The September 10 debate helped clarify the programs of Donald Trump and Kamala Harris to some extent. When goals and priorities are relatively close on economic issues, especially purchasing power and housing, the tools envisioned are often opposites. Decoding.
Two months before the 2024 US presidential elections, the economic programs of the Republican and Democratic candidates, supported by various written or verbal campaign promises, mainly focus on purchasing power, the weak point in the economic record of the Biden administration, in line with the spirit of the Americans. This prioritization allows Donald Trump to overcome this dissatisfaction and to respond in advance to the criticisms of Kamala Harris, a record for which she herself was responsible as the outgoing vice president.
Massive inflation has affected the United States, like the rest of the world, for almost the entirety of Joe Biden’s term in office. Prices have increased by an average of 20% over the past four years, creating a negative perception of purchasing power among Americans despite wage increases and inflation being partially contained, thanks to the increase in the key interest rate of the Federal Reserve (Fed). This increase has certainly prevented economic activity from overheating, but it has also increased the difficulties for all Americans looking to get a loan. The cost of mortgages, in particular, is now preventing many Americans from purchasing a home, especially since prices have increased significantly due to the lack of offers.
Note that unemployment has not been central to the campaign so far. The unemployment rate remains very low (4.3%) despite a slight increase in the last six months, which can be explained by some slower growth in 2024 due to the high interest rates set by the Fed.
Beyond the convergence on purchasing power, the economic programs of Kamala Harris and Donald Trump are quite different. But at this stage, both are extremely uncertain, with the expected outcomes and costs of the proposed measures not clearly defined, and the method of financing them equally unclear.
Fight against rising prices
Both candidates are pledging to voters to limit growth in, and even lower prices for, everyday consumer goods to rapidly improve the daily lives of American households.
To this end, Kamala Harris is talking about banning prices that are seen as abusive in terms of production costs, especially for food products. The thing that has caused the most controversy at this stage is undoubtedly the economic promise of the Democratic candidate; Donald Trump’s condemnation of the “communist fixing” of prices.
Although such measures are already in place in about thirty states, including Republican states, to deal with occasional excesses by certain manufacturers, there are serious doubts about their ability to actually reduce targeted products. A study by the San Francisco Federal Reserve shows that recent inflation has little to do with such practices.
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Donald Trump, for his part, promises a rapid drop in prices thanks to the elimination of all costly regulations, without going into further detail. He also plans to encourage the oil and gas industry to drill even more, considering that increased production will allow for a lower price per gallon of fuel, a symbolic price for Americans.
This logic overlooks the fact that this price is tied to the price of oil on the world market, which depends on many things beyond U.S. national production, from OPEC decisions to the geopolitical context.
Facilitating access to housing
To address Americans’ housing challenges, the Republican program plans to open federal land parcels to construction and eliminate any regulations deemed unnecessary and likely to increase costs. It also announces support for first-time buyers, without specifics.
Kamala Harris’s program includes more concrete announcements in this area, as she is considering a $25,000 subsidy for first-time buyers. The subsidy, which is reserved for workers who have not paid their rent for at least two years, would apply to one million households per year. Democrats also promise to provide tax incentives for affordable housing construction. This plan would allow for the construction of 3 million new homes.
Finally, the current vice president plans to regulate rents by supporting a bill proposed by Democrats in early 2024. One of these aims to limit the use of rent-setting algorithms, the use of which is equivalent to agreeing on prices for the big players in the industry. The other eliminates tax benefits for buyers of 50 or more individual homes ready for rent; these investments are considered predatory.
Limit the cost of healthcare
Kamala Harris wants to tackle another expense that can affect Americans’ purchasing power: health care. To do so, she’s promising to extend the federal health insurance program provided to people 65 and older and those with disabilities (Medicare) under the 2022 Inflation Reduction Act to all Americans — meaning out-of-pocket expenses would be capped at $35 a month for insulin treatments and $2,000 a year for prescription drugs.
Kamala Harris also wants to give Medicare the authority to speed up negotiations with the pharmaceutical industry to lower prices for the most commonly used drugs, and to do the same, she wants to strengthen competition and transparency in that industry.
Read more: US: Opioid tragedy compounded by failing healthcare system
In this area, Donald Trump pledges not to reverse the benefits that Medicare offers to the elderly, but he does not foresee extending them to other segments of the population. In his opinion, the fall in drug prices is simply a result of competition in the pharmaceutical market, and therefore a competition that must be encouraged.
Knowing that health care has put many American households into debt, the Democratic program also proposes to wipe out $7 billion of that debt for up to 3 million Americans using funds from the American Rescue Plan Act passed in 2021.
Tax deductions or credits
Donald Trump became the first person to promise to eliminate federal taxes on tips for the 4 million Americans who pay that way. Kamala Harris has accepted the offer.
The difference between the two programs is that Democrats propose to eliminate federal income taxes on these tips, while Republicans propose to reduce Social Security contributions to fund Medicare. This would result in a fiscal deficit ranging from a single deficit for Democrats to a double deficit for Republicans, totaling between $150 billion and $250 billion over 10 years, according to the Committee for a Responsible Federal Budget (CRFB).
Donald Trump wants to renew the tax cuts he put in place when he came to the White House in 2017, which expire at the end of 2025, or even make them permanent. He also promises to eliminate taxes on benefits paid by Social Security for the elderly.
But tax cuts only benefit those rich enough to pay. Kamala Harris, who prioritizes improving the situation of the middle class, has announced tax measures in the form of tax cuts that allow aid to be paid to those who pay little or no taxes.
The Democratic candidate is planning relief that would benefit more than 100 million Americans. It would pay a tax credit of $3,600 per child, increasing to $6,000 in the child’s first year. Low-income childless workers would also be eligible for a tax credit of up to $1,500. More generally, Kamala Harris has pledged not to raise taxes on people earning less than $400,000 a year.
Finally, the two candidates’ statements conflict on the federal corporate tax rate. Kamala Harris wants to increase it to 28 percent, currently at 21 percent, while Donald Trump wants to reduce it to 15 percent for companies that manufacture their products in the United States. Kamala Harris’ support for businesses will focus on new SMEs, and she proposes increasing the tax benefit they can receive tenfold to $50,000.
Crypto assets and digital dollars
Donald Trump has announced his support for the development of crypto assets, promising to make the United States the world capital of cryptocurrencies and bitcoin. Kamala Harris remains silent on this issue for now. Donald Trump’s enthusiasm and Kamala Harris’ caution are actually quite opportunistic and are linked to the growing influence of the crypto industry, which largely financed his election campaign; currently, the most significant funds go to Donald Trump, which gives them better commitments for the future. .
One of these commitments concerns the absence of the possibility of the Federal Reserve issuing a “digital dollar”. The House of Representatives, with the participation of the Republican majority, passed a bill in May 2024 aimed at blocking the implementation of this law, citing the lack of financial privacy guarantees. In reality, the crypto industry does not want this public competitor to emerge, which justifies the Republicans’ position on this issue.
Similar goals, different visions
The economic programs that the candidates propose to improve the lives of Americans are based on different economic visions. Kamala Harris wants to bolster the middle class through direct and indirect aid, while Donald Trump promises tax cuts and deregulation. Republicans are also considering major protectionist measures, including tariffs on some Chinese products and even import bans, without saying a word about the resulting price increases for American consumers. Another promise by Donald Trump could have major economic impacts: the deportation by the National Guard of 15 to 20 million illegal aliens who are already in the job market and would be destabilizing.
But these programs can only be implemented if the party that wins the presidential election wins a majority in both houses of Congress, which decides all budgetary issues. However, the budget impact of the tax promises alone (tax cuts on the Republican side, tax credits on the Democratic side) is estimated to be in the thousands of billions of dollars over 10 years, especially according to estimates by the bipartisan Committee on the Organization of the Federal Budget (CRFB).
While Donald Trump is considering making cuts in federal government spending to fund his respective programs and handing over the determination of savings to an independent commission headed by Elon Musk, Kamala Harris wants to increase state revenues by increasing the tax on capital gains in addition to the corporate tax.
The truth is that other social issues are at the heart of this election. Immigration and abortion could have a major impact on the outcome, as the content of the first televised debate between the two candidates on September 10 showed.
