Kamala Harris is our choice for President of the United States. (Photo: White House)
Editor’s Note: This is the first of a two-part analysis of campaign promises by Vice President Kamala Harris and Republican challenger Donald Trump. Part I focuses on the economy, inflation and taxes.
Kamala Harris is hands down the best qualified to be President of the United States and should have your vote in the 2024 election.
The reasons for our endorsement are manifest. They begin with her background, experience and temperament. But make no mistake, Donald Trump is a key factor as well.
Trump has demonstrated over and over, he is unfit to be President of the United States. He has built a campaign based on grievance, misogyny, empty promises, lies, racism and hate. But that is only half the problem.
If you set aside his mental state, which is troubling at 78 years old, Trump is clearly incompetent, lacks reason and judgment and has shown he does not grasp key facts or the nation’s role in the world.
He has pitched his campaign narrowly to his like-minded base and is incapable of uniting the country.
He promises years of turmoil and upheaval as he pursues his agenda of political revenge, hair-brained economic policies and an unnecessary, hate-fueled and destructive campaign against immigrants.
In a side-by-side comparison, Harris is the clear choice to lead the nation into the 21st Century.
The Economy
It’s astonishing that polls show Trump with an advantage on managing the economy.
When President Obama left office, he’d pulled the country back from the 2008-2009 financial meltdown and handed Trump a sound economy.
The Obama economy gained a net 11.6 million jobs. The unemployment rate hit 10% during the crisis and fell to 4.7%, below historical norms, when he left office. Average weekly earnings for all workers were up 4.2% after inflation. The number of unfilled job openings more than doubled during Obama’s time.
After-tax corporate profits also set records, as did stock prices. The S&P 500 index rose 166%
Trump ran it into a ditch by lying about COVID, then mismanaging the response.
Lines stretched for hours at food banks, hospitals were overwhelmed, tractor-trailers were used as temporary morgues, food and staples were in short supply nationwide and 750,000 people died on his watch.
In April 2020, the unemployment rate hit 14.8%, the highest since the Great Depression.
When Trump left office in 2021, the economy was in a shambles. The unemployment rate was 6.5% and 16.5 million people were out of work. He became the first president since Herbert Hoover to post a net job loss.
Retail gas prices; Trump administrtion
But it wasn’t just this pandemic. His economic policies were equally ruinous.
His 2019 tariff war caused 1,800 Factories to close, threw half of the factory workers who found jobs under Trump, out of work, bankrupted 33% of our family farms and mangled the supply chain.
Trump imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, amounting to one of the largest tax increases in decades, according to the conservative Tax Foundation.
Yet, Trump has vowed to pursue even higher tariffs.
“His proposed tariff increases would hike taxes by another $524 billion annually and shrink GDP by at least 0.8%, the capital stock by 0.7%, and employment by 684,000 full-time equivalent jobs,” excluding the cost of retaliation by other countries from a global trade war, according to the Tax Foundation.
From Wall Street to Nobel Prize laureates, economists predict Trump’s proposed tariffs will cost consumers thousands of dollars in new taxes, lead to higher inflation, balloon the deficit, and likely trigger a recession.
Trump administration’s overall weak trade agenda, COVID-19—and the administration’s mismanagement of the crisis—wiped out much of the previous decade’s job gains in U.S. manufacturing, according to a study by the Economic Policy Institute.
The real U.S. trade deficit increased every year beginning in 2016, reducing GDP growth by roughly 0.25% annually and reaching historic proportions during Trump’s administration.
When Biden took office in 2021, he was facing an economic crisis. He acted quickly to enact the nearly $2 trillion American Rescue Plan, including $1,400 stimulus checks, expanded unemployment insurance benefits and the enhanced child tax credit.
By all accounts, his plan worked. Economists said the U.S. recovery from the COVID-19 pandemic has been among the best in the world.
Employment surpassed pre-pandemic peak in record time. By August 2022, the economy regained all the jobs that had been lost since April 2020. In contrast, it took 76 months for employment to reach its pre-recession peak after the Great Recession, according to the Center for American Progress.
The Inflation Reduction Act lowered out-of-pocket costs for prescription drugs for seniors on Medicare and expanded financial assistance for health insurance through the Affordable Care Act.
Biden’s Infrastructure Investment and Jobs Act and the CHIPS and Science Act—has helped spur private sector investments. Companies subsequently announced billions of dollars of investment in domestic manufacturing, leading to high quality job creating and a boost U.S. competitiveness.
The Federal Reserve has started cutting interest rates. Hiring is picking up, unemployment has dropped and wage growth has been strong, while inflation has receded to pre-pandemic levels. Retails sales also remain durable.
As a result, the U.S. economy’s recovery from the pandemic is the “envy” of the developed world, according to The Economist magazine.
Harris’s economic politics would build on that foundation.
Her strategy involves banning price gouging, promoting housing affordability, reducing healthcare costs, and revising former President Donald Trump’s tax cuts that benefited corporations and higher-income taxpayers.
Trump has tried to portray Harris’s policies as radical and leftist, but they are merely progressive and only slightly left of center.
More than half of the living US recipients of the Nobel Prize for economics — 23 in all — have called Vice President Kamala Harris’ economic agenda “vastly superior” to Trump’s plan.
“Simply put, Harris’s policies will result in a stronger economic performance, with economic growth that is more robust, more sustainable, and more equitable,” the economists wrote in a joint letter.
Inflation
Inflation has been the one overhang on the Biden pandemic recovery. Trump has repeatedly cited the post-pandemic price rise on Biden/Harris policies.
But the issue is far more nuanced and government spending alone is far from the sole reason.
inflation is a lagging indicator, which only shows up in the economy 8- to 12-months later. As such, its roots can be traced to Trump’s 2018 and 2019 tariff increases. Those tariffs caused the price of home appliances, automobiles, and other consumer goods to soar by an average of 12%; Meat/Poultry/Produce prices rose between 5% and 9%
The US response to the COVID-19 pandemic included a series of federal initiatives, notably the CARES Act and the American Rescue Plan, which collectively authorized roughly $5 trillion in government spending.
These programs contributed to strong consumer and business demand, which tightened labor markets (between mid-2021 and early 2022 the ratio of job vacancies to unemployed workers doubled), putting upward pressure on wages and prices, according to the National Bureau of Economic Research.
But supply chain disruptions had an important inflationary impact, as well, particularly in 2021 and 2022. Price spikes due to shortages were the dominant drivers of inflation in its early stages.
“The vast majority of the inflation surge was driven by supply-linked factors, not by the demand side that would point to overheating.” according to the Brookings Institution.
US auto production is a case in point. It dropped from 11.7 million vehicles in July 2020, roughly the pre-pandemic rate, to less than 9 million in the fall of 2021, reflecting shortages of computer chips and other parts and accessories.
The crude oil market was disrupted by the Russian invasion of Ukraine in early 2022, sending oil prices to a high of $100 a barrel, before they began easing. During that time, the United States became the largest producer of oil.
Price gouging was also a factor. During the period of high inflation, corporate profits skyrocketed as companies raised prices.
Trump claims inflation was low during his administration, but the contrary is true. Inflation was 1.7% when Obama left office and rose to 2.13% in 2017 and 2.44% in 2018. Inflation only fell below that level as the pandemic gripped the nation. Today’s inflation rate is about the same.
Gas prices rose all during the Trump administration peaking at $2.98 a gallon before the pandemic. Trump claims gas was $1.80 a gallon, but it only fell that low for one month in March 2020.
At Trump’s request, Saudi Arabia and Russia cut oil production to save U.S. oil companies from the downturn. Trump has bragged about the deal, but fails to mention the agreement extended until 2022, putting upward pressure on prices as demand picked up.
Now, Trump’s only plan to reduce inflation is to “drill baby drill,” that is to cut the price of oil by 50% in the first year in office, which he says will have benefits across the economy.
His plan includes slashing regulations and safeguards and opening up federal wetlands, offshore areas and wildlife refuges.
With oil trading at $68 a barrel, he would have to bring the price down to around $34 a barrel. The last time oil was that cheap was in the 1960s, when it cost an inflation adjusted $5.25 a barrel.
This is pure pie-in-the-sky policy.
The president does not have the power to control oil prices. Oil is an international commodity traded on world markets. Any significant increase in U.S. oil production wold be offset by production cuts by Saudi Arabia and the OPEC+ nations to stabilize prices.
It’s also unprofitable to drill for oil in the United States unless the price per barrel is between $80 and $100 because fracking is a more expensive extraction method. U.S. oil companies answer to shareholders, not the president.
Taxes
Trump has made cutting taxes a cornerstone of his campaign, but like all of his promises, his proposals are not grounded in reality.
In a bid to pander for votes, he’s proposed a dizzying array of at least a dozen tax cuts.
They include extending his expiring 2017 tax cuts, reviving deductions for state and local taxes (SALT), reducing the corporate tax rate for domestic production, exempting tips, overtime pay and bonuses from income taxes, making car loan interest tax deductible, repealing social security taxes and green energy tax credits, and imposing steep new tariffs.
Criticism of his proposals has been loud and sharp.
“These tax proposals he’s floating out of desperation are as fake as his tan,” Democratic Senate Finance Committee Chair Ron Wyden said in a statement. “Trump knows Republicans in Congress have no intention of passing this stuff, but he goes ahead and blurts it out anyway.”
Who wins under Trump tax cut extension
Best estimates are Trump’s tax cuts would cost $$9.75 trillion over a decade.
His three new exemptions — overtime, Social Security benefits, and tips — would cost at least $2.9 trillion, and possibly much higher, according to the Tax Foundation.
Trump is also considering a $5,000 per child tax credit that could add another $3 trillion over a decade.
The cuts would far outstrip the $4.8 trillion, his proposed tariffs and repeal of green tax credits would generate over the same time. Extending his 2017 tax cut alone would gobble up all the new revenue.
What’s more, the majority of these Trump tax cuts would be regressive and benefit the wealthy over the poor and middle class.
Although Trump has argued his tax cuts would stimulate the economy and lead to higher government revenues, just the opposite has happened with his 2017 corporate tax cut.
So, what are corporations doing with the money from Trump’s $1.4 trillion tax cut? Investing in jobs? Hiring more people? Lowering costs to consumers? None of the above.
S&P 500 companies were expected to repurchase $925 billion worth of their own shares in 2023, a 13% annual gain, up from initial forecast of 4%, according to a Goldman Sachs analysis.
Buybacks should then climb 16% in 2025 to $1.075 billion. Stock buybacks reward investors and artificially raise the price of stock, which is a key measure for executive bonuses. In short, they’re lining their own pockets.
Harris has called for raising the top individual income tax rate from 37 percent to 39.6 percent and has pledged not to raise taxes on those earning less than $400,000.
She has also called for restoring the increase in the child tax credit (CTC) and earned income tax credit (EITC) under the American Rescue Plan. The EITC for workers without children would be raised to $1,500. CTC would go from $2,000 per child to $6,000 for newborns, $3,600 for children under six, and $3,000 for those ages six to 17. She would also make the full CTC benefit available to households earning little or no income.
Low-income families with children would gain $2,750 on average from the combination of the expanded CTC and the additional credit for newborns. The EITC change would give the average household in the bottom two quintiles a tax break of $720, according to the Tax Policy Foundation.
Harris has proposed expanding the low-income housing tax credit and creating new credits for home building projects in certain low-income communities.
Harris proposes raising the deduction for startup business expenses from $5,000 to $50,000 and simplifying the tax filing process for small businesses.
Harris has also proposed an “America Forward tax credit” for investment “in key strategic industries.”
Republicans have falsely claimed that Harris is proposing “price controls” on groceries, but she actually proposed a national price-gouging ban. Some 37 states, including Texas and Florida, have similar bans.
Groceries are more affordable now than in 2019 based on the number of hours of work needed by an average U.S. worker to buy the same basket of goods, according to economists.
On the revenue side, she has said she would raise the long-term capital gains tax rate to 28%, up from the current 20%, for those who earn $1 million or more.
Like Biden, Harris is eyeing a so-called billionaire minimum tax – which would impact those whose net worth is more than $100 million, roughly less than 1% of taxpayers.
Harris is also proposing an increase to the corporate tax rate from 21% to 28%.
In all, Harris’s proposals would cost an estimated $3 trillion over the next decade. Her proposals to raise taxes would raise at least $2 trillion over ten years.
Andrew Lautz, associate director for the Bipartisan Policy Center’s economic policy program, says that Harris’ tax plan is “progressive in nature” and would deliver a “larger proportion of benefits to low- and middle-income families than to high income families.”
Harris’s policies reflect her temperament and commitment to lead from the bottom up, not the top down. It’s the right course for America and America’s future.