In Tuesday’s presidential debate between former President Donald Trump and current Vice President Kamala Harris, the candidates made numerous claims and counter-claims about the relative merits of their economic policy proposals. Which claims were true? Here is a high-level overview.
Harris’s Plan: Handouts
Harris touted her “plan to build what I call an opportunity economy.” She proposed a $50,000 tax deduction for launching a new small business, expanding the child tax credit to $6,000, and providing $25,000 of the downpayment for first-time homebuyers.
“Kamala Harris is running a giveaway campaign,” Paul Mueller, a senior research fellow at the American Institute for Economic Research (AIER) summarized. “Her approach, I think, to stimulating the economy is more of what we’ve seen over the past four years, which is extensive government involvement, huge amounts of spending. It’s not really an organic growth within the economy. … When you subsidize people’s ability to buy things … what we see over time … is rising costs.”
A key element of Harris’s economic agenda that received next to no attention in the debate is her plan to implement price controls on groceries. She once mentioned in passing her intention to “address bringing down the price of groceries,” but it otherwise went unmentioned.
This is yet “another example of flawed economics,” where the Biden-Harris administration continues to “put the emphasis on demand rather than supply,” lamented Heritage Foundation Research Fellow Joel Griffith. “The focus should be … how do we increase the supply of homes?”
While some economists have objected to Harris’s policy proposals as unwise, her comments in the debate about her own economic plan were too vague and general to be rated as either true or false.
Trump’s Plan: Tariffs and Tax Cuts
For his part, Trump touted his plan to raise tariffs on imported products such as automobiles, and he denied that the costs of the tariff would be passed along to the consumer. “They aren’t gonna have higher prices. What’s gonna have and who’s gonna have higher prices is China and all of the countries that have been ripping us off for years,” Trump insisted.
Any tax on businesses raises the cost of supplying goods to consumers. On a basic supply-and-demand graph, this has the effect of shifting the entire supply curve upward, resulting in a higher price (and lower quantity) at the equilibrium point. Indeed, this is the very theory that justified the Trump administration’s 2017 cut to the corporate tax rate, reasoning that reducing taxes on businesses would result in lower prices for consumers. A tariff is a selective tax on businesses that only applies to foreign producers; the true beneficiaries of a tariff are not consumers, but rather domestic producers who would otherwise be unable to compete effectively with the low prices of goods produced overseas.
In other words, Trump’s claim that tariffs would not be passed along to consumers in the form of higher prices is false.
Harris decided to go on offense against Trump’s economic agenda. “My opponent has a plan that I call the ‘Trump Sales Tax,’ which would be a 20% tax on everyday goods,” she said. The accusation is so random that it would be hard to tell what Harris were talking about, were it not for Trump’s reply. “First of all, I have no sales tax. That’s an incorrect statement,” he said. “She knows that. We’re doing tariffs on other countries.”
While both kinds of taxes affect the supply curve, there are key differences between a tariff and a sales tax. A tariff is levied in the production chain, which means it is reflected in the sticker price; a sales tax occurs at the end point of that chain and is often not included in the sticker price. Also, a tariff only taxes imported goods (of certain types), while a sales tax applies to all goods (of certain types), regardless of where they were produced.
Harris’s description of Trump’s proposed tariffs as a national sales tax is inaccurate.
Trump also pointed out that tariffs imposed during his first term have been left in place by the Biden administration — even getting the biased moderators to agree with him on this point. In July 2024, the Biden administration’s Council of Economic Advisors wrote that “tariffs remain an important and targeted tool.” In other words, endorsing tariffs is not unique to the Trump campaign.
Harris also vilified Trump’s tax-cut plan, saying, “His plan is to do what he has done before, which is to provide a tax cut for billionaires and big corporations, which will result in $5 trillion to America’s deficit.”
Again, it’s not obvious what specific policies Harris meant. The 2017 tax cut package did reduce the tax rate for higher tax brackets and corporations, but it also reduced taxes for everyone. The new, Trump-orchestrated RNC platform pledges to “make permanent the provisions of the Trump Tax Cuts and Jobs Act that doubled the standard deduction [and] expanded the Child Tax Credit,” as well as cutting taxes on tips. It also promises to “slash Regulations that stifle Jobs” and “increase Energy Production across the board.”
The Penn-Wharton budget model does estimate that Trump’s budget plan would add $5.8 trillion to deficits over the next 10 years, or $4.1 trillion after accounting for economic growth factors. However, under the Biden administration, the U.S. debt has grown by $6.7 trillion in three and a half years.
For these reasons, Harris’s critique of the Trump tax cuts is mostly false.
Economic Results
Harris and Trump also sparred over the relative performance of their economic record. “Donald Trump left us the worst unemployment since the Great Depression. Donald Trump left us the worst public health epidemic in a century,” Harris alleged.
“We had the greatest economy. We got hit with a pandemic,” Trump shot back. “We did a phenomenal job with the pandemic. We handed them over a country where the economy and where the stock market was higher than it was before the pandemic came in. … The only jobs they got were bounce-back jobs.”
The U.S. economy did crank up during the first three years of the Trump administration. Real GDP grew by 3.0% in 2017, 2.2% in 2018, and 3.2% in 2019. The unemployment rate decreased from 4.7% in January 2017 to 3.5% in February 2020, just before the pandemic hit. Real median wages (what the average worker is able to buy with his weekly earnings) increased 3.7% from the fourth quarter of 2016 to the fourth quarter of 2019.
Then COVID hit the U.S. in March 2020, eight months before the election. Many state and local officials issued stay-at-home orders for all but essential workers, causing a sharp but brief recession. No one has credibly argued that Trump caused the pandemic, nor did anyone reasonably expect the pandemic to go away in that short time frame. The unemployment rate spiked to 14.8% in April 2020, which was the highest rate since the Great Depression.
However, when Trump left office in January 2021, the unemployment rate had declined to 6.4%. The unemployment rate was equal to or higher than this for more than 20 years since the Bureau of Labor Statistics began tracking the data in 1948: October 2008 to March 2014, January 1991 to April 1994, April 1980 to March 1987, November 1974 to January 1978, December 1960 to October 1961, February 1958 to October 1958, and July 1949 to February 1950.
Thus, Harris’s claim that “Donald Trump left us the worst unemployment since the Great Depression” is false. Harris’s claim that “Donald Trump left us the worst public health epidemic in a century” is misleading.
“We’ve had a terrible economy,” Trump continued. “We have inflation like very few people have ever seen before. Probably the worst in our nation’s history. We were at 21%. But that’s being generous because many things are 50, 60, 70, and 80% higher than they were just a few years ago.” He contrasted this with his own record, “I had no inflation, virtually no inflation, they had the highest inflation, perhaps in the history of our country because I’ve never seen a worse period of time.”
During Trump’s four years in office, the Consumer Price Index (CPI, a standard measure for inflation) increased by 7.8%, or about 1.9% per year. From January 2021 to August 2024, the CPI has increased by 19.7%. This comes out to an annual increase of approximately 5.4%, but it was most severe from June 2021 to June 2022, where the CPI rose by just under 9.0%.
America has not experienced inflation like this in decades, but it is not the “worst in our nation’s history,” nor even in Trump’s lifetime. Inflation was higher from 1974-75 and from 1979-81, when Trump was in his late 20s and early 30s.
In general, Trump’s point that the U.S. economy suffered under the Biden administration due to high inflation is true. However, the particular claim that it was the worst inflation in our nation’s history is false.
Expert Endorsements
Finally, Harris made an argument that sounded as if economic experts endorsed her economic plan over Trump’s:
“The best economists in our country, if not the world, have reviewed our relative plans for the future of America. What Goldman Sachs has said is that Donald Trump’s plan would make the economy worse. Mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession.”
The reality isn’t as simple as this makes it sound.
Reuters reported the Goldman Sachs note, which isn’t available publicly. Goldman Sachs analysts “estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse, resulting in a peak hit to GDP growth of -0.5pp [percentage point] in 2025H2 that abates in 2026.”
By contrast, Goldman Sachs continued, “If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates, resulting in a very slight boost to GDP investment due to higher corporate tax rates, resulting in a very slight boost to GDP growth on average over 2025-2026.”
This summary contains two noteworthy features. First, the analysis (or the part of it published by Reuters) only considers the very short term — the first two years of the next presidential term. Most economic policies take longer to have their full effect. Second, Goldman Sachs noted pros and cons for both candidates’ economic plans, so that the net effect of either agenda would be slight. Both Trump and Harris would expand the deficit, but they judge that Trump’s tariffs would have a slightly worse effect than Harris’s corporate tax hikes.
Penn-Wharton’s analysis came to a different conclusion. They did find Trump’s plan would have a greater impact on the deficit, but they also predict it would cause more economic growth.
Their Trump analysis estimated “that the Trump Campaign tax and spending proposals would increase primary deficits by $5.8 trillion over the next 10 years on a conventional basis and by $4.1 trillion on a dynamic basis that includes economic feedback effects. Households across all income groups benefit on a conventional basis.”
Their Harris analysis estimated “that the Harris Campaign tax and spending proposals would increase primary deficits by $1.2 trillion over the next 10 years on a conventional basis and by $2.0 trillion on a dynamic basis that includes a reduction in economic activity. Lower and middle-income households generally benefit from increased transfers and credits on a conventional basis, while higher-income households are worse off.”
Thus, they find the 10-year deficit effect of Trump’s policies would be larger than Harris’s. However, their “dynamic” model estimated that “economic feedback effects” (economic expansion from pro-growth policies) would slice $1.7 trillion off that deficit. Meanwhile, Harris’s policies would cause “a reduction in economic activity” that would add an extra $800 billion to the deficit total.
It is also true that 16 Nobel laureates signed a letter criticizing Trump’s economic agenda. The letter was written before President Joe Biden’s abrupt withdrawal and therefore compares a second Biden term with a second Trump term. The one-page letter squanders its space on non-economic considerations such as whether the U.S. is “conforming to international norms and having normal and stable relationships with other countries.” The letter also does not mention any possibility of recession, as Harris claimed.
The letter represents “partisanship, not economics,” responded analysts with the CATO Institute. “The letter implies that large fiscal deficits in a future under President Trump would risk higher inflation. Yet it also claims that President Biden’s actual high deficits were nothing but positive.”
Thus, Harris’s claims about economic experts supporting her economic plan over Trump’s are partly true, partly false, and partly misleading. Of the three sources she cited, one gave her policies a slight edge, one favored Trump’s policies, and one endorsed Biden’s policies.
What all three sources agree on is that both Trump and his Democratic opponent are prepared to continue America’s irresponsible deficit spending that invites inflation and is sending the country hurtling toward bankruptcy. The candidates disagree about particulars — tariffs versus corporate taxes, massive subsidies or tax cuts — but neither one has a vision to achieve or even approach financial stability over the next four years.
Joshua Arnold is a senior writer at The Washington Stand.