The Daily - Trump vs. Harris on the Economy

Episode Date: August 26, 2024

As the 2024 presidential race enters the homestretch, former President Donald J. Trump and Vice President Kamala Harris are putting economic policy at the center of their pitches to voters.Jim Tankersley, who covers economic policy for The New York Times, evaluates both of their plans.Guest: Jim Tankersley, an economic policy reporter for The New York Times.Background reading: Analysis: Both candidates embrace expansions of government power to steer economic outcomes — but in vastly different areas.Analysis: Harris’s price-gouging ban plan does not appear to amount to government price controls. It also might not bring down grocery bills anytime soon.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

From the New York Times, I'm Michael Bobarro. This is The Daily. Today. As we enter the homestretch of the presidential race, Donald Trump and Kamala Harris are putting economic policy at the center of their pitch to voters. So we asked our colleague, Jim Tankersley, to evaluate both of their plans. It's Monday, August 26th. Um, Jim. Good morning. Michael, hello. Sorry. Wow.

You gotta let me say hello. Let's try it again. Okay. Let's try saying hello again. We are like people who have said hello to each other literally thousands of times before. Go ahead. Hi, Jim. Hi, Michael.

So, Jim, both conventions are now over and the candidates have begun their mad final month's sprint to election day. And what's become clear is that both of the nominees are putting their greatest policy focus on the economy, which makes sense. It's the number one issue for voters. And we wanted to get a sense from you of how they are approaching the question of what economic plans

would meet this moment in the minds of the American voter and how those plans stack up against each other. Yeah, I think that both candidates now are free to focus on what Americans are telling pollsters is the thing that bothers them most about life in America right now, which is the high cost of everything. And both candidates understand this and there is no doubt from what either of them is saying and the pitch that they are now making in these last couple of months to voters. Elect me because I am the one with the plan to bring down that cost of living. And what's interesting to me as someone who has covered a lot of contrasts between presidential candidates on economic policy issues in the past is a really specific philosophical agreement

that both these candidates have about lowering costs, which is that they want to use the power of government in one way or the other to reduce prices that people are paying across the economy right now. So Kamala Harris and Donald Trump agree on virtually nothing, but apparently they agree that the federal government should be playing a big role in making things more affordable right now. Yeah, but the agreement ends with that sort of general philosophical government should do something part. There's really big differences in how Harris and Trump would use the power

of government in an effort to bring down prices in just a variety of ways across the economy. We'll just summarize the philosophical differences that flow from this shared vision of using the government. At the core of it, Trump wants to use the power of government to force companies to do things, to basically jawbone companies into creating jobs and production in the United States, and then in some kind of unusual and possibly impossible ways to use it to force private companies to lower their costs because he's making them. What Harris wants to do is to use the government to break down the power that some companies

have amassed in the marketplace and put more competition injected into the economy. And sort of under the idea that if government can correct those competition distortions, people will pay less for things. And then she wants to give some people more money to pay for high cost goods in the economy. So if you just sort of think of some basic tools you might see lying around a construction site, Trump wants to use kind of a hammer

and a bullhorn on private companies and on the economy, whereas Harris maybe wants to use a chisel to break some things up and then a ladder to try to give people a boost. Jim, that was an extremely useful metaphor. Fantastic. Let's now get into the specifics of how both of these nominees are trying to do what you are describing, starting with Trump. We have long been taken advantage of by other countries. So Trump's maybe most important policy for trying to attack this is tariffs. We're going to charge them to come in and take advantage of our country because that's

what they've been doing for nothing. To take our jobs. We're going to charge them. He wants to levy new taxes on imported goods to the United States. More taxes on imports from China, where we get a lot of our imports and also just on anything that comes in from anywhere across the board. As we reduce burdens on domestic manufacturers, American workers will make our critical goods better and cheaper. We're going

to make them in our country right here in the USA, right here in a place called North Carolina. Have you heard of it? right here in a place called North Carolina. Have you heard of it? Have you heard of it? The idea behind this is that if it costs more to buy imported products, that'll force companies to make more things here. They will pay good wages to American workers,

and there'll be more American-made products to choose from, and that it'll help with people's cost of living by creating what Trump and his running mate JD Vance promised will be millions of American manufacturing jobs that can help support a family. And this isn't a totally new idea for Trump. Towards the end of his first term as president, he launched a full-on trade war with China using tariffs as the instigator and so we know what this ends up looking like. When he was president, Trump started laying tariffs on China and escalated them. And we ended up with hundreds of billions of dollars of products from China, subject to tariffs,

which by the way, the Biden administration has kept in place. So we know that Trump is serious about tariffs, but this is by far and away his biggest, grandest tariff vision. For the early rounds of this campaign, Trump talked about his sort of worldwide tariff as being like a 10% tariff, levied this 10% tax on everything coming in from anywhere in the world. Now he's talking about it being up to 20%. So obviously that's double the size and that's, you know, a significant tax on everything

coming in from anywhere that is not the United States. Well, what do we learn from the past two administrations? Like you said, Trump started these tariffs, but Biden kept a lot of them, about how effective they are at doing the thing Trump hopes they do. There's really no economic evidence to support Trump's claim that tariffs create millions of domestic manufacturing jobs. There certainly isn't any evidence from his time in office that that just didn't happen. Instead what we saw was the price of some things like washing machines went up for American

consumers, profit margins were squeezed for some American retailers, and overall the effect on employment was very, very small, if anything. But Trump's advisors and Trump himself don't believe that economic evidence I just cited to you. They really think that if you do big enough tariffs, you're going to force manufacturing employment back to the United States. He has some of the most dyed in the wool believers of that on his team. I mean, they really think,

you know, as Vance likes to tell people, they're going to go revitalize all of these left behind manufacturing centers just by doing big tariff policies. But the other important thing here is that the politics of tariffs remain very positive, especially when it comes to China. Americans are very concerned about China right now, the polls show, and they're favorable toward all sorts of efforts to curb China, and that includes tariffs on China. So that is a big part of the reason why President Biden kept the Trump tariffs on China, and so that's why they're pursuing it. Got it. So they want to keep hitting the gas on those tariffs. But if tariffs, as you've just explained, actually increase many consumer prices rather than lowering them, what's Trump's plan for lowering those

costs in the shorter term? His short-term plan is to use government force, either by bullhorn or by hammer, to bring down costs in particular industries. I'm just going to warn you right now, Michael, that not all of these are fully fleshed out. Okay. It's a campaign. It's a campaign. It's also Donald Trump. He is much more vague on the details than any candidates who have come before him.

Car insurance is up 70 to 100 percent and you can't get it. You can't even get it. Do you agree with that? You can't even get it. They tell me. So for example, he says he's going to direct his cabinet to bring down the price of auto insurance within the first 100 days or week that he's in office. Prices will come down. You just watch. They'll come down and they'll come down fast, not only with insurance, with everything. But no idea how he's going to actually get auto insurance companies to just cut their just watch, they'll come down and they'll come down fast, not only with insurance, with everything.

But no idea how he's going to actually get auto insurance companies to just cut their rates out of the goodness of their heart. By contrast, I'm announcing today that under my leadership, the United States will commit to the ambitious goal of slashing energy and electricity prices by half at least half. He says the same thing about energy prices. You will never have had energy so low as you will under a certain gentleman known as Donald J Trump. Have you heard of him?

Within one year, he's going to cut energy prices in half. But there's no feasible policy that he could do within a year to bring enough production online to cut energy prices in half. That's just not something we've really ever seen in America. Mm-hmm. So again, no real idea of how he would do it. He just says he would. The colossal influx of migrants into our cities is driving rent,

rent absolutely through the roof. Now, maybe his most concrete plan is how he says he's going to bring down the cost of housing. Hmm. But that's why as president, I will seal the border. I will send them all back to their countries where they belong. Prices will come down and come down dramatically and come down fast. And that is by deporting millions of immigrants who currently live in houses. Wow. A dramatic reduction in housing demand. This is theoretically possible if you drive a bunch of people out of their houses by deporting

them then you would reduce demand for housing that could bring prices down particularly in certain markets. But of course, deporting millions of people would be disruptive to the economy in a whole bunch of other ways, would be disruptive to American society and American politics. And deporting millions of immigrants is a really difficult thing that would require a massive federal law enforcement effort. And again, the feasibility here is not at all certain and we do not have a lot of details on how it would be carried out.

Together, we will deliver low taxes, low regulations, low energy costs, low interest rates, low inflation so that everyone can afford groceries, a car and a home. Common sense. So these plans to lower consumer costs seem pretty flimsy sounding. Well, Trump does have one more thing in his pocket that he talks about. The Federal Reserve is a very interesting thing and it's sort of gotten it wrong a lot. Which is people are really upset about the high cost of borrowing in the economy right

now, high interest rates. I feel the president should have at least say in there. Yeah, I feel that strongly. I think that in my case, I made a lot of money. I was very successful and I think I have a better instinct than in many cases people that would be on the Federal Reserve or the chairman. Trump wants to be able to force the Federal Reserve to cut rates. He wants actual presidential ability to help set interest rate policy, which is not something the presidents currently have. They appoint Fed chairs, they appoint

Fed governors, but they do not get a say at Fed meetings in where interest rates are going to go. He wants the actual authority to drive rates down himself and reduce the cost of borrowing in the economy for people. Right. We've talked about this a little bit on the show, and it's not quite clear legally whether Trump would have the power to take over the Fed, which is technically an independent agency within the executive branch, but he and those around him think they could, in theory, pull it off. So then presumably if they did, they would ensure that the interest rate goes down, borrowing costs are lower, mortgage prices are lower.

So in theory, if he does this, prices, by definition, would start to go down. Well, borrowing costs would start to go down, but a lot of economists warn that it could actually backfire really bad. How? When executives start to intervene in independent central banking, you really risk setting off a spiral of rapid inflation. In this case, Trump could force interest rates down much faster than actual conditions call for, and suddenly all that price growth that people were upset about in the last few years,

which has finally started to come down, takes off again. And now you don't have the credibility in the marketplace of an independent central bank trying to fight that. And what we've seen in other countries around the world with more politicized central banks is that you can get really big inflation spirals. And that's what economists would warn would be a real risk here. And so he might be trying to make things cheaper, but in fact make things a lot more expensive by setting off rampant inflation. So setting aside how practical or wise any of these approaches are, they are very top-down, very government-as-center-of-the-economy-style

plans, very classically speaking, un-Republican, right? I mean, I think of Republicans and the economy as, take your hands off my economy. This is exceedingly hands-on, the economy. Yeah. Tariffs are a tax, economists would say. It's raising taxes. Intervening with the Fed is classic sort of thing that a tax, economists would say, it's raising taxes. Intervening with the Fed is classic sort of thing that a free market person would not want you to

do. And then these, yeah, these, the idea of the government stepping in and telling an auto insurance company what it can charge is the sort of thing that Republicans even now call communist. Right. But Trump hasn't junked the entire classic Republican approach. He is keeping, for example, promises to reduce regulation across the economy, which could help to lower costs by reducing the burden on business to comply with what the government's telling them to do. And he's promising to do another big round of tax cuts for individuals and businesses. So those are much more classic Republican ideas. But even then, even with his sort of embrace of classic Republican tax cuts, Trump has

tossed a couple of tax cut ideas on the table that you don't usually hear from Republicans. It's called no tax on tips. No tax on tips. One of them is exempting the income that workers like waiters or Uber drivers earn via tips from federal income taxes. Everybody loves it. Waitresses and caddies and drivers. Another is exempting the income that retirees make from social security benefits from taxes. Both of those are very targeted to demographic groups Trump is trying to win over for this election.

So, he wants senior citizens, he wants like culinary workers in crucial states like Nevada, he wants them to support him. And so he's made tax cuts for them planks of his agenda, even though those particular tax cuts would not be the top of your conservative economists lists for the tax cuts they'd most like to see. Now Trump has claimed that these tax cuts would basically pay for themselves. They would generate so much economic growth that revenues would actually go up not down. There's just no evidence that that's true. It wasn't true of his last round of tax cuts. It would not be true of this round. But that doesn't stop him from saying it.

So this feels a bit less like a clear and coherent vision to meet this moment than an economic plan that is designed to beat Kamala Harris in November. I think of it this way. Trump entered this race with a strong economic brand. Americans see him as the candidate who they trust most in the economy. They have fond memories of the economy when he was president. And what he's sort of done is take sort of the basic building blocks of his economic policy from when he was president. And he's just kind of riffed a few things on top of that,

often again, without very much detail, to try to respond to particular sets of voters or particular concerns in this election. For Kamala Harris, it's a totally different thing. Harris needs to basically reboot her brand and the Democratic Party's brand on economic policy. She's behind in the polls on the economy. People did not like President Biden's handling of the economy at all, but she

has this very rare, this late in the game opportunity to reintroduce herself and her ideas to the country. And she has crafted her economic plan in a way that is meant to convey to voters. I understand what you're upset about. I know why you're angry about the economy. And I have real ideas for how to deal with it. -♪ -♪

We'll be right back. We'll be right back. So Jim, let's turn now to the specifics of the Kamala Harris plan for the economy, her plan to use government power to answer the financial needs of the electorate right now, knowing, as you just said, that polls tell us this is a relative weakness for her vis-a-vis Trump. Yeah. So Harris has begun to roll out her economic policy plan. And I think really important context here is that she has been part of an administration where the president has really struggled over the last few years to get a particular balance

right when it comes to the economy. Democrats have really pushed him on one hand to take more credit for things like strong job growth and how fast the country popped out of the pandemic recession, which he's obviously very proud of. On the other hand, he's been under a lot of pressure to feel people's pain on high prices. And so it's led to these contortions almost where he says we're cheering the progress we've made, we've come farther than we thought we could have, but at the same time we know that stuff is still too expensive. And Harris has dispensed with a lot of that.

In her speeches thus far, she'll claim some credit for the economy, she'll talk about it being in a strong place, but she is much more solidly landed in the I know you think stuff is too expensive camp. And in rolling out her economic plan, she specifically chose to focus on areas of efforts to bring down high prices. So walk us through those plans. Sure. As president, I will take on the high costs that matter most to most Americans, like the cost of food. It starts in the grocery store and in the

food industry. And the basic Biden administration view of that industry is, it's too concentrated. Too few firms have a lot of power. So in some cases, she wants to continue what Biden has been doing and directly subsidize more competitors. We will help the food industry become more competitive because I believe competition is the lifeblood of our economy.

More competition means lower prices for you and your families. She wants to give government money to start up meatpacking companies to help them get bigger, challenge the dominant players, bring prices down because there's more competition. Got it. She wants the Federal Trade Commission to be aggressive at looking at mergers and other consolidation in the food industry, like even more so than it is now,

wants to give them more tools to look for anti-competitive behaviors by companies and attack them. So the idea is use the government to level the playing field in the food industry. We do this with big tech. We just did it with Google. Do it with big meat. Yeah, absolutely. There's a lot of evidence that the meat industry is very concentrated, and so that could be pushing up prices for consumers. So there are a good deal of economists who think, yeah, if you try to attack that, you try to get more competition in the industry, you might be able to bring prices down.

But Harris actually goes a step further, and she then focuses on grocery stores themselves. Many of the big food companies are seeing their highest profits in two decades. And while many grocery chains pass along these savings, others still aren't. She rules out a policy that is politically a response to a widely held view Americans have right now, which is that big companies are ripping them off at the grocery store. We all know that prices went up during the pandemic

when the supply chains shut down and failed. But our supply chains have now improved. And prices are still too high. I've been writing about this for a few weeks now. I can tell you people feel very, very strongly about it. Because the price of groceries went up during the pandemic, and in many cases have not come down, a lot of Americans believe that grocery chains,

food companies, whoever, are ripping them off. And they're really mad about it. And so progressives have been pushing Biden, and now Harris, to channel that anger more. And in her policy plan, Harris tries to do that. So believe me, as president, I will go after the bad actors. She proposes the first ever federal ban on price gouging, which we have state bans on price gouging.

It's basically the idea that companies shouldn't be able to exploit a crisis to charge people more for something They really need like classically if you have a blizzard overnight your hardware store shouldn't be able to quadruple the price of snow Shovels the next day. There is no federal ban on this Harris has proposed one but is the current inflation we're experiencing in the grocery store price gouging would seem to be an important question many economists Would say no there's just not a lot of evidence that there's systemic price gouging happening

at the grocery store right now. While we do have anecdotal evidence of particular companies raising certain prices, almost to take advantage of inflation, finding out that consumers are willing to pay more and jacking their prices because of it, there's just a lot more going on here than simple corporate behavior.

What we know from economic research is that people have more money to spend at the grocery store, there have been supply chain disruptions, and that grocery store workers are getting paid more now than they did before the pandemic. And that pushes up prices along with corporate profits. So it's more complicated than just a simple price gouging

story. And so Harris's ban on price gouging, which by the way, we know basically no details about, and we have only guesses really as to how it would actually work. That ban, almost no matter what it is, would not address those more complicated factors that are driving up grocery prices. address those more complicated factors that are driving up grocery prices. Okay, what else is Harris proposing to make America more affordable in this campaign? And let's talk about the cost of housing. She also has a housing plan that has two parts.

There's a serious housing shortage. In many places, it's too difficult to build and it's driving prices up. As president, I will work in partnership with industry to build the housing we need both to rent and to buy. She wants to use federal dollars to encourage developers to build like 3 million new housing units over the next four years. There's some particular funds to do that. She also wants to give some tax breaks to developers to do that.

The idea is that one way to bring down housing costs is to just build a lot more housing and you can use the power of government to encourage the building of housing. The general idea that the government should be doing more to encourage a supply increase of housing intends to be very popular among especially liberal economists right now. We also know that as the price of housing has gone up, the size of down payments have gone up as well. And then on the flip side, she wants to send $25,000 to every

qualified first time home buyer in the country to help them with a down payment. Wow. So you have theoretically more houses for people to buy and more money for people buying for the first time to buy those houses, which, you know, her campaign argues will make those houses more affordable. How would that $25,000 down payment work?

Because that is quite tantalizing, also, seemingly quite expensive for the government. We don't know all the details. But the idea on this one, which is a bit more fleshed out, is that the government would find a way to get that money to buyers when they go to buy the house. It's probably not useful for you to claim a tax credit a year after you've gone to buy your home, you need that

money right away, you need to bring it to the table at closing. And so they're looking for a way to make the tax credit sort of advanceable, it's called, so that people can get that money, take it with them and be able to buy a home. The economic knock on that is, if there's 10 homes in your neighborhood, and they were all selling for a hundred thousand dollars But suddenly a whole bunch of people in the neighborhood have $25,000 more to spend on those ten homes. Well that limited number of homes plus the extra

Demand ends up pushing up the price kind of classic economics fair enough But $25,000 is a pretty attractive carrot to dangle in front of a voter who has felt locked out of the housing market until now. That's absolutely true. And it's not the only carrot that Harris is dangling here in her initial tranche of economic plans. And the child tax credit, through which millions of Americans with children got to keep more of their hard earned income.

She's also offering money to parents to help them deal with the high costs of raising a kid. We know this works and has a direct impact on so many issues, including child poverty. If you'll recall, in 2021, President Biden signs this stimulus bill that gave a much larger child tax credit to parents across the country. That lasted for a year. It helped to reduce child poverty, and then it expired. So as president, I'll not only restore that tax cut, but expand it. And so she is proposing reviving that, giving thousands of dollars to parents per year on a permanent basis.

And that also on top of that, she wants to give up to $6,000 a year for parents of newborns. That is a vital, vital year of critical development of a child. And the cost can really add up, especially for young parents who need to buy diapers and clothes and a car seat and so much else. I think really importantly here, Harris has detailed these plans for tax credits for parents. She wants to do a lot more for parents though, she said. She's talked about wanting to do bigger federal programs to bring down the cost of childcare,

to provide paid leave, but on that she's given us no details. People close to her campaign say that those details might come in the weeks to come here, but we just we don't know right now. So we should think of this as part of her cost-cutting agenda for parents and the part that she's willing to lead with and give details for now, but not the whole thing. It strikes me that a lot of the proposals Harris is making, at least the ones we have some detail on, are tax credits, which, if you're the government, is money that you used

to take in that you're not going to be taking in anymore. So has Harris said how she would cover that lost revenue? Presumably, it's a tax increase of some kind on somebody. Harris hasn't come out herself and campaigned on the tax increases that would pay for her agenda, but her campaign has said on the record very clearly that she embraces the pay-fors in President Biden's most recent agenda, which is a fancy way of saying she's in favor of about $5 trillion in tax increases, all of which are concentrated on corporations and high earners. So no tax increases for anybody who makes less than $400,000 a year, but a whole bunch of taxes

on millionaires and big companies and the sort of people that Democrats are really fond of targeting with tax policy right now. Jim, just stepping back now a bit and looking at both of these plans, based on your reporting, based on your analysis, who benefits the most? What kind of American, what kind of voter from each of these two plans? Harris's and Trump's? That's a great question, and it's really hard to answer with the level of detail or the lack of detail

we have from these candidates. We can say some things about, for example, the Harris plans that we have details on. She is most likely going to be helping middle income and lower income parents with her child tax credit plan. That's who it's targeted for. We don't need to know all the details to know middle income and lower income parents with her child tax credit plan. That's who it's targeted for. We don't need to know all the details to know kind of directionally that's where she's going.

Trump wants to extend his tax cuts. That's going to help a lot of businesses and it will help people up and down the income scale. But from what we've seen in the past, the largest share of the benefits are probably going to go to corporations and higher earners. And if Trump does impose these tariffs, we know from a lot of economic modeling and studies that it's lower income people and middle income people who buy more of the things as a share of their income that are going to be subject to these tariffs.

So it's going to be more of a tax on the middle class and lower incomes than it is on higher incomes But it's gonna be tax on all those people There are a lot of things we don't know still though about what Trump might do to offset the cost of his plans About the rest of Harris's plans, but I think we actually can say one really important thing Pretty definitively which is that the odds are very low that either of these candidates are proposing plans right now that are going to bring prices back down, like actual deflation. We just don't see prices fall on a systemic basis very often.

And usually when they do, it's for bad reasons. In other words, what goes up in this case doesn't always come down. Right. And what happens instead is people kind of get used to the higher prices. They have to get used to it. And they really have to hope that what happens is things become more affordable, that their incomes go up even if prices are higher. And look, you can't run on that.

People aren't going to like that. And I don't think the electorate is going to really accept that. But it's almost certainly going to be the reality, no matter which candidate wins. Well, Jim, thank you very much. Always a pleasure. We'll be right back. Here's what else you need to know today. On Sunday morning, Israel bombed dozens of targets in southern Lebanon to prevent what it described as an extensive attack planned by Hezbollah on Israeli territory.

Hezbollah rejected the claim that Israel had preempted its attack, which was retaliation for Israel's assassination of a senior Hezbollah leader last month. The group said it had successfully fired 320 rockets at Israeli military targets, but Israel said those missiles inflicted little damage, and both sides appeared to signal that they did not intend to further escalate. And... So I cannot in good conscience ask my staff and volunteers to keep working their long hours or ask my donors to keep giving

when I cannot honestly tell them that I have a real path to the White House. Robert F. Kennedy Jr. has suspended his independent campaign for president and thrown his support behind former President Trump. In a series of long, intense discussions, I was surprised to discover that we are aligned on many key issues. In those meetings, he suggested that we join forces as a unity party. In a speech on Friday, Kennedy said that Trump had offered him a role in a second Trump administration, dealing with health care, food and drug policy, a major focus of Kennedy's campaign. Kennedy had reportedly sought a similar role in a Harris administration

in exchange for endorsing her, but was rebuffed. Kennedy's endorsement is unlikely to make much of a difference in the race. A Times analysis found that even if all Republicans or independents who supported Kennedy now switched to supporting Trump, Trump would only gain an average of one percentage point across seven key swing states. Today's episode was produced by Diana Nguyen, Nina Feldman, Sydney Harper, and Ricky Novetsky, with help from Claire Tennis-Getter. It was edited by Devon Taylor, contains original music by Mary Lozano, Diane Wong, and Brad

Fisher, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Lansferk of Wonderly. That's it for the Daily. I'm Michael Boborow. See you tomorrow.