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As someone who loves economics like most folks love football and 50-cent wing nights, I have an axe to grind with the Republican and Democratic candidates running for president. Both Trump and Harris are ignoring basic Economics 101 while simultaneously wielding it to curry favor with particular voting blocs.
Take any Introduction to Economics course in any university, from the most progressive to the most libertarian, and you will learn essentially the same material. That’s because, like other sciences, economics has largely agreed on the fundamentals.
If we were to grade these campaigns as Econ 101 students, they would fail. As Greg Ip put it in the Wall Street Journal, “But the candidates haven’t just demoted economic principles this year; they’ve jettisoned them altogether. It’s as if they wanted to flip the bird at the economic establishment.”
The Harris campaign, for example, has proposed several price caps and manipulations that would make even the most boring caricature of an economics professor blush. They’ve suggested a first-ever federal ban on price gouging for food and groceries. Putting aside legality, it violates fundamental economic theory. Price controls lead to shortages, like the ones Americans experienced in the 1970s. However, unlike the gas shortages our parents lived (or rather, waited) through, if the Harris campaign gets its way, we could flirt with food and grocery shortages—a much more frightening and dangerous state of affairs.
Additionally, Harris suggested a cap on prescription drug costs and new rent controls. I shudder to imagine a prescription drug shortage, and Americans, especially New Yorkers, are intimately familiar with what rent controls do to the housing supply.
The Trump camp is no better. Remember “Tariff Man?” Trump has floated a 10 percent and a 20 percent baseline tariff for imports, along with a 60 percent tariff on goods coming from China. He insists foreign countries will bear the cost. This is false and would be admonished in any Econ 101 class. A tariff is a tax, ultimately, on American consumers. For example, that cool t-shirt made in China that would have been $8.99 before the import tax is now much more due to it. Higher prices for goods hurt those who can least afford it the most. As a result, Trump is presenting himself as a hero to the American working class while screwing them with higher prices for basic goods.
Ignoring fundamental economic reality doesn’t mean you can’t attempt to use it cynically to win votes. In June, Trump announced a “no tax on tips” policy after an encounter with a Las Vegas server. Not to be outdone, the Harris campaign followed suit with its version. What the policy lacks in economic rigor, it makes up in political points.
Immediately, economists publicly denounced the policy as unfair and inefficient. It is unfair because it shifts the relative tax burden onto those who earn hourly or salary wages rather than tips. In other words, it rewards front-of-the-house servers and punishes back-of-the-house cooks and managers. It would also hurt servers in states with higher minimum wages, like California, relative to their counterparts in, say, Georgia.
The economic football doesn’t stop at tips. Harris has proposed a $6,000 tax credit for the parents of a newborn child and a $25,000 tax credit for first-time home buyers. Trump’s running mate, Senator JD Vance, proposed increasing the child tax credit from $2,000 to $5,000, and Trump wants to end income taxes on Social Security benefits.
Cue the Oprah “you get a car” meme.
The most charitable interpretation of these economic proposals is that they attempt to address some severe affordability problems. Food and groceries haven’t been this expensive in decades. Home prices are seemingly headed to the moon. And the average cost of having a baby in the United States broke $18,000 this year.
Thankfully, there is a better way to address the affordability crisis. Take it from us independent voters stuck between the partisan fighting of the Republicans and Democrats. We want simple, common-sense solutions. Complicating the tax code and creating carve-outs for special interests does the exact opposite. The goal should be to simplify and broaden the tax base, equally treat as many people as possible, and not play favorites. The more complicated the tax code, the more it favors the wealthy, who can afford lawyers to scheme their way out of paying.
It’s time to treat economic policy with the sharpness and simplicity of Occam’s Razor. Simpler is better. The problem is that simplicity and fairness require adults willing to work together, compromise, and come to solutions. Unfortunately, we rarely see such behavior in politics today.
