“Inflation is killing our country.” […] With me, price increases will disappear.” It is the economic self-portrait of Donald Trump, with the culprit included: Joe Biden. “When the American middle class is strong, the US is powerful; Therefore, rebuilding its prosperity will be my great objective,” replies Kamala Harris, who does not hesitate to attack neoliberal theses and the defense of her rival’s great fortunes, which weaken “democracies more than economic crises,” just as says Joseph Stiglitz. The Nobel Prize expression has been commonly used by the Democratic candidate.
Trump and Harris have adjusted their sights on the economy in the final stretch of the campaign. Not in vain, it is the most determining factor in reaching the Oval Office. This has been the case in the last 110 years, in which none of the 12 presidents with any GDP contraction in their first two years in office revalidated their position. And, of course, neither are the six with recessions in the last two years: Trump, Bush Sr., Jimmy Carter, Gerald Ford, Hervert Hoover and William Taft.
The fight against inflation and the defense of the middle class make up the battlefield that Biden’s successor will settle. No matter how much the American economy has silenced the recessionary drums and aspired to the largest inflationary bubble in four decades. This is what another Nobel Prize winner –Paul Krugman– warns, who sees no reason for the economy to monopolize the spotlight again: “There is full employment, inflation is under control, salaries are growing and the GDP remains at black numbersbut, for some reason, voters are not happy; “It’s either obstinacy or ignorance,” he says.
Stephen Roach, a professor at Yale and former president of Morgan Stanley in Asia, explains American pessimism, despite Krugman’s “correct diagnosis.” This “misinterpretation” is due to the “overwhelming jump in prices in 2023, which has minimized all efforts to drain inflation and which, unfortunately, has now caused voters to engage in a crusade to make the culprit pay more.” rather than by debating solutions or providing future strategies.”
The clarifications of Stiglizt, Krugman and Roach once again agree with James Carville, Bill Clinton’s campaign advisor and his famous “it’s the economy, stupid!” The circumstances don’t matter. The pockets of Americans will elect their leader every four years. More than 90% of voters (Ipsos) admit that their income will decide their vote, because – says Gallup – the economy is the most important of the 22 issues that registered Americans consider key to their appointment at the 5N polls. 52% consider it “extremely important” and 38% “very important”. Nine out of ten admit that there is a climate of dynamism and price control.
So, in what ways do Trump and Harris collide? And, above all, why do the polls give the former president a more favorable perception of his management of the economy (54% versus 45%)? These 4 thematic blocks help to discover the Democratic and Republican differences.
1.- The philosopher’s stones of their economic strategies. Trump intends to force US companies to generate jobs on American soil. Harris, break the monopolistic power that several of them – especially bigtechsinvestigated in the courts for false competition –, have amassed the leading global market.
“Together, we will lower taxes, regulations, energy costs, interest rates and inflation so that all citizens can provide themselves with food, a car or a home.” Word of a former president, who fully complied with the double dogma of faith of his party predecessors – from Ronald Reagan to George W. Bush – of applying tax cuts and trade wars. Now he intends to restore “another round of tax cuts for people and companies” and intensify protectionism with more tariffs; especially, towards goods and services made in china to whom he will impose rates of 60% although also, as he did in his mandate – to partners, Europeans, Asians and Anglo-Saxons – who must assume a general entry rate of 20%.
All of this, seasoned with the ironic slogan of the Grand Old Party (GOP) “take your hands off my economy.” Despite his marked interventionism and his allegories about inflation – “prices will fall quickly; you just have to observe” – or about the cost of housing, which he links to “the invasion of illegal aliens”, in reference to the 11 million immigrants without papers. Without forgetting his declared object of desire – to influence the Fed to maintain low rates – of which Larry Summers, Secretary of the Treasury under Clinton, warns him because “any attempt to intercede in the independence of a central bank brings spirals of galloping inflation.”
Harris, on the other hand, prefers to stop the “uncontrolled prices” of food, which have risen 25% since 2019, and which consumers and their industry agree to blame on “deficiencies” in their value chains, at lowest levels in two decades. .
In his opinion, the trilemma Productivity-competitiveness-prosperity must govern Treasury policy. With extension of federal resources for startupsrenewable industries or electric cars, more power to supervisors to end dominant positions in crucial sectors and aid for housing –25,000 dollars for first purchases and construction of three million new properties– and for child care: tax credits of 6,000 dollars per birth and for care of minors that exceed 7% of family income.
2.- Alteration of expenses and income: more deficit and debt. Harris’ roadmap seeks to make tax returns and medical prescriptions cheaper for the middle class, although it will deepen the budget hole for the next decade by $1.7 trillion – almost the Spanish GDP – says the Committee for a Responsible Federal Budget (CPFR), which includes the Democratic leader’s plans to maintain the tax rates of the Tax Cuts and Jobs Act beyond 2025, which Trump approved in 2017, for incomes of less than $400,000 annually.
In addition to the increases, from 21% to 28%, in the corporate tax and from 37% to 39.6%, in the maximum income tax bracket; at the expense of knowing his promise to apply a specific tax to fortunes of more than 100 million dollars. In total, the Harris project would add $5 trillion to Treasury coffers through 2035.
For its part, the extension of his Tax Cuts – “my number one priority”, Trump acknowledges –, with cuts in tax pressure on companies – up to 15% – and an increase in exemptions and deductions, would increase the deficit by 2.3 billion in ten years, says the Tax Foundation.
Although other models such as that of the Penn Wharton business school place Harris’ budget imbalance at 1.2 trillion and raise Trump’s to 5.8 trillion, five times more. The CRFB also estimates the increase in debt with the current vice president at an extra 3.95 billion between 2026 and 2035, which, in the case of her opponent, would reach 7.74 billion.
The US debt will reach, at the end of fiscal year 2024, $35.46 trillion, 124% of GDP
3.- Commerce, the axis of America, firstlinks immigration and industry. Trump’s motto that gave way to his Make America Great Again (MAGA), finds its commercial order leitmotiv. “Tariff (in reference to tariff) is the most beautiful word in the dictionary,” he says. Everything is under his scythe: from cars manufactured in Mexico, to John Deere agricultural machinery – an American brand par excellence – if he hires personnel abroad or in countries that abandon the dollar. Their falcons promise to revoke China’s Most Favored Nation status and warn investors of asian giant that they do not acquire US properties or companies. Harris retains Biden’s multiple vetoes to Beijing, predicts tax credits for American companies to compete with their Chinese rivals, and criticizes that her opponent’s tactics will raise the bill for consumers and industries and will cause inflation.
Robert Lighthizer, Trump’s Trade Representative and his presumed Treasury Secretary, is the instigator of the tariff wars and promoter of his campaign initiatives. “He changed from a defender of multilateralism in his decades as an ambassador to an economic nationalist with the air of a commercial revolutionary,” warns Edward Alden, of the Council on Foreign Relations (CFR), for whom “his final mission will be to transform the global free trade system.”
You won’t be alone. The Heritage Foundation, think tank who has nurtured Republican programs since Reagan, admits that his proposals, woven into Project 2025 For this occasion, they are “radioactive,” according to the co-president of this team, Howard Lutnick. Although he is the big boss of the conservative entity, Kevin Roberts, the architect of the trumpist road mapwhich includes as its final mission burying “all help” from Bidenomics.
Above all, the Economist Intelligence Unit (EIU) assures, the investments of its billion-dollar Infrastructure program and the subsidies of the Chips and Science Act and the IRA, the Inflation Reduction Act that, combined, are successfully accelerating the industrial reconversion of Biden to ensure the supply of strategic manufacturing, chips and raw materials. Its experts highlight that Trump “regrets not having instituted” these measures and that, for this reason, he criticizes “fiercely, again, climate change and the current president’s renewable policies.”
Just like his insistence on mass deportations of immigrants, which goes against the Congressional Budget Office’s calculation that the 5.2 million new workers that the labor market will demand in 2033 would contribute an additional 7 trillion to the GDP and prevent recessions. Or against the WTO prediction that sees a 0.8% decline in American GDP and a 4.3% rise in the CPI in 2028 if Trump carries out his tariff threat to China.
Harris is in favor of border agreements with Mexico and other Central American countries and, without being very precise, of emphasizing immediate returns. In the commercial order, he says he wants “the strengthening of multilateralism with rules that protect the free flow of goods and services and promote predictability and stability.”
4.- Housing, cost of living and employment. Trump is betting on “reducing mortgages” with his pressure on the Fed, liberalizing land and providing fiscal incentives, without specifying, to buyers. While Harris intends to provide tax assistance to builders and extend tax credits to neighborhoods that rehabilitate houses for low-income communities. The Republican opts to eliminate “distortions” in the oil and gas business to increase production.
On employment, Harris pledges to double the minimum wage. From $7.25 an hour to $15, because the current ones “create little purchasing power”: about $15,000 annually. For Trump, the priority is the well-known flexibility of the labor market and, of course, that no immigrant arrives without a job.
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