Harris and Trump's economic proposals
16 Nobel Prize economists have warned that Trump's proposals could lead to a recession and higher inflation
By Luis Fierro Carrión
Twitter: @luis_fierro_eco
The United States will vote on November 5 for the new president, who could be Kamala Harris or Donald Trump. In poll averages, Harris has a slight lead (as of August 4th).
Trump was already President between 2017 and 2021, a period during which the COVID 19 pandemic occurred. Some of his economic proposals were already implemented during his term, although now he promises to radicalize them:
- Reduce taxes on higher-income individuals and corporations. This reduction will have to be ratified in 2025, at an estimated cost of $400 billion a year. The corporate tax dropped from 35% to 21%, and Trump wants to reduce it even more to 20%.
- Increase tariffs, especially on imports from China and steel. Now he says he will impose a minimum tariff of 10% on all imports (which could increase middle-class spending by $2,350 a month, accelerate inflation, and reduce GDP by 0.8% per year).
- Detain and deport 15-20 million undocumented immigrants. This could create an economic recession and also increase inflation (due to the loss of a large part of the labor force in sectors such as agriculture or construction). One estimate indicates that deporting 1.3 million undocumented immigrant workers could reduce GDP by 2.1 percent.
- Eliminate subsidies and support for the development of North American assembled electric vehicles and renewable energy. Further boost oil and gas production (which has already reached an all-time high under Biden-Harris).
- Eliminate the Affordable Care Act (known as Obamacare), which allows access to subsidized health insurance for low-income people; and prohibits insurance companies from turning away people with pre-existing conditions.
In the case of Kamala Harris, the impact of the economic policies already adopted in the Biden-Harris administration can be assessed, as well as some proposals she has made for her term of office if elected.
- Reverse Trump's tax cut for those earning more than $400,000 a year, and corporations (raising the tax to 28%). This will reduce the fiscal deficit by $400 billion per year.
- Harris has generally opposed protectionism, and she is expected not to raise tariffs (or she might even reduce some Trump tariffs that Biden has maintained).
- Continue to push green technologies, including electric vehicles and renewable energy. She has proposed to change all school buses to electric ones.
- Strengthen the Affordable Care Act and Medicaid subsidies.
- Continue to forgive student debt and increase free access to higher education (through scholarships)
- Reduce the cost of basic drugs, such as insulin (the Biden administration has already succeeded in reducing the price of insulin to $35 for seniors enrolled in Medicare).
- Offer a tax credit again for families with children (the extension of this credit was blocked by Republicans in Congress).
- Limit rent increases in corporate-owned apartments to a maximum of 5% per year.
Before President Biden left his candidacy, a group of 16 Nobel laureates in economics had warned that Trump's proposals would lead to a revival of inflation, due to the tariffs on imports, the deportation of workers and the growing fiscal deficits derived from reducing taxes on the wealthy and corporations.
Source: https://projects.fivethirtyeight.com/polls/president-general/2024/national/
The Kamala Harris campaign has now published detailed policy proposals:
https://kamalaharris.com/issues/
Some additional items:
- expand the startup expense tax deduction for new businesses from $5,000 to $50,000 and take on the everyday obstacles and red tape that can make it harder to grow a small business.
- extend Medicaid postpartum coverage from two months to twelve: today, 46 states do so—up from just three near the Administration’s start.
- She’ll fight to raise the minimum wage, end sub-minimum wages for tipped workers and people with disabilities, establish paid family and medical leave, and eliminate taxes on tips for service and hospitality workers.
- expanding high-quality home care services for seniors and people with disabilities and ensuring hardworking families can afford high-quality child care
After this article was written, Kamala Harris announced her campaign economic proposals.
Some highlights (that were not previously covered):
- federal ban on grocery price gouging (enhanced anti-trust enforcement; not price controls)
- $6,000 per child to families for the first year of the child’s life.
- restoring the Biden Administration’s child tax credit, which had been set at $3,000 per child before its expiration at the end of 2021 (Republicans voted against its extension, as recently as August 1st)
- $25,000 down-payment assistance for first-time home buyers
- tens of billions of dollars to facilitate the construction of three million new housing units
- extend the price cap on insulin at $35 per month and limiting annual out-of-pocket prescription drug costs to $2,000 (currently available to Medicare patients, thanks to the Biden-Harris administration and the Democrats in Congress - not a single Republican voted for it)
- finding ways to eliminate medical debt.
- eliminate taxes on tips for service and hospitality workers
Most of these proposals depend on the Democratic Party having a majority in the House and Senate.
https://time.com/7011865/kamala-harris-economic-plan-groceries-child/