Harris, Trump and Your Wallet
On the eve of Tuesday’s presidential debate between Vice President Kamala Harris and former President Donald Trump, we are taking a look at the positions both candidates have staked out on economic issues that are most likely to impact your wallet
The Economy and Your Wallet
Investment banking firms Goldman Sachs and Nomura issued reports last week that determined a Harris-Walz victory that puts control of Congress in the hands of Democrats would boost the economy and enhance the financial well-being of most Americans.
Goldman Sachs issued a note Wednesday predicting that growth and employment under a Harris administration would continue to rise. In contrast, another Trump administration would bring a decline in economic output and reduced job growth resulting from increased tariffs and restrictive immigration policies.
“We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse,” the Goldman Sach note stated.
“If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates,” contended Goldman Sachs.
Goldman Sachs predicts that job growth after the election will increase in direct proportion to the extent of a Democratic victory in November. Goldman Sachs says that 10,000 jobs will be created each month under Harris, as opposed to Trump. Goldman also predicts that inflation will rise under Trump up to.4 percent. Nomura’s study took a global look at the impact of Trump plans, and found that they would increase inflation next year by.75 per cent. As a result, the investment banking firm forecasts that Trump’s tax plan and high tariffs will inhibit
interest rate cuts by the Federal Reserve Bank
. The differences in the Harris vs. Trump forecasts are primarily the results of the candidates’ policy proposals regarding taxes and tariffs. Taxes and Your WalletHarris’ and Trump’s tax plans are radically different.
Trump advocates lowering taxes for the wealthy and corporations. He argues that this will trickle-down to lower and middle class households.
Harris, on the other hand, favors raising taxes on the most wealthy individuals and corporations to pay for programs aimed at helping middle and lower-class households.
However, there is some area of agreement. Both candidates have supported the elimination of taxes on tips. Both candidates’ tax plans would result in a net increase for middle-class families, according to calculations from independent research organizations. When tariffs are taken into account, the gains that Trump made from his tax plan would be reversed. According to the
Penn-Wharton Budget model
, a household earning $80,000 would benefit by $1,700 in after-tax income under Trump. Model shows that the after-tax income of the same household will increase by $22,000 under Harris’s plan.
Tariffs, Your Wallet
Trump’s and Harris’s approaches to tariffs are also different. Tariffs can be enacted by a president at will, unlike tax plans that must be approved by Congress.
While a tax plan has to be passed by Congress, tariffs can be enacted by a president at will. Trump advocates a blanket 10 to 20 percent tariff on all foreign goods with a 60 percent tariff on China imports.Harris maintains that Trump’s tariff strategy is too wide-ranging and will result in higher prices for consumers. In her acceptance speech at the Democratic National Convention, she characterized the former president’s plan as “a Trump tax”.
Analysis by the
Peterson Institute for International Economics (PIIE)
seems to bear Harris out. According to PIIE, if Trump includes tariff proposals in his tax strategy then Trump’s plans would reduce the income after taxes of middle-class families. Remember the $80,000 family that would have $1,700 extra in their pocket under Trump’s plan? They would end up losing (instead of gaining) $1,700 a year if both tax and tariff plans were implemented.
Other economists have weighed in on Trump’s tariff and tax programs.
“But even just a step in that direction is problematic,” Mark Zandi,
Moody Analytics’ chief economist told CNN
. It’s a bad idea. Morgan’s David Kelly, also speaking to CNN, said Trump’s tariff idea is “one of those magical economic proposals that can actually cause inflation and put you into a recession – at the same time.” Morgan’s David Kelly, also speaking to CNN, said Trump’s tariff idea is “one of those magical economic proposals that can actually cause inflation and put you into a recession – at the same time,”
Tariffs can disrupt supply chains and lead to retaliation from trading partners.“It’s a two-year-old’s mentality: You punch someone in the nose and expect them not to punch you back,” Kelly said. The National Debt and Your Wallet
The fiscal plans of both candidates will increase the national debt according to the Penn Wharton Budget Model. However, Trump’s proposals will add almost five times as much as Harris’.
Trump’s plans would add $5.8 trillion to the debt over 10 years while Harris’ plans would increase the debt $1.2 trillion over the same time.
The candidates differ on how to cover the costs of their programs. Harris supports raising income taxes for individuals who earn more than $400,000 per year. Trump, on the other hand believes that tariffs can cover his deficits. Family living expenses and your walletBoth of the candidates have stated that they will support legislation to reduce child care costs. Trump failed to convince Congress to increase childcare spending while he was president. However, he did succeed in doubling the child tax credit and getting paid leave for federal employees.
Harris worked as vice president to push for national family leave and universal pre-kindergarten.
Helping families with the cost of child care is one thing, but the devil is in the details. One candidate, Trump, is lacking in specifics.
Twice Trump was asked about how he would help with childcare expenses during his debate with President Joe Biden. He avoided the topic twice. He was again asked how he would assist families who are struggling to pay for childcare during a session on Thursday at the Economic Club of New York. Again, he provided no specifics.
“As much as child care is talked about as being expensive, it’s, relatively speaking, not very expensive compared to the kind of numbers we’ll be taking in,” Mr. Trump said. Again he was speculating that blanket tariffs would cover costs.
Trump’s vice presidential pick, Senator J. D. Vance has not helped things. On Wednesday, he told a Mesa AZ group that parents should ask for help from their family.
“Maybe Grandma and Grandpa want to help out a little bit more,” Vance said when asked what could be done to help families with childcare costs.
Harris, on the other hand, has been more forthcoming. Last month, Harris unveiled her economic strategy which included raising the child tax credits from $2,000 to $3,000. In addition, she proposes giving families of newborns $6,000 to help with care in the first year.
Governor Tim Walz, as Harris’ running mate, lends support to her advocacy of paid family and medical leave. In 2023, he signed a similar provision into Minnesota Law.
Social Security
Social Security has been off-limits for presidential candidates for generations. This year will be no exception. Harris, on the other hand, has vowed to not only protect but also expand social security. By contrast, Harris has vowed not only to protect but to expand social security
“I will never do anything that will jeopardize or hurt Social Security or Medicare,” Trump said in a
March interview
with Breitbart News.
Although Trump does not seem to intend to “hurt social security” – his tax plan might do just that Michael Ryan, founder of michaelryanmoney.com, told
Newsweek.
“His plan to eliminate taxes on Social Security benefits might sound appealing,” Ryan said. Ryan said that Trump’s plan to eliminate taxes on Social Security benefits might sound appealing. It will likely just worsen the system’s long-term funding challenges.”
As a senator, Harris co-sponsored legislation that would increase revenue to Social Security by extending the income limits for payroll taxes to income over $250,000 a year. She also proposes changing the Cost of Living Adjustment to determine social security benefit increases. Harris wants COLA to be calculated using CPI-E instead of CPIW (Consumer Price Index Urban Wage Earners). It is more accurate than the CPI-W. It is usually slightly higher than the CPI-W.
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