Will a Trump or Biden win have a greater impact on Israel's economy?
A man stands in front of an electronic board displaying market data at the Tel Aviv Stock Exchange, in Tel Aviv, Israel
(photo credit: REUTERS/BAZ RATNER)
Economic experts say the election is likely to have little impact on Israel's finances
How will the results of the US election impact Israeli-US economic relations? According to most economic experts – not so much.
A second term for US President Donald Trump would likely mean a return to a trade-war with China in the hopeful aftermath of the COVID-19 pandemic.
A victory for Joe Biden could mean the US will take on a bold new direction, such as a “New Green Deal,” which would have a powerful impact in renewable energy.
But, say the experts, unless something unusual happens, Israeli-US trade relations are expected to remain more or less the same in the foreseeable future.
“Presidents usually set the tone and the agenda of their administration,” explained Naomi Feldman of the Department of Economics at the Hebrew University of Jerusalem. “They don’t get involved with the day-to-day issues.”
She pointed out that while the president is one of the pillars of US Democracy, Congress and the Senate are the others. Only a highly unusual election result would give either Trump or Biden control over both bodies and the means to carry out their policies unchecked.
Feldman noted that Trump’s outsider status in politics enabled him to “do things differently” and offer Israel a “new kind of peace.” It also had some impact on the US economy. Trump reduced corporate taxes to 21%. These taxes used to drive US companies to seek a base of operations elsewhere.
In theory, this could impact large hi-tech firms that might decide to move to the States to save costs on taxation. Biden, on the other hand, has promised to increase corporate taxes to 28% if elected.
Israel might not realize it now but, should Trump be reelected, it might witness hi-tech firms opting to incorporate in the States, rather than relocate to the Start-Up Nation.
Chief economist of Bank Leumi Gil Bufman agreed with Feldman on many counts.
“Presidents don’t tend to greatly impact growth,” he said in a report released by the bank. “There are basic, local and global economic conditions that take place despite the involvement of presidents.”
Bufman claimed that no matter who sits in the Oval Office, the US will continue to “drift and disengage with China.”
He warned that even if the Democrats win by a landslide, it would be unlikely they would also control the Senate and so “we should greatly postpone any expectations concerning a massive benefits package in the near future.”
PROF. AMIR SHOHAM, a professor at Temple University, said the US economy is so badly hit by COVID-19 that he thinks no matter who wins, the winner will be almost forced to spend $2 trillion in an attempt to boost the economy.
“This will be the last rescue attempt,” he said. “Not even the US can keep on spending trillions to save its economy in such conditions.” Both parties agree that the US economy needs the boost, and the expense was only delayed due to the elections.
He argued that due to the massive importance of the US economy in the world, the shrinkage in consumption and US jobs would impact everyone, even Israel.
“It’ll be even worse if there is no clear winner and nobody will know for sure who is the president,” he said. “This won’t add to the stable conditions any economy needs to grow.”
Shoham added that the last president to enjoy a budget surplus had been Clinton and that ever since, the US accumulated an “unimaginable” national debt.
“In Israel, we think nobody can touch the aid to Israel,” he said. “But if Biden is elected and they cut back on everything, they might decide to cut back on that as well.”
On the other hand, should Trump win a second term it is likely he will demand Israel to declare on which side of the fence it sits in relation to China.
“In academia, people are writing about a ‘trade cold war,’” Shoham said. “Israel will be asked to make a decision.”
When Earth is the topic being discussed, David Katz from the Department of Geography and Environmental Studies at University of Haifa believes there can be no doubt the president can have a great impact.
“Trump spoke in favor of ‘clean coal’ as he is attempting to hold on to existing industries,” he said. “Biden is much more forward-thinking in that regard.”
“The environmental issue is an urgent one and Trump has rolled back roughly 100 legislations intended to protect it,” Katz said.
While states can do a lot for renewable energy on their level, it takes federal funding to shape American policy.
“Biden pledged to invest a great deal more in renewable energy,” Katz said. “Something Israel is a global leader at.”
He pointed to how the largest solar panel field in the US, the Ivanpah Solar Electric Generating System in the Mojave Desert, was built by the Israeli-based company BrightSource Energy.