Trump and Harris Could Clash Over Economic Issues in the Debate

For months, Kamala Harris and Donald Trump have taken shots at each other’s economic policies. The rivals will soon have the chance to do that face-to-face in their first televised debate.

The debate will be broadcast live on Tuesday, Sept. 10, at 9 p.m. Eastern time.

Inflation and Tariffs

The cost of living has risen significantly since the start of the pandemic, especially during a burst of rapid price increases in 2021 and 2022. Although inflation has simmered down since, household budgets face prices that are, on average, 21% higher than they were before the pandemic, according to the Consumer Price Index, a broad measure of prices for the things people buy.

Republican candidate Trump has repeatedly attacked President Joe Biden, as well as Harris, blaming their policies for the surge of inflation. Economists usually attribute the rise of inflation during that period to supply chain problems during the pandemic and, to a lesser extent, pandemic relief programs by Biden and former president Trump — such as stimulus checks — that put money in people’s pockets and fueled consumer demand.

Harris, a Democrat, has for her part attacked Trump’s proposed economic policies, pointing to analyses by economists at Goldman Sachs, Moody’s Analytics, and others, which projected that the Trump agenda would fuel inflation and slow economic growth.

Trump’s economic plans center around tariffs, or taxes on imports from foreign countries. Trump has called for a broad 10% to 20% tariff on all foreign goods and tariffs of 60% or higher on Chinese products. In a speech Thursday at the Economic Club of New York, Trump defended his proposal, invoking the record of President William McKinley, who was president from 1897 until his assassination in 1901. Trump contended tariffs would encourage more companies to make things in America, fueling economic growth.

Most economists say tariffs would damage the economy more than they would help, since merchants would pass the cost of tariffs along to consumers and give domestic manufacturers cover to raise prices. An analysis by the Peterson Institute for International Economics that a typical family would pay $2,600 more per year because of rising prices under Trump’s tariff regime.

Harris has proposed more limited tariffs, echoing Biden’s approach of targeting specific industries that he wanted to encourage to develop in the U.S., such as microchips and electric cars.

Taxes

The candidates are also likely to clash over taxes. One of the biggest decisions facing the next president will be whether to extend Trump’s tax cuts, which were passed in 2017 and expire next year.

Trump has promised to extend all the provisions of the Tax Cuts and Jobs Act, which simplified the tax code and lowered taxes. Tax professionals and economists have said most of the benefits from those cuts went to the wealthy.

Harris has proposed an array of tax cuts and credits, carrying forward a Biden pledge not to raise taxes on anyone making more than $400,000 a year. Her proposals include a $25,000 credit for first-time homebuyers, expanding the child tax credit to up to $3,600 per child from $2,000, and raising corporate taxes to 28% from 21%, partly reversing the Trump tax cuts.

Harris would raise the capital gains tax to 28% from 20%, a smaller increase than the nearly 40% rate Biden had proposed.

Student Loan Forgiveness

Harris has supported Biden’s program of student loan debt forgiveness for federal borrowers, which has forgiven $168.5 billion in student debt, with other proposed relief blocked or delayed by Republican-led legal challenges.

Trump has blasted Biden’s student loan policies, calling them “not even legal” in a campaign rally in June.

Overall, the debate between Trump and Harris promises to be a clash of economic visions. Trump favors steep and broad tariffs on foreign-made products, a proposal that economists say would drive up inflation. Harris prefers more limited tariffs. Trump wants to extend the tax cuts he signed into law in 2017, while Harris would raise taxes on high-income earners and the wealthy. These economic issues will be at the forefront of the debate as the candidates make their case to the American people.

Read the original article on Investopedia.