By Ovunc Kutlu
ANKARA (AA) - The next US administration will face major economic challenges from US-China tensions and health care to reviving the economy and rising government debt, according to global rating agency Moody's.
As the world's largest economy is going through the worst recession since the Great Depression in the late 1920s and early 1930s because of the coronavirus pandemic, contracting by a record 31.4% in the second quarter, Moody's said Monday that there are five major issues awaiting the next president in the White House.
For incumbent Donald Trump and Democratic presidential nominee Joe Biden, reviving the economy will be "a policy priority," it said.
Trump's economic plans are based on tax cuts and deregulation, like it was four years ago, but Biden has proposed spending and tax incentives to solve high levels of unemployment, currently at 7.9%, that would affect infrastructure, energy and automotive sectors.
A fiscal and monetary stimulus has attempted to keep the US economy afloat since March but resulted in rising government debt and record-high fiscal deficits, which are now other issues for the next president.
"Coronavirus fiscal stimulus, along with declining government revenue, has driven federal fiscal deficits and debt to unprecedented levels," the report said.
To increase government revenue and lower the trade deficit, Trump has engaged in a trade conflict with China, but tensions between two of the world's biggest economies are unlikely to end any time soon.
"Biden's foreign policy platform differs in tone from Trump’s in calling for active engagement with traditional international allies and multilateral institutions," Moody's said. "However, Biden's approach toward China on national security, technology and human rights issues likely would be marked by similar frictions as have Trump's policies.”
Then there is health care, where Trump and Biden differ the most. While the president promised to repeal former President Barack Obama's Affordable Care Act (ACA), and failed, he is expected to continue to loosen regulations around it, in addition to promises of lowering prescription drug costs and insurance premiums.
Biden, who served as vice president under Obama for eight years, on the other hand, aims to expand Americans’ access to the ACA, introduce a public option plan and allow the federal government to negotiate lower drug prices, according to the report.
"Both candidates' policies would directly affect hospitals, health insurers, pharmaceutical companies and state and local governments," it said.
The two candidates also fall apart on environmental issues.
Trump withdrew the US in June 2017 from the historic Paris Climate Agreement, while Biden is viewed as a bigger supporter of renewable energy.
"Biden’s economic plans include measures to address climate change. Trump’s proposals do not prioritize addressing climate change or lowering carbon dependence," Moody's said.