First off, Furman was Obama's head economic advisor. Ergo don't expect him to be a big Trump supporter. However, the points he makes below are excellent and measured. He makes a compelling case.
Personally, while very close, it looks like we may have a GOP House and Senate. Would I prefer Donald in the White House under that scenario? Not sure? He'd probably have success pushing most of his crazy tariff and spending ideas through Congress. Don't forget the new head of the RNC, which controls about 60% of the campaign funds that congressional leaders get to run their campaigns is none other than Lara Trump. That gives the Dark Lord a great deal of power (if elected)
On the other hand, Kamala would hypothetically face a Congress that would thwart spending and hypothetical anti-business policies. Sometimes gridlock is a good (sorry great) thing!
Talk about confusing.
Harris Is the Safer Economic Choice
Both candidates have bad ideas, but Trump’s are worse—and likelier to find support in Congress.
By Jason Furman, WSJ
Sept. 16, 2024 5:10 pm ET
The first modern presidential race between two candidates with undergraduate degrees in economics hasn’t thrilled economists. Both Donald Trump and Kamala Harris have floated bad ideas, including that Nippon Steel’s proposed acquisition of U.S. Steel is a national-security risk, that tip income shouldn’t be taxed, and that grocery prices are currently elevated because of price gouging.
Yet economists are obliged to compare and quantify. In this race, the evaluation is clear: Mr. Trump’s ideas on tariffs, the budget and the Federal Reserve pose a much greater risk to the economy than Ms. Harris’s.
Let’s start with tariffs. The Biden administration was wrong to keep and add to the tariffs Mr. Trump placed on China. Fortunately Ms. Harris doesn’t seem enthusiastic about pursuing this route much further. Mr. Trump, meanwhile, has proposed 10% tariffs on all U.S. imports, as well as 60% on Chinese goods. Whereas President Biden’s tariffs covered $18 billion of imports, Mr. Trump’s would cover $4 trillion, more than 200 times as much.
That proposal isn’t merely election-year bluster. While Mr. Trump’s views on many topics have evolved, his enthusiasm for tariffs hasn’t. He says international trade is zero sum and has even floated up to 20% tariffs “on foreign countries that have been ripping us off for years.”
Some of his supporters have described this policy merely as a negotiating tactic. But he appears committed, and his running mate, JD Vance, has suggested the money raised would help pay for tax cuts. Why would they want to backtrack? Worse yet, as in his first term, Mr. Trump would likely pursue this policy without congressional approval, citing national-security imperatives.
Next consider the budget. The deficit is too large and unsustainable. No one is proposing a plan commensurate with the problem. Mr. Biden’s fiscal 2025 budget offered more than $3 trillion in deficit reduction. Ms. Harris has embraced this as a starting point while sensibly backing off some ill-advised ideas—such as raising the capital-gains rate to about 45%—and suggesting new ones, such as expanding the Child Tax Credit. I estimate this leaves her with about $1.5 trillion of deficit reduction. She has, however, committed to extending the expiring tax cuts below $400,000 without explaining how she would pay for it. If these tax cuts are extended without pay-fors, along with the rest of her agenda, she would face a $1.5 trillion deficit increase.
Mr. Trump is vaguer about his budget numbers than most candidates. I estimate his combination of making the 2017 tax cuts permanent, cutting the corporate rate, and eliminating taxes on tips, overtime and Social Security would add more than $5 trillion to the deficit. That is after accounting for the revenue from his proposed tariffs.
Mr. Trump’s deficit increases are more likely than Ms. Harris’s to materialize. Betting markets suggest that if he wins, there is a two-thirds chance he will have a Republican House and Senate—a combination that typically results in substantial tax cuts. If Ms. Harris wins, she would have only about a one-third chance of a unified Democratic Congress, with the best case being 50 Democratic senators. Even with unified Democratic control, there is more precedent for deficit reduction and paying for proposals, outside major recessions and emergencies.
Finally, the Federal Reserve. Mr. Biden reappointed Chairman Jerome Powell, the Republican Mr. Trump tapped to lead the central bank. Ms. Harris has affirmed her support for the Fed’s independence, and I have no doubt she would continue a half-century tradition of appointing mainstream, nonpartisan candidates to the central bank.
Mr. Trump’s Fed appointments were generally excellent, with some exceptions near the end of his term that Republican senators helped stop. Yet he often fiercely criticized the central bank. He is now arguing that the president should have a say in setting interest rates, and at least one of Mr. Trump’s top advisers has suggested he would fire Mr. Powell in the first 100 days. It is likely but not certain that he would back off these ideas as soon as the stock market caught wind of them. Regardless, the possibility that he follows through on them is perhaps the largest threat the economy faces.
There are other issues. I have publicly criticized Mr. Biden’s rent-control scheme and Ms. Harris’s anti-price-gouging proposals. Yet both of these would require legislative approval, which neither is likely to get. Those policies, moreover, aren’t nearly as important as where the two candidates stand on tariffs, the deficit and the central bank—and the likelihood they would follow through on their promises.
Mr. Trump often listened to sensible advisers and walked away from some terrible economic policies as president. Some of his defenders believe he will do so again—and I hope they’re right. For my money, though, I recommend taking him at his word and voting accordingly.
Mr. Furman, a professor of the practice of economic policy at Harvard, was chairman of the White House Council of Economic Advisers, 2013-17.
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