On the eve of Tuesday’s presidential debate between Vice President Kamala Harris and former President Donald Trump, we’re taking a look at both candidates’ positions on economic issues that could have a big impact on your wallet.
The Economy and Your Wallet
Investment banking firms Goldman Sachs and Nomura released reports last week that concluded that a Harris-Walz victory that puts control of Congress in the hands of Democrats will boost the economy and improve the financial well-being of many Americans.
Goldman Sachs issued a note Wednesday predicts that growth and employment under the Harris administration will continue to rise. In contrast, the rest of the Trump administration will bring a slowdown in economic output and reduce job growth caused by tax increases and restrictive immigration policies.
“We estimate that if Trump wins by a landslide or with a divided government, the slowdown in growth from spending and stricter immigration policy will outweigh the positive fiscal stimulus,” Goldman Sachs said in a note.
“If the Democrats sweep, new spending and an expanded middle-income tax credit would be little more than a reduction in lower investment due to higher corporate tax rates,” argued Goldman Sachs.
Goldman Sachs predicts that post-election job growth will increase in direct proportion to the extent of a Democratic victory in November. Specifically, Goldman says 10,000 jobs will be added every month under Harris as opposed to Trump.
In addition, Goldman sees inflation rising under Trump by about .4 percentage points.
Nomura’s report looked at the global impact of Trump’s plans and determined that they would increase inflation by .75 percent next year. As a result, the investment banking firm predicts that Trump’s tax plan and higher taxes will be prohibitive. interest rate cuts by the Federal Reserve Bank.
The difference in predictions of Harris vs. Trump is primarily the result of the candidates’ policy proposals regarding taxes and tariffs.
Taxes and Your Wallet
Harris and Trump have very different tax plans.
Trump has promoted tax cuts for the wealthy and corporations. He says that will go into middle class and low class homes.
Harris, on the other hand, favors tax increases on the wealthiest individuals and corporations to pay for programs aimed at helping middle- and lower-income households.
However, there is some room for agreement. Both have advocated removing taxes on tips.
Statistics from two independent research organizations found that middle-class families would gain more income under both candidates’ tax plans. However, gains from Trump’s tax plan could turn into losses if his tax plans are factored in. More on taxes below.
A family with an income of $80,000 a year could get $1,700 after tax under Trump, according to the report. Penn Wharton Budget Model. The model shows that taxable income for the same family would increase by $2,2000 under Harris’ tax plan.
Those in the 0.1 percent of income ($14 million a year) would gain $377,000 under Trump’s proposals while they would lose $167,000 under Harris’ plans.
Payments and Your Wallet
Trump and Harris also have different approaches to taxation.
Used as a means of raising prices on imported goods, tariffs are intended to bring the prices of domestic and foreign products more or less equal.
While the tax plan must be passed by Congress, tariffs can be set by the president at will.
Trump is advocating a 10 to 20 percent tariff on all foreign goods with a 60 percent tariff on Chinese imports.
Harris maintains that Trump’s tax plan is too broad and will lead to higher prices for consumers. In his acceptance speech at the Democratic National Convention, he described the former president’s plan as “Trump’s tax”.
Analysis of Peterson Institute for International Economics (PIIE) looks like harris is getting out.
If Trump adds tax proposals to his tax plan, Trump’s plans will reduce after-tax income for middle-class families, according to PIIE. Remember that $80,000 household that would take home $1,700 more under Trump’s tax plan? They will end up losing (instead of gaining) $1,700 per year if both the tax and tax systems are implemented.
Some economists have weighed in on Trump’s tax plans.
“But even just a step towards that is a problem,” Mark Zandi, Moody Analytics chief economist told CNN. “It’s a very bad idea. If there’s one thing most economists can agree on, it’s that prices are bad.”
JP Morgan’s David Kelly, also speaking to CNN, said Trump’s tax proposal is “one of those magical economic proposals that can create inflation and get you into trouble — at the same time.”
Tariffs can disrupt procurement and lead to retaliation from trading partners.
“The mentality of a two-year-old child: You punch someone in the nose and expect them not to punch you back,” said Kelly.
The National Debt and Your Fund
Both candidates’ fiscal plans will increase the national debt according to the Penn Wharton Budget Model. However, Trump’s proposals would add nearly five times as much as Harris’s.
Trump’s plans would add $5.8 trillion to the debt over 10 years and Harris’ plans would increase the debt by $1.2 trillion over the same period.
Candidates differ in how they can pay for their programs. Harris favors an income tax increase for people earning more than $400,000 a year. He also advocates raising corporate taxes from 21 percent to 28 percent.
Trump, on the other hand, thinks the tariffs will cover his deficit.
Family Living Expenses and Your Wallet
Both candidates said they would support legislation to make childcare more accessible. In fact, both candidates have some history of trying to lower child care costs.
Trump has failed to get congressional support for raising child care costs during his presidency. However, he succeeded in doubling the child tax credit and getting paid leave for government workers.
Harris served as vice president to push for national family leave and pre-kindergarten.
Helping families with childcare costs is one thing, but the devil is in the details. One candidate, Trump, has no specifics.
Trump was asked twice how he would help with child care costs during his debate with President Joe Biden. He put the matter aside twice. He was also asked how he would help families struggling with child care costs during a Thursday session at the Economic Club of New York. Again, he did not provide details.
“Since child care is talked about as expensive, in comparison, it is not very expensive compared to the kind of numbers we will take,” said Mr. Again, he speculated that prices would cover costs.
Trump’s vice president, Senator JD Vance didn’t help matters. He told a Mesa, AZ rally Wednesday that parents should seek help from family members.
“Maybe Grandma and Grandpa want to help out a little bit,” Vance said when asked what can be done to help families with childcare costs.
Harris, on the other hand, has a lot coming. He unveiled his economic plan last month that included raising the child tax credit from the current $2,000 to $3,600. In addition, he proposes giving families of newborns $6,000 to help with care in the first year.
Governor Tim Walz, as Harris’s running mate, supports him in his advocacy of paid family and medical leave. He signed such a provision into Minnesota law in 2023.
social Security
Social Security has been denied to presidential candidates for generations. This year is no different. Trump has promised not to cut Social Security. In contrast, Harris vowed not only to protect but also to increase public safety
“I would never do anything that would jeopardize or harm Social Security or Medicare,” Trump said in a statement March interview with Breitbart News.
While Trump doesn’t appear to be “damaging public safety” – his tax plan could do just that, Michael Ryan, founder of michaelryanmoney.com, said. Newsweek.
“His plan to eliminate taxes on Social Security benefits may sound appealing,” Ryan said. “But let’s be real. It will likely only exacerbate the program’s long-term funding challenges.”
As a congressman, Harris co-sponsored legislation that would have increased revenue for Social Security by extending the income limits for payroll taxes to incomes over $250,000 a year. He also proposed changing the annual Cost of Living Adjustment (COLA) to determine increases in social security benefits. Instead of using the CPI-W (Consumer Price Index for Urban Wage Earners), Harris wants to switch to using the CPI-E (Consumer Price Index – Elderly) to determine the COLA. The CPI-E is a more accurate measure of prices for adults. It is usually slightly higher than the CPI-W.
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