Reviewing Trump and Harris Economic Policies Side-By-Side
"If you tell the truth, you don't have to remember anything." - Mark Twain
With the election just a few days away, I decided to compare the economic policies of the two major candidates, Donald Trump and Kamala Harris. Unfortunately, neither candidate presented extensive details about their policies, leaving much to our imagination and intuitive thinking. Given the energy around the election outcome, I tried to conduct an objective analysis without taking a side in the race. Don't shoot the messenger. I am just trying to be helpful to the handful of people who have not decided who their candidate is.
Overall, comparing the economic policies of Trump and Harris shows two contrasting visions for America's economy. Trump's policies are rooted in conservative, supply-side economics, while Harris aligns with more progressive, demand-side principles. Below is a comparative analysis across critical areas of economic policy:
1. Tax Policy:
Trump: His administration's hallmark economic policy was the 2017 Tax Cuts and Jobs Act (TCJA), which lowered the corporate tax rate from 35% to 21% and reduced taxes for individuals. Trump's tax policy was designed to incentivize business investment and job creation, a classic supply-side approach. It also increased the standard deduction and child tax credits but capped state and local tax deductions, affecting higher-tax states. Throughout the campaign, Trump has suggested more of the same. He proposed extending the expiring 2017 Tax Cuts and Jobs Act (TCJA) changes, further reducing the corporate income tax rate in some form, and exempting tips, overtime pay, and Social Security benefits.
Harris: As vice president, Harris supported reversing portions of the Trump tax cuts, especially those benefiting wealthy individuals and corporations. She advocates raising taxes on corporations and individuals earning over $400,000 annually and expanding tax credits for the middle class, such as the Child Tax Credit and Earned Income Tax Credit. Another proposal of her economic team is to set a higher tax on long-term capital gains and qualified dividends at 28% for taxable income above $1 million. Another novice idea is to create a 25 percent "billionaire minimum tax" to tax unrealized capital gains of high-net-worth taxpayers. Harris also wants to eliminate federal taxes on tips. She also says she wants to provide a financial cushion for small businesses with a tenfold increase in the startup expense deduction — lifting it from $5,000 to $50,000.
2. Economic Growth and Jobs:
Trump: His economic strategy focuses on deregulation, tax cuts, and promoting energy independence, particularly for fossil fuels like oil and natural gas. Trump believes that reducing regulatory burdens would spur business investment and drive economic growth. He also emphasized reshoring manufacturing jobs and renegotiating trade deals (like NAFTA, replaced by the USMCA) to protect American jobs. Before the pandemic, the U.S. economy saw steady growth and historically low unemployment rates.
Harris: Harris supports a more interventionist approach, advocating increased government spending on infrastructure, green energy, and education to create jobs and stimulate long-term growth. As part of the Biden administration, she supports investment in clean energy industries and unionization efforts. The American Rescue Plan and the proposed Build Back Better plan focus on reducing inequality and fostering growth through more equitable policies.
3. Regulation:
Trump: Deregulation was an essential aspect of Trump's economic policy. His administration rolled back numerous regulations, particularly in energy, finance, and the environment. For example, Trump eased environmental restrictions on oil and gas drilling and repealed parts of the Dodd-Frank financial regulations aimed at banks, arguing that these moves would unleash economic growth by reducing business expenses.\
Harris: Harris takes a slightly stricter stance on regulation. She supports strengthening environmental protection, pushing for action on climate change, and promoting clean energy. As vice president, she is part of an administration that seeks to impose higher standards on industries to protect workers, consumers, and the environment. Harris's policies also focus on enforcing antitrust laws to regulate big tech and reduce corporate monopolies.
4. Trade Policy:
Trump: Â Trump believes in using tariffs as leverage in trade negotiations. As President, he pursued a protectionist trade agenda, emphasizing "America First" policies. Trump imposed tariffs on China to reduce the trade deficit and curb intellectual property theft. He also renegotiated trade deals, such as the USMCA with Canada and Mexico, which was intended to benefit American workers, especially in manufacturing and agriculture.
Harris: Â Harris supports a more multilateral approach to trade, working with allies to address global issues such as climate change and fair-trade practices. As part of the Biden administration, her approach is less confrontational than Trump's. She focuses on rebuilding relationships with traditional allies while continuing to take tough stances on China, particularly in the areas of technology and intellectual property.
5. Healthcare:
Trump: During his first term, Trump sought to repeal and replace the Affordable Care Act (Obamacare), favoring market-driven healthcare solutions. His administration did not pass a complete replacement for Obamacare but managed to eliminate the individual mandate penalty through the 2017 tax law. Trump supported lowering prescription drug prices and promoted competition in the pharmaceutical industry. Trump's most significant contribution to reining health care costs was signing an executive order that required hospitals to disclose prices for standard services on their websites. In 2020, Trump signed the No Surprises Act, which protects consumers against surprise medical bills when receiving care from out-of-network providers. Unfortunately, his healthcare policy lacks comprehensive details. The general expectation is that if Trump wins the election, he will keep ACA, but it will loosen up some of its provisions.
Harris: Harris has been a strong advocate for expanding healthcare access. She supported Medicare for All early in her 2020 presidential campaign, though she later moderated her stance. As vice president, Harris supports expanding the Affordable Care Act, lowering Medicare eligibility age, and reducing prescription drug costs. The Biden-Harris administration has focused on expanding health insurance coverage and enhancing subsidies for middle-class families. Harris has also taken a leading role in the current administration's efforts to address the medical debt that burdens millions of families. Furthermore, she proposed rules to remove medical debt from credit reports and has promised to work with states to cancel medical debt altogether.
6. Climate and Energy Policy:
Trump: Â His administration heavily promoted fossil fuels and energy independence, including coal, oil, and natural gas. Trump rolled back numerous Obama-era environmental regulations, withdrew the U.S. from the Paris Climate Agreement, and opened federal lands and waters for more drilling. His energy policy aimed at making the U.S. energy-independent while reducing regulatory burdens on the fossil fuel industry.
Harris: Â Harris is a strong proponent of climate action and supports transitioning the U.S. to a clean energy economy. As vice president, she supports rejoining the Paris Climate Agreement, investing in renewable energy, and pushing for net-zero carbon emissions by 2050. The Biden-Harris administration's focus includes green infrastructure investments, such as electric vehicles and renewable energy projects.
7. Immigration:
Trump: Â As President, Trump's immigration policies were restrictive, aiming to reduce both legal and illegal immigration. His administration tightened visa programs like H-1B and sought to limit the number of refugees and asylum seekers. Trump argues that reducing immigration would protect American workers by decreasing labor competition and preserving jobs for U.S. citizens. On the campaign trail, he has promised to conduct mass deportation of undocumented immigrants. Most recently, Trump's position on skill-based immigration through work visas has become more favorable. In a podcast, Donald Trump said that if he became President, he would grant green cards to foreign graduates from U.S. colleges.
Harris: Â Harris supports a more inclusive immigration policy. She advocates for reforming immigration laws to provide a pathway to citizenship for undocumented immigrants, particularly those brought to the U.S. as children (DREAMers). Harris also supports expanding worker protections and raising the federal minimum wage to $15 an hour, which she argues would benefit both American and immigrant workers. The Biden-Harris administration in June 2024 announced measures to sharply curb access to asylum at the border following years of record levels of border crossings.
8. Deficit and Debt:
Trump: Trump's economic policies, especially the tax cuts, led to increased budget deficits, as the cuts did not pay for themselves through growth as predicted. While economic growth initially increased, the national debt grew substantially during his term, particularly in the wake of COVID-19 relief spending.
Harris: Â As vice president, Harris is part of an administration that supports large-scale government investments in social programs, infrastructure, and green energy. While this approach aims to stimulate long-term economic growth and reduce inequality, it has faced criticism for potentially increasing the national debt. However, the Biden-Harris administration argues that higher taxes on the wealthy and corporations would help finance these initiatives.
9. Affordable Housing
Trump: While recognizing the need for more affordable housing, the Trump campaign has not offered any specific plan to resolve the problem. Trump has long opposed building multi-family housing and instead backed single-family zoning and the use of Federal land. Trump has argued that his plan for mass deportations of undocumented immigrants will help free up the supply of housing.
Harris: Harris has offered several initiatives to address the nation's housing shortage. She promises to build 3 million affordable new homes and rentals by the end of her first term, offering tax breaks to builders who construct homes for first-time home buyers. She's also proposing a $40 billion fund to help local governments find solutions to the low housing stock. She also wants to provide up to $25,000 in down-payment assistance support for first-time homebuyers.
10. Student loan forgiveness
Trump: Republican administrations have historically opposed significant loan forgiveness initiatives but focused on expanding the use of 529 college savings plans. Trump has not commented on this topic, but the general expectation is that his administration will not promote student loan forgiveness on a large scale.
Harris: Biden Harris administration has forgiven about $170 billion in student debt through various programs but failed to provide $10,000 in universal relief to all borrowers, as he promised during his campaign. Harris has strongly supported broad forgiveness and will most likely continue these efforts as President.
How about the stock market?
U.S. presidential elections often bring short-term volatility to the stock market due to uncertainty over potential policy changes. Historically, however, the stock market tends to perform positively in election years, regardless of which party wins. Markets typically experience volatility leading up to the election but stabilize afterward as investors gain clarity on the political direction.
In the long term, the market continues its upward trend, and staying invested has generally proven more beneficial than holding cash, as missing out on key rebound periods can significantly reduce your returns. In summary, while elections can cause temporary fluctuations, their long-term impact on the stock market is generally neutral.