Vice President Kamala Harris wants to renovate the American economy. Former President Donald Trump’s economic vision amounts to knocking it down and rebuilding it from the ground up.
The Harris economic agenda calls for modest improvements designed to make life more affordable. Bigger tax credits for parents. Boosting the minimum wage. Building more homes. And more small business loans.
There’s nothing subtle about the Trump agenda. He’s calling for dramatic changes that could upend daily life. Mass deportations. Unthinkably high tariffs. And enough tax giveaways to give Oprah a run for her money.
The campaigns are fiercely divided over which approach is best for this moment. But what’s clear is that voters are not being forced to choose between two similar visions. They have a real contrast: Measured changes to the economy or drastic ones.
“Trump is proposing radical change – with an emphasis on radical,” Joe Brusuelas, chief economist at RSM, told CNN in a phone interview. “When you’re talking about forced deportations and 1930s-style tariffs, you’re talking about significant disruptions.”
Yet it’s far from clear that the US economy requires the complete overhaul Trump wants.
After all, the Federal Reserve appears to be on the verge of pulling off the once-unlikely soft landing: Taming inflation without crashing the jobs market. Unemployment remains historically low. The rate of inflation is nearly back to normal.
“The economy is doing just fine on its own. It doesn’t need radical change,” said Brusuelas.
Fighting inflation – or making it worse?
And there is a real fear that the Trump agenda could do more harm than good – especially on the inflation front.
Trump has promised to confront the affordability crisis. Yet some mainstream economists worry Trump wouldn’t just fail to tame inflation – he’d make it worse.
More than two-thirds (68%) of economists surveyed by The Wall Street Journal said prices would rise faster under Trump than under Harris. That’s up from 56% in July.
Twenty-three Nobel Prize-winning economists signed a letter that described the Harris agenda as “vastly superior to the counterproductive economic agenda of Donald Trump.”
Trump has argued mass deportations would help address the cost of living – especially the shortage of housing.
But there’s also a real risk that deporting millions of undocumented workers – if that were even possible – would cause wages to surge and that would lift prices for consumers.
“He has quite an inflationary agenda overall -– more so than any other presidential candidate in my lifetime,” Kimberly Clausing, nonresident senior fellow at the Peterson Institute for International Economics, told CNN.
Tariff hikes could backfire
Trump has proposed sweeping tariffs of up to 20% on all $3 trillion of US imports. He’s called for even steeper tariffs of 60% on China and suggested massive tariffs on other trading partners like Mexico.
By contrast, Harris has not called for major new tariffs, suggesting trade policy could remain similar under a Harris administration as it is under President Joe Biden. No massive relief from tariffs that the Trump administration imposed – but no major trade war either.
Although Trump argues that tariffs won’t spike prices, pointing to how inflation was subdued during his administration, many mainstream economists say otherwise. They point to study after study that finds Americans have borne almost the entire cost of Trump’s tariffs on Chinese products.
Clausing, a former Biden administration official, published research earlier this year that warned Trump’s tariff proposals would cost the typical middle-income US household more than $2,600 per year.
And that estimate does not even include almost-definite retaliation from other nations who would respond to Trump tariffs with ones of their own.
“The first order of operation when it comes to the economy should be do no harm,” said Brusuelas. “There are major risks that the changes Trump is proposing could result in a recession.”
Trump’s steep tariffs, coupled with mass deportations and influencing Federal Reserve policy, would cause weaker economic growth, higher inflation and lower employment, according to a separate Peterson Institute analysis. In some cases, damage would continue through 2040, researchers found.
Trump plan could cost $8 trillion
The two candidates have starkly different visions on taxes.
Harris has called for only partially extending the 2017 Trump tax cuts. Although Harris has pledged not to raise taxes on anyone making under $400,000, she will push Congress to roll back tax cuts for the richest Americans and increase the corporate tax rate from 21% to 28%.
On the other hand, Trump is tripling-down on tax cuts.
Not only has Trump called for fully extending his 2017 tax cuts, which will largely expire in the upcoming presidential term, he wants to lower the corporate tax rate to 15% for some companies.
And Trump has laid out plans for a series of targeted tax breaks, including eliminating taxes on tips (something Harris later endorsed), Social Security benefits, and overtime pay and making interest on car loans tax deductible. Last weekend, Trump floated a tax credit for “family caregivers,” too.
Yet there is a real price tag for all these tax giveaways. And the federal government has already wracked up $35 trillion of debt.
Although neither candidate has clearly laid out plans to pay for their campaign promises, Trump’s plans would add $7.75 trillion to the national debt – nearly twice as much as Harris, according to the Committee for a Responsible Federal Budget.
Frustration lingers
Still, Trump’s message of strength and dramatic change is likely resonating with voters frustrated with the current state of affairs.
Consider that just 28% of Americans believe the country is on the right track, according to a recent NBC News poll. That’s well below the north of 40% who said that in 2021 when President Joe Biden took office.
Consumer confidence is on the rise – it climbed in October by the most since March 2021 – but it remains well below where it was when Trump was in office before the pandemic.
The rate of inflation is down but Americans are still paying way more than a few years ago on everything from groceries to car insurance. And Trump is promising bold change to address the cost of living – even if experts fear those changes could make matters worse.
