Given the terrible economic distress the American people have undergone during the past four years, it was inevitable that the nation’s newspaper of record on economic issues would conduct a poll on what effects economists think the respective policies of the two major candidates would have if elected.
It was also entirely predictable that the designated experts would find that the candidate from the party inclined toward catastrophically dire high spending and taxes has more promising economic policies than the representative of the party with a merely disastrous spending and tax record during this century.
“Most economists think inflation, interest rates and deficits would be higher under the policies former President Donald Trump would pursue in a second administration than under those proposed by Vice President Kamala Harris, according to a quarterly survey by The Wall Street Journal,” the Journal reported.
Trump’s major offense, the economists argue, is in proposing to cut taxes on income and raise taxes on consumption, the latter through tariffs on imports from China and possibly other disfavored countries. Harris has proposed less in tax cuts than Trump, which the economists see as a good thing, and apparently they have discounted all of Harris’s spending promises as of little consequence: “While neither Trump nor Harris has expressed much appetite for fiscal rectitude, 65 percent of economists see Trump’s proposed policies putting more upward pressure on the federal deficit, up from 51 percent in July,” the paper reported.
The economists are evidently assuming that raising tax rates increases revenues at least somewhat proportionately. It does not, however, because when you tax something, you get less of it. Siphoning a larger percentage from a much smaller source reduces the government’s take instead of expanding it. Increasing taxes on consumption does less damage to the economy, though high tax rates are never good.
Attention to the supply side of the economy is a critical distinction between the two candidates. The supply side, of course, is where goods and services are produced. Trump pays more attention to the supply side, and Harris to the demand side. This is a return to the Reagan era when the GOP adopted some supply-side concepts and the Democrats stuck with big-government Keynesian policies. Supply-side policies have a far better track record of economic growth over the decades, as Ph.D. economist Robert Genetski noted.
The federal budget record of the past eight years is ugly, but the data show much better performance under Trump if we set aside the COVID-19 year of 2020, as we certainly should. With that correction, “neither president has a good record on the debt and deficits, but the annual levels of red ink were twice as high under Biden. The average deficit was $800 billion under Trump and $1.6 trillion under Biden” through the 2024 fiscal year, Unleash Prosperity noted.
In year four under Biden and Harris, federal spending is now nearly $2 trillion above the January 2017 to January 2020 trendline, and it continues to increase with a steeper up-slope. Meanwhile, real per capita income has decreased under Biden and Harris and is far below the 2017 to January 2020 trendline, with each person in the United States having more than $3,500 a year less than if the Trump trend had continued.
Another Wall Street Journal story, “The Economy Under Trump vs. Biden,” confirmed this. The Journal’s data clearly show that inflation-adjusted GDP grew by much more in 2019 than in 2022, when the two presidents’ preferred policies were in effect. “Census Bureau figures show that household incomes grew strongly during Trump’s first three years in office” before falling in the pandemic year of 2020. “Cutting through the [pandemic] noise, real median income was 8.2 percent higher in 2020 than in 2016.”
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“Under Biden, inflation weighed heavily on household income, especially in 2022,” the Journal reported. “As of last year, real median income was up 1.3 percent from 2020.”
Trump’s policies resulted in far greater wealth increases for middle-income people than those of Biden and Harris did, the Journal reported: “Americans got significantly wealthier under Trump. … At the end of 2019, average real net worth for households in the middle fifth by income was 13.5 percent higher than it had been in the final quarter of 2016, according to the Federal Reserve.”
The Biden-Harris economic record is dismal, with growth just one-third of what the Trump economy achieved. “As of the second quarter [of 2024], real net worth for households in the middle fifth by income was up 4.6 percent from the end of 2020,” the Journal noted.
Harris was at Biden’s side throughout the past four years, and, most consequentially, she cast the deciding votes in the Senate for the budget-busting American Rescue Plan Act of 2021, the equally profligate Inflation Reduction Act of 2022 and the wasteful February 2021 budget resolution.
Without Harris’s “yes” votes, the massive, entirely unnecessary federal spending increases and price inflation of the Biden years would not have happened.
Though both presidential candidates are big spenders, the notion that Kamala Harris is more fiscally conservative than Donald Trump and would preside over a better economy is obviously false — except to the expert economists The Wall Street Journal contacted.
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