Trump vs. Harris on the Economy

from The New York Times I'm Michael Babar this is the [Music] daily today as we enter the home stretch of the presidential race Donald Trump and kamla 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 [Music] 26th um Jim Michael hello sorry wow you got to let me say hello let's try it again okay let's let's try saying hello again we we are like people who have said to 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 months 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 a number one issue for voters and we wanted to get a sense from you of how they are approaching the question of what economic plan 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 M 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 Ross the economy right now so KLA Harris and Donald Trump agree un 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 ways across the economy we 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 job own 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 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 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 fast 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 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 americanmade 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 promise 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 in a way 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 Levy 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 it's significant tax on everything coming in from anywhere that is not the United States well what have we learned 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 advisers 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 died 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 espe es when it comes to China Americans are very concerned about China right now the poll 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% and you can't get it you can't even get it do that 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 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 he could do within a year to bring enough production online to cut Energy prices in half it's that's just not something we've really ever seen in America mhm 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 but that's why as president I will seal the Border I will send them all back 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 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 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 a president should have at least say in there yeah I feel that strongly I think that uh 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 can 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 from 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 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 rampid 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 is take your hands off my economy this is exceedingly handson the economy yeah tariffs are attacks economists would say it's raising taxes intervening with the FED is classic sort of thing that that a free market person would would not want you to do and then these yeah these 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 junk the entire classic Republican approach he is keeping for example promises to reduce regulation across the economy which could help to lower cost 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 no tax on tips one of them is exempting the income that workers like waiters or Uber drivers earn via tips MH 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' 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 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 kamla 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 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 KLA 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 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's 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 [Music] we'll be right back so Jim let's turn now to the specifics of the kamla 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 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 this these contortions almost where he's 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 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 the 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 plants 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 Startup meat packing companies to help them get bigger challenge the dominant players bring prices down because there's more competition 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 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 uh 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 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 experienc 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 like anecdotal evidence of particular companies raising certain prices almost to take advantage of inflation finding out that consumers are willing to pay more and 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 or what it is would not 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 of housing the general idea that the government should be doing more to encourage a supply increase of housing it tends 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 $225,000 to every qualified firsttime 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 like 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 advancable 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 $100,000 but suddenly a whole bunch of people in the neighborhood have $225,000 more to spend on those 10 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 troncha of economic plans and the child tax credit through which millions of Americans with Children got to keep more of their hard-earned income we 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 we will provide 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 child care to provide paid leave but on that she's given us no details people close to to her campaign say that those details might come uh in 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 what 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 inome 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 det tells 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 it's lower income people and middle inome 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 and lower incomes than it is on higher incomes but it's going to be attacks 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 like a systemic basis very often and usually when they do it's 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 [Music] higher and look you can't run on that people aren't going to like that and and and I don't think the electri is going to really accept that um but it's almost certainly going to be the reality uh no matter which candidate [Music] wins well Jim thank you very much always a pleasure [Music] we'll be right back here's what else you need to Notre Day 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 report 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 switch 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 win Nina Feldman Sydney Harper and Ricky nety with help from CLA tennis gter it was edited by Devin Taylor contains original music by Maran Lozano Diane Wong and Brad fiser and was engineered by Chris Wood our theme music is by Jim brunberg and Ben lansberg of wonderly [Music] [Music] that's it for the daily I'm melaro see you tomorrow [Music]