The Full Trump. The Complete Harris. With two months until Election Day, economists and policy analysts are busy computing the budget impacts and market implications of each presidential candidate’s policy agendas.
That’s how the Penn Wharton Budget Model, as one example, estimated that Donald Trump’s policies would add $4.1 trillion to the national debt during the next decade, while Kamala Harris’s policies would add $2 trillion. The big Wall Street firms all have their own analyses, including stock market winners and losers.
These analyses are important for differentiating each candidate’s priorities. But they’re also misleading because they’re based on the assumption that each set of policies will be fully implemented. That’s extremely unlikely.
Many of the most prominent presidential campaign pitches would require congressional legislation, which is only likely if Republicans or Democrats accomplish a sweep and end up controlling the White House and both chambers of Congress.
Financial firm Evercore ISI puts the odds of a Trump win with a Republican sweep at 25% and the odds of a Harris win with a Democratic sweep at 10%. So that’s a 65% chance of divided government that would forestall partisan legislation. Even in a unified Congress, the Senate filibuster gives the minority some blocking power. Plus, some presidential pitches are unserious hyperbole meant to accomplish little except wooing gullible voters.
That's why these eight big campaign pitches are likely to go nowhere:
Trump policies
Eliminate federal income tax on Social Security: This would cost the government around $1.7 trillion in lost revenue over a decade at a time when members of both parties are concerned about the mushrooming national debt. Adding that much new debt could actually destabilize Social Security by making the budget outlook even shakier than it already is. Won’t happen.
Promptly end Russia’s war in Ukraine: Trump claims to have a magic way of ending Russian President Vladimir Putin’s rampage in Ukraine, but the only thing he could really do is halt American support for Ukraine, which would obviously help Russia. Ukraine would keep fighting, however, and Europe would have to find new ways to check an emboldened Putin.
Cut electricity prices in half: Trump promises that more fossil fuel production would cut electricity prices by 50% or more. That would be quite the magic trick. Demand for electricity is growing faster than available capacity, thanks largely to energy-hungry data centers and the artificial intelligence boom. Permitting delays and other regional logjams are the biggest problem. Trump could streamline the federal role in permitting, but at best that would bring future price hikes down by a bit. The whole national grid needs to be modernized, which is a vast and unprecedented undertaking with no simple solution.
Harris policies
Raise the corporate tax rate to 28%: Harris, like President Joe Biden before her, wants to raise the corporate tax rate from 21% to 28% and use the new revenue to pay for a child tax credit and other social benefits. That target is plausible, given that the business rate was 35% as recently as 2017. But Biden couldn’t get Congress to raise the corporate rate even though his fellow Democrats controlled both the House and the Senate during Biden’s first two years in office. There’s no reason to think Harris would do any better.
Tax the unrealized capital gains of multimillionaires: This is Harris’s version of the “wealth tax” Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) support. It’s popular. But a wealth tax might be unconstitutional, guaranteeing it would face legal challenges. If overturned, any revenue it generated would have to be refunded, creating a budgeting nightmare. If you want to tax the rich more, raising other taxes already in place is simpler and more reliable.
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Ban “price gouging:” This is Harris’s plan to bring down the cost of food and rent. Problem is, there’s not even a definition of price gouging in this context, and anything that works as a de facto price cap will cause other problems by limiting production and creating shortages. Harris has to address inflation, since she was vice president when it hit 40-year highs, but this solution is just happy talk.
Give first-time homebuyers a $25,000 subsidy: This would also require congressional legislation, and it’s well understood that subsidizing the purchase of homes any more than the government already does through guaranteed mortgages would add to demand and push prices even higher. Economists broadly agree that this sort of subsidy would benefit sellers, not buyers, because they’d get higher prices, courtesy of taxpayers.
Both Trump and Harris
No taxes on tips: Trump and Harris both support this idea as a sop to some 350,000 hospitality workers earning tip income in Nevada, which is a key swing state. But as a policy idea, it’s a dud. Only 2% of all workers nationally earn tip income, so the government would be giving up $20 billion per year in foregone revenue for a plan with extremely limited appeal. Millions of lower-income workers who don’t earn tips would get no benefit at all and probably feel resentful. Each party has a lengthy list of pet tax ideas they’d pass if they could, and exempting tip income isn’t on either of them.
Pushing aside the things unlikely to happen in the next presidential term makes it easier to focus on what could occur. There’s going to be some change in tax policy, given that all of the 2017 tax cuts for individuals expire at the end of 2025. If Congress does nothing, tax rates will go back to their earlier levels, which will be a de facto tax hike for millions of Americans, especially the wealthy. Republicans want to extend all the tax cuts, while Democrats only want to keep them in place for those earning less than $400,000. The makeup of Congress and the White House will be crucial to determining how that goes.
Trump can raise tariffs without congressional action, and since he did that during his first term it’s reasonable to think he’d go further in a second, as he has promised to do. Trump could also carry out his plan to deport millions of undocumented immigrants without congressional approval. And Harris would likely keep in place the Biden policy that makes it harder for migrants to claim asylum, which has slashed the number of people entering the United States at the southwest border.
There’s certainly a lot at stake in the 2024 election. Just not quite as much as the candidates want you to think.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on X at @rickjnewman.
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