The economy. Who’s better for Americans? Trump, lol or Vice President Kamala Harris? Look, it’s clear to us but let’s dive in on a few things …
VP Harris’ campaign is centering her campaign around fiscal responsibility by advocating for substantial tax increases to fund her policy initiatives while criticizing former President Donald Trump’s economic agenda for lacking a clear plan to cover its costs.
Get this, Harris’s proposals include raising approximately $5 trillion in new tax revenue over the next decade to finance $2 trillion in spending aimed at issues like housing, childcare, and prescription drug costs.
Now in contrast, and he’s one big contrast, Trump is proposing $5 trillion in tax cuts and spending but has only outlined about $3 trillion in new revenue, primarily through tariffs. James Singer, a spokesperson for the Harris campaign, described Trump’s plan as “an inflation and deficit bomb” in a statement to NBC News, prompting a response from the Trump campaign, which accused Harris of imposing a “Biden-Harris inflation tax” on Americans. Mark Zandi, chief economist at Moody’s Analytics, supports the view that Harris is taking a more fiscally disciplined approach than Trump. “Historically, Republicans have been the party focused on fiscal responsibility, but here we see a reversal,” Zandi noted.
He emphasized that Harris’s plan signals a commitment to reducing the deficit, which could attract moderate Republicans and center-right voters, especially in key swing states. Harris’s strategy aligns with the $5 trillion in tax increases proposed in the White House budget released in March. These increases include raising the corporate tax rate from 21% to 28%, reversing Trump’s tax cuts for high-income earners, and introducing new taxes on wealthier Americans.
Let’s get down to the nitty gritty …
So the Committee for a Responsible Federal Budget, a nonpartisan group, estimates that Harris’s initiatives would cost around $1.7 trillion, leaving approximately $3 trillion for deficit reduction over the next decade. Zandi also supports this estimate, noting that such a large deficit reduction package is unprecedented.
However, Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget, cautioned that Harris’s campaign has not yet fully outlined how the $3 trillion in revenue will be allocated. He also pointed out that extending Trump’s tax cuts for lower-income earners in 2025 could impact Harris’s revenue projections. In contrast, Trump’s economic plan includes extending his 2017 tax cuts, eliminating payroll taxes on Social Security, removing taxes on tips, and increasing the child tax credit to $5,000.
Essentially, these initiatives would add about $5 trillion to the federal deficit, according to Zandi. When asked how he would finance these plans, Trump responded by promising “tremendous growth,” a claim that Goldwein dismissed as unrealistic, stating, “You’re not going to grow your way out of this.” Trump’s primary method for generating revenue is through new tariffs, including a 10% tariff on all imported goods and a 60% tariff on Chinese imports.
Let’s talk more on tariffs …
The Tax Policy Center estimates that these tariffs could raise around $2.8 trillion, but they would likely reduce U.S. imports by 15%, potentially harming economic growth. Goldwein added that while some of Trump’s proposed tax breaks could stimulate the economy, his tariffs and mass deportation policies might counteract those benefits.
So what’s this all mean? As the election approaches, both campaigns are gearing up for a significant fiscal debate, with Congress expected to address major tax issues next year, particularly as parts of the 2017 Trump tax cuts are set to expire at the end of 2025. The outcome of this debate will likely have lasting implications for the U.S. economy, depending on which aspects of the tax cuts are extended or allowed to expire.
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