The Federal Reserve lowered its benchmark interest rate by half a percentage point on Wednesday for the first time since 2020, a signal that inflation is finally getting under control.
That’s good news for Vice President Kamala Harris – and not so good for former President Donald Trump, who has repeatedly claimed that a rate cut would be an attempt to sabotage him and “help the Democrats.”
Every poll shows Americans are worried about the economy. But which candidate’s policies would make for a better future? And what are their policies, anyway? Justin Wolfers, a professor of public policy and economics at the University of Michigan, joined KNX News’ daily political show Countdown 2024 to break the respective platforms down.
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“Harris has got a real campaign and some real policies, they're up on her website,” he said. “They're pretty piecemeal compared to what you might have seen in previous elections, and I think that's because she's, you know, first of all had to stand up her campaign very quickly, and partly I think there's a continuation of what's been happening through the Biden years.”
One of Harris’ key proposals is a $25,000 tax credit to help first-time homeowners with down payments. But given the state of the housing market, Wolfers said the policy is putting the cart before the horse.
“If you've got not enough houses and lots of people, then the only way that gets resolved is that those people will start to bid the price of houses up and housing becomes unaffordable,” he explained. “How do you solve that? The simplest solution is, make it easier to build housing. That's the supply side problem. And if we fix that, then we'll actually get more homes, more people in homes, and also lower home prices. So I think that's got to be the first solution.”
As for Trump’s economic policies, Wolfers said every time he goes to another rally, he “adds another trillion dollars in tax cuts.”
“None of this is remotely serious,” he said. “The hole that it would blow in the budget is just too big. He's not having any serious economists look at any of this.”
Trump claims the aggressive tariffs he’s proposing would pass the cost along to other countries, not the American people. But Wolfers called that “literally a lie,” saying that if Trump follows through on his promised 10% tariff, it will cost the average American roughly $2000 a year.
“The person who pays the tariff is the person who imports it, which in every case is an American,” he explained. “Iif every time Walmart imports a washing machine, it has to pay another $100, what it will do is then add another $100 to the price of washing machines. And in fact, that's literally what happened when Trump raised tariffs on washing machines.”
So why do Americans credit Trump with creating a strong economy during his first term? Wolfers said the economy was in good shape in 2019, but it’s hard to say whether Trump himself should be credited for it.
“Often who's leader doesn't matter, but there are particular times of crisis where we do need leadership, and I would say that the COVID pandemic was one of them,” he said. “And I think the question for your listeners in trying to think about who deserves credit and blame is to go back and think, did Trump handle the COVID pandemic well?”
Wolfers also said that while presidents “have less to do with the economy than most people would guess,” there are some factors that keep the U.S. economy strong compared to other countries, such as having a democracy, well-regulated markets, and respecting the rule of law.
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“The only serious risk to the American economic model is if some of that starts to come undone,” he said. “This is why economists really worry about things like, what does it mean if one candidate refuses to accept the results of an election? Because if we get into that world, then would you be willing to invest in a new factory, not knowing whether the United States is still going to be a democracy in four, eight, or 12 years’ time?”
Listen to the full episode above to hear a Quinnipiac University analyst break down the latest polling on the race, and catch new episodes of Countdown 2024 live at 2:30 p.m. every weekday through Election Day.
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