Among topics like health care, immigration, foreign policy, and Supreme Court appointments, the economy is the top issue for U.S. voters in the 2024 election with 81% of registered voters saying that it is very important to their vote (Issues and the 2024 election, 2024). However, while it remains the number one issue on voters’ minds, there is a notable gap between the perception and the reality of the American economy. Despite traditional economic indicators suggesting that the U.S. economy is strong, Americans still seem displeased with the state of the economy. The danger arises in that voters may be casting their ballots based on their perceptions of the economy as opposed to the facts. This blog post aims to deliver clear, factual insights about the economy and the presidential candidates economic policy plans to help the American public make informed, well-grounded decisions in the 2024 presidential election.
Less than a quarter of Americans (23%) currently describe the nation’s economic conditions as excellent or good, while 36% consider them poor, and around 41% rate them as “only fair.” Public’s Positive Economic Ratings Slip, 2024). When asked about their expectations for the nation’s economic conditions a year from now, 43% of Americans believe it will remain roughly the same. Around 24% anticipate the economy will improve, while nearly 32% expect it to decline (Pew Research Center, 2024).
During the Biden administration, the average annual growth rate of gross domestic product (GDP) increased by 2.2%, on par with the 2.3% increase during the Trump administration (Horton, 2024). Additionally, under President Biden, the economy added roughly 14.8 million jobs (Robertson, 2024). While 14.8 million may sound impressive, it’s important to note that many of these jobs represent recoveries from pandemic-related losses rather than entirely new job creation (House Budget Committee, 2024). Even still, over the past year, the country has maintained near-full employment; as of September 2024, the unemployment rate stood at 4.1%, significantly lower than the 21st-century average of 5.7% (Galston, 2023; Cummings, Harris, & Mahoney, 2024).
Despite the impressive job growth and low unemployment, inflation continues to loom over Americans like an inescapable shadow. It has been a constant strain, tightening budgets and pushing prices higher on everything from groceries to gas. While the inflation that the economy did reach 9.1% in June 2022, it was not the “worst inflation we’ve ever had,” despite what Donald Trump may say. However, the rate of inflation did exceed the rate of pay increases, therefore leaving Americans with less purchasing power than the previous year (Galston, 2023). The steep inflation rate had negative repercussions on Americans and as the polls will indicate, they were not pleased.
Today, the inflation rate has returned to 2.4%, aligning closely with the level economists consider ideal. Yet, the lingering effects of inflation still weigh heavily on people’s minds, making it hard for many to see past the facts when their wallets are still feeling the strain. For countless Americans, the pain of rising costs endures, creating a gap between economic indicators and personal experience.
Many Americans are concerned about the state of the economy when it comes to topics like inflation, taxes, and job security. The policies that have been proposed by the 2024 presidential candidates directly address these issues, although in distinct ways. These policies will greatly impact the economic landscape of years to come, so it is essential to understand their impacts beyond surface-level perceptions. The economic policies from both Donald Trump and Kamala Harris will be analyzed to determine how they plan to address economic challenges facing the U.S. economy.
Business and Competitiveness
Tax policy involves several trade-offs, requiring both Donald Trump and Kamala Harris to make difficult decisions. The current corporate income tax rate in the U.S. is 21%, but historically, the corporate income tax rate averaged 32.08% from 1909 until 2024. Trump has stated that he plans to lower the corporate income tax rate to 20% for companies that make their products abroad and 15% for the companies that make their products in the U.S., while Harris has stated she will increase the corporate income tax rate to 28% in an attempt to raise revenue (Tax Foundation, 2024) Increasing the corporate tax rate would generate more revenue, but it would also come at a significant cost in terms of reduced economic output, lower investment, and slower wage growth (York, 2024).
Families and Workers
As it pertains to families and individual workers, Trump plans to provide ongoing tax relief for families by making individual income tax cuts permanent, expand the child tax credit to $5,000, and exempt Social Security benefits, tip income, and overtime pay from taxation. However, these proposed policies may have negative effects on individual behavior and the economy. One study finds that cutting taxes on Social Security benefits would significantly increase the budget deficit by approximately $1.6 trillion over ten years and the exemption of overtime pay from taxation will increase labor costs for employers as more employees will want to work overtime (Watson & Erica York, 2024; Watson, 2024). On the other hand, Harris plans to expand the Child Tax Credit to $6,000 for families with newborns, $3,600 for children 2-5, and $3,000 for older children; she also intends to expand the Earned Income Tax Credit for filers who do not claim children (Kamala Harris Issues, 2024). The Harris campaign also wants to ensure that no one making under $400,000 in a given year will pay more on taxes. Instead, she plans to raise the highest individual income tax rate to 39.6% on earnings exceeding $400,000 for single filers and $450,000 for joint filers (Watson et al., 2024). While this won’t impact average middle-class Americans, it will affect the wealthiest Americans and the largest corporations. While some may see higher taxes as necessary, others see it as potentially harmful to the economy. Harris’ tax proposals “would reduce long-run GDP by 2.0 percent, the capital stock by 3.0 percent, wages by 1.2 percent, and employment by about 786,000 full-time equivalent jobs” (McBride et al., 2024).
Harris also has stated plans to expand housing tax credits, create “America Forward” tax credits, and expand credit for first-time homebuyers (Tax Foundation, 2024). Both candidates plan to eliminate tax on tips, but a study finds this may not effectively help low-income earners, as 37% of tipped workers might see no benefit (Berlin & Gale, 2024).
Tariffs & Industrial Policy
When it comes to tariffs and industrial policy, Trump plans to implement a universal baseline tariff on US imports that are 10% to 20% and 60% tariff on all US imports coming from China (Stein, 2024; York, 2024). This proposed plan is forecast to have negative effects on the U.S. GDP and could cause a rebound in inflation (up to double today’s pace of inflation), forcing the Federal Reserve to raise interest rates (Rampell, 2024). Several economic scholars condemned these proposed tariffs, claiming that they will raise taxes for every single American (Rampell, 2024).
Harris intends to create an America Forward strategy with the intention of investing in industries of the future. This plan will be centered around the developing, manufacturing, and deploying both traditional industries, like clean iron and steel, and emerging technologies essential for future growth, such as biomanufacturing, artificial intelligence, aerospace, data centers, and clean energy. Their strategy includes a transformative America Forward tax credit, designed to promote investment and job creation in key industries while prioritizing the rights of American workers and supporting investments in longstanding manufacturing, farming, and energy communities (A New Way Forward, 2024).
It is critical that voters are informed on economic policy facts in order to shape their voting opinions. However, even where there is factual information, evidence is being interpreted through a partisan lens by layman voters without economic expertise. For example, the Committee for a Responsible Federal Budget found that Vice President Harris’ plan is predicted to have zero to $8.10 trillion impact on national debt by 2035, while former President Trump’s plan is predicted to increase debt between $1.45 and $15.15 trillion (Smart, 2024). This side-by-side analysis of both presidential candidates’ economic policies presents a factual foundation that allows voters to better understand the issues on their ballots. However, voters are still left to interpret the relative merits of each plan and there is substantial overlap in the overall impact of each plan on national debt. Regardless of economic indicators and projections, the reality is that without accurate reporting that is tailored to their economic circumstances, voters will rely on their feelings to cast their ballots. In a world where perceptions and misinformation plague understanding of economic realities, it is now more important than ever to cut out the noise and refocus on evidence-based insights that present the true implications of economic policy decisions on the lives of Americans.
