October 22, 2024
Former president Trump’s closing economic argument for the American people is that putting a high tariff wall around the country will bring in so much foreign money that it will fund domestic programs and bring down the deficit, enabling massive tax cuts for the wealthy and corporations.
Vice President Kamala Harris’s closing economic argument is that the government should invest in the middle class by permitting Medicare to pay for in-home health aides for the elderly, cutting taxes for small businesses and families, and passing a federal law against price gouging for groceries during emergencies.
The two candidates are presenting quite stark differences in the futures they propose for the American people.
Trump has indicated his determination to take the nation’s economy back to that of the 1890s, back to a time when capital was concentrated among a few industrialists and financiers. This world fits the idea of modern Republicans that the government should work to protect the economic power of those on the “supply side” of the economy with the expectation that they will be able to invest more efficiently in the market than if they were regulated by government or their money taken by taxation.
Trump has said he thinks the word “tariff” is as beautiful as “love” or “faith” and has frequently praised President William McKinley, who held office from 1897 to 1901, for leading the U.S. to become, he says, the wealthiest it ever was. Trump attributes that wealth to tariffs, but unlike leaders in the 1890s, Trump refuses to acknowledge that tariffs do not bring in money from other countries. The cost of tariffs is borne by American consumers.
The industrialists and Republican lawmakers who pushed high tariffs in the 1890s were quite open that tariffs are a tax on ordinary Americans. In 1890, Joseph Pulitzer’s New York World complained about the McKinley Tariff that raised average tariffs to 49.5%. “Under the McKinley Act the people are paying taxes of nearly $20,000,000 and a much larger sum in bounties to Carnegie, Phipps & Co., and their fellows, for the alleged purpose of benefiting the wage-earners,” it wrote, even as the powerful companies slashed wages.
Today, on CNBC’s Squawk Box, senior economics reporter Steve Liesman noted that the conservative American Enterprise Institute has called out Trump’s proposed tariffs as a tax hike on American consumers of as much as $3.9 trillion.
Together with Trump’s promise to make deep cuts or even to end income taxes on the wealthy and corporations, his economic plan will dramatically shift the burden of supporting the country from the very wealthy to average Americans, precisely the way the U.S. economy worked until 1913, when the revenue act of that year lowered tariffs and replaced the lost income with an income tax.
That shifting of the economic burden of the country downward showed in another way yesterday, as well, when the Committee for a Responsible Budget noted that Trump’s economic plans would hasten the insolvency of Social Security trust funds by three years, from 2034 to 2031, and would lead to dramatic cuts.
Harris’s plan explicitly rejects the supply-side economics of the past and moves forward the policies of the Biden administration that work to make sure the “demand side” of the economy, or consumers, has access to money and opportunity. Those policies, dismissed by the ideologues of the Reagan revolution, had proven their success between 1933 and 1981 and have again delivered, achieving the nation’s extraordinary post-pandemic economic growth.
The International Monetary Fund underlined that growth again today when it outlined that the nation’s surge of investment under the Biden administration has attracted private investment, all of which is paying off in higher productivity, higher wages, and higher stock prices, enabling the U.S. to pull ahead of the world’s other advanced economies.
And it is continuing to deliver. Yesterday the Federal Trade Commission’s final rule banning fake online reviews and testimonials that mislead consumers and hurt real businesses went into effect. Today the Department of Health and Human Services reported that in the first half of 2024, nearly 1.5 million people with Medicare Part D saved almost $1 billion in out-of-pocket costs for prescription drugs thanks to the drug negotiations authorized by the Inflation Reduction Act.
Harris has expanded that plan to focus on small businesses and families. In addition to her plan to permit start-ups to deduct $50,000 in costs rather than the current $5,000 and to cut taxes for families by extending the Child Tax Credit, she has called for raising the corporate tax rate to 28%, lower than it was before the Trump tax cuts and lower than the rate President Joe Biden proposed in his 2024 budget. She has proposed $25,000 in down payment assistance for first-time homebuyers and promised to work with the private sector to build 3 million new housing units by the end of her first term.
Her recent proposal to enable Medicare to pay for home health aides has flown largely under the radar, although it would be a major benefit to many Americans. She proposes to pay for that benefit with additional savings from drug price negotiations. By keeping seniors in their homes longer, it would save families from having to meet the high cost of residential care.
Yesterday the White House proposed an expansion of the Affordable Care Act to make over-the-counter contraceptives free under health plans. Currently, only prescription contraceptives are covered. If the rule is finalized, it would expand contraceptive coverage to the 52 million women of reproductive age covered by private health plans.
As the campaigns enter the last two weeks before the election, the difference between their economic vision is stark.
So, it seems, is the difference between the candidates.
Today, Trump canceled another event, this one a roundtable with Robert Kennedy Jr. and former Democratic representative Tulsi Gabbard, both members of Trump’s transition team, that was supposed to highlight Kennedy’s vision for America’s health and their contributions to the campaign. He later held a rally in North Carolina.
Harris, meanwhile, sat down with Hallie Jackson of NBC News and participated in an interview with Telemundo’s Julio Vaqueiro. Tonight, rapper Eminem introduced former president Barack Obama at a rally for Harris and her running mate, Minnesota governor Tim Walz. Harris’s campaign announced today that on Friday she will campaign in Houston, Texas, where she will emphasize the dangers of abortion bans in the heart of Trump country.
The biggest news about the candidates today, though, appears to be an article by Jeffrey Goldberg in The Atlantic exploring Trump’s disparagement of the U.S. military. Noting that it is an odd thing for a president to remain popular when he is openly dismissive of soldiers and their decorated officers, Goldberg explores Trump’s inability to understand any relationship that is not transactional. He noted Trump’s dismissal of soldiers as “losers,“ his astonishment at how little pay they make, and his dislike of wounded personnel who, he thinks, made him look bad.
Unable to understand the principles of honor or patriotism, Trump could not comprehend that Army generals were loyal to the U.S. Constitution rather than him. He yearned for generals, he said, like those of autocratic rulers. He said he wanted generals like Hitler’s, a leader he sometimes praised. “Do you really believe you’re not loyal to me?” Trump asked then–chief of staff General John Kelly. Kelly was clear: “I’m certainly part of the administration, but my ultimate loyalty is to the rule of law.”
That was not an answer Trump liked. When the generals refused to shoot protesters or deploy U.S. troops against American citizens, Trump screamed: “You are all f*cking losers!”
Finally, General Kelly spoke up himself. In an interview with Michael S. Schmidt of the New York Times published tonight, Kelly noted that he had decided not to speak out about Trump unless Trump said something deeply troubling or something that involved Kelly and was wildly inaccurate. For Kelly, Trump’s recent talk about the “enemy within” was dangerous enough that he felt obliged to make a public comment.
The retired U.S. Marine Corps general confirmed that Trump is “certainly the only president that has all but rejected what America is all about, and what makes America America, in terms of our Constitution, in terms of our values, the way we look at everything, to include family and government—he’s certainly the only president that I know of, certainly in my lifetime, that was like that.”
Kelly added that “in his opinion, Mr. Trump met the definition of a fascist, would govern like a dictator if allowed, and had no understanding of the Constitution or the concept of rule of law.”
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Notes:
https://www.crfb.org/blogs/what-would-trump-campaign-plans-mean-social-security
https://www.wsj.com/economy/iglobal/u-s-economy-again-leads-the-world-imf-says-39578275?page=1
New York World, July 1, 1892, in John L. Heaton, The Story of a Page: Thirty Years of Public Service and Public Discussion in the Editorial Columns of the New York World (New York: Harper & Brothers, 1908), pp. 83, 88.
https://www.cbsnews.com/news/trump-social-security-plan-crfb-benefits-cut-insolvency/
https://www.cnn.com/2024/10/08/politics/harris-home-health-care-medicare-proposal/index.html
https://www.washingtonpost.com/health/2024/10/21/free-birth-control-pills/
https://www.theatlantic.com/politics/archive/2024/10/trump-military-generals-hitler/680327/
https://www.nytimes.com/2024/10/22/us/politics/john-kelly-trump-fitness-character.html
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Thanks Heather, the nausea of the possibility of Trump winning is intolerable. I cannot imagine the Democrats making a more profound and vital effort as they are doing now. What happens in the next two weeks will say more about our country than anything that has proceeded us.
Shame on John Kelly for not speaking up about Trump sooner.