major fight for the next president. On Thursday, debate moderators pressed Trump on his plans to extend and expand them, asking why corporations and the wealthy should “pay even less in taxes than they do now” given the nation’s record debt.

In response, Trump said that his tax cuts “spurred the greatest economy that we’ve ever seen just prior to COVID.” (See the economy section above for more details.)

Biden, meanwhile, vowed Thursday to “fix the tax system,” though he didn’t go into too much detail. His proposed budget floats several tax changes of its own, including expanding the child tax credit and providing homebuyers with $10,000 in tax credits. These suggestions are expensive, though.

According to a June blog post from the Tax Foundation, a tax policy nonprofit, Biden’s 2025 budget would raise taxes by about $4.4 trillion on a gross basis and “substantially increase marginal tax rates on investment, saving and work.” Without those changes, the government would collect $62.6 trillion, meaning Biden is suggesting a tax increase of 7% — nowhere near the 300% tax hike Trump mentioned. And Biden’s tax hikes would be paid for largely by wealthy Americans: He’s repeatedly said that anyone making less than $400,000 won’t pay higher taxes.

Social Security

• Biden said Trump “wants to get rid of Social Security” and “thinks that there’s plenty to cut in Social Security.” Biden suggested an increase in payroll taxes for high earners to keep the program solvent.

• Trump said Biden “is going to single-handedly destroy Social Security” by giving benefits to “millions of people [who] are pouring into our country.”

Social Security is a tricky subject because neither political party wants to be the one to alienate millions of older voters by cutting their beloved (and heavily-relied-upon) benefits. But the program is in a funding crisis: Unless Congress acts, Social Security’s trust fund reserves will run out in 2035, at which point it’ll only be able to pay out 83% of benefits. An immediate, across-the-board benefits cut would ensue.

When asked during the debate how to keep Social Security solvent, Biden suggested making wealthy Americans “begin to pay their fair share.” As it stands, employers and workers both pay 6.2% of their wages up to $168,600. This year, millionaires reached that threshold in March.

Biden’s plan could move the needle. If, for instance, the payroll tax were to be applied to earnings over $250,000 in addition to earnings below the current threshold, the trust funds would make it until 2046, according to the Congressional Budget Office.

On Thursday, Biden appeared to suggest he’d raise payroll taxes for people earning over $400,000 a year, which would change the calculations.

Trump’s position on Social Security has changed recently. In March, he told Breitbart that he “will never do anything that will jeopardize or hurt Social Security or Medicare” — but those comments followed a CNBC interview in which he said “there is a lot you can do in terms of entitlements in terms of cutting.” He has not put forth a formal proposal on how to fix Social Security.

During the debate, Trump linked the Social Security funding problem to immigration, implying that the current president is providing benefits to “all of these people … coming in.” But according to the Social Security Administration, only “lawfully present noncitizens of the United States who meet all eligibility requirements” are able to qualify. In addition, people generally have to work for 10 years and be at least 62 years old to claim Social Security retirement benefits.

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