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A Tale of Two Economic Visions: Kamala Harris and Donald Trump
In the ever-evolving narrative of American politics, the economic blueprints of Vice President Kamala Harris and former President Donald Trump starkly contrast each other in almost blinding ways. When President Joe Biden and Trump were in office, their economic ideologies varied significantly, yet the schism widens even more with Harris stepping onto the platform.
Proposals Unveiled by Kamala Harris
Since Harris took over from Biden as the Democratic nominee, she has rolled out a suite of proposals aimed at enhancing the quality of life for low- and middle-income Americans. These include making housing more affordable, lowering child care costs, clamping down on price gouging, and reducing prescription drug prices. Mark Zandi, the chief economist at Moody’s Analytics, remarked, “She’s doubling down on efforts to support lower- and middle-class families and small businesses and pay for it with tax increases on the wealthy and corporations.”
Trump’s Vision
Trump plans to extend and expand his previous tax cuts of 2017, targeting all Americans. His approach involves stringent immigration policies, extensive tariffs on U.S. imports, and undoing much of Biden’s clean energy initiatives. In contrast to Harris, Trump supports lowering the corporate tax rate and imposing new tariffs to stimulate domestic production.
Economic Predictions for 2025
Analyses by Moody’s and Goldman Sachs provide insightful forecasts about the economic implications of each candidate’s policies. According to Moody’s, a Trump presidency would lead to slower economic growth, higher inflation, and steeper interest rates. Conversely, the Harris administration projects a moderate economic enhancement. Moody’s surmises that the economy would grow an average of 1.3% annually under Trump compared to 2.1% under Harris. Notably, the job market under Trump would see 3.1 million fewer jobs compared to a Harris administration and an unemployment rate half a percentage point higher.
Public Opinion
Interestingly, a poll by ABC News/Ipsos in late August found that about 45% of Americans trust Trump on economic issues compared to 37% for Harris. Though Trump is seen as a better steward of the U.S. economy, the margin has narrowed since Harris replaced Biden as the Democratic nominee in late July.
Tariffs
Trump’s Plan
During his first term, Trump imposed tariffs on a myriad of imports including steel, washing machines, and solar panels. However, his new proposals involve a 10% tariff on all U.S. imports and a 60% levy on Chinese goods.
Harris’ Plan
Harris plans strategic tariffs much like her predecessor, Biden, who also implemented targeted tariffs on Chinese electric vehicles and solar panels.
Impact
While Trump’s tariffs could elevate inflation significantly, Harris’ tariffs are forecasted to have a negligible impact. Trump’s sweeping tariffs could hamper economic growth and job creation owing to retaliatory measures by other countries and elevated costs for U.S. consumers.
Taxes
Trump’s Plan
Trump aims to perpetuate his 2017 Tax Cut and Jobs Act, reducing even the corporate tax rate for companies operating in the U.S. However, extending these tax cuts would balloon the deficit by $5.2 trillion over the next decade according to the Committee for a Responsible Federal Budget.
Harris’ Plan
Harris intends to extend tax cuts for individuals earning less than $400,000 annually. For corporations, she proposes raising the corporate tax rate to 28%. Additionally, she advocates for a 25% minimum tax on the wealthiest households and increasing the capital gains tax rate for high-earners.
Impact
Tax cuts generally spur investment and growth, but with the U.S. nearing full employment, further cuts could fuel inflation. Higher interest rates would counter the benefits of tax breaks, resulting in modest gains for the economy.
Immigration
Trump’s Plan
Trump’s policies would drastically slash immigration, reducing the labor force and potentially igniting inflation due to wage increases in sectors reliant on immigrant labor.
Harris’ Plan
Harris supports bolstering legal immigration and providing a pathway to citizenship while maintaining stringent border controls.
Impact
Trump’s policies could contract economic growth by reducing the available workforce. Harris’ approach of enlarging the labor pool would moderate wage growth and inflation.
The Inflation Reduction Act
Trump’s Plan
Trump may seek to dismantle the Inflation Reduction Act, which promotes green energy, leading to reduced grants and subsidies.
Impact
Trump’s rollback could decrease economic growth and employment. Nonetheless, such moves face bipartisan resistance within Congress.
Social Service Policies
Harris’ Plan
Harris supports several measures to aid low- and middle-income Americans:
- Cracking down on emergency price gouging and rental collusion.
- Increasing the child tax credit.
- Providing substantial down payment assistance for first-time homebuyers.
- Developing affordable rental housing.
- Expanding caps on insulin and out-of-pocket health expenses.
- Offering significant tax deductions for small business start-ups.
Impact
While these programs are partially funded by taxes on the wealthy, their passage through a divided Congress remains uncertain. Certain measures like increasing the child tax credit and funding low-income housing have higher chances of approval.
Final Word
Ultimately, each candidate offers a distinct path for America’s future economic landscape, each with its strengths and potential pitfalls. With public opinion and economic forecasts serving as critical guides, the upcoming debate promises to be a crucial moment for defining the direction of U.S. economic policy.
