Waking up early to trudge across campus, trying to beat the 8:00 bell signaling the start of Econ 101, is not how any student wants to start their day. But hey, if you want to graduate, sometimes it can’t be helped. If you get there and can stay awake you will soon learn about the wonders of micro and macroeconomics. In short, microeconomics focuses on individuals, families and businesses while macroeconomics focuses on nations, governments and industries. Why might we care about this? It can help to explain the challenges of the past four years and can show us where we may be going in the next.
You will definitely learn about supply and demand in Econ 101! After the ravages of COVID-19 and the supply chain issues it created, inflation rose dramatically. This affected everything on the micro level. But here is the thing, the government cannot directly control prices in a free market economy. This is why it is crazy to vote for a president based on the current price of gas! But we do it anyway!
What Biden/Harris did was focus on macroeconomics, where the government can have an influence, by passing COVID-19 Relief, the Bipartisan Infrastructure Act and the Inflation Reduction Act among other actions, injecting needed funds into the economy. Acting independently, the Federal Reserve raised interest rates to slow inflation, and now has begun lowering them as inflation has finally come down. It was quite a balancing act, and has caused economic pain, but economists agree that these actions have helped to avoid a recession which would have been even more devastating to the economy and ordinary Americans.
So what about the next four years? Where are we headed? Let’s look at a highly respected analysis of the Harris/Walz economic plans vs those of Trump/Vance. The investment bank Goldman Sachs recently analyzed both plans and determined that Harris’ would likely strengthen the economy while Trump’s would stifle growth. This is in large part because of Trump’s plan for tariffs of up to 20% on imports which are passed onto Americans in the form of higher prices. The report explains that Trump’s proposals to raise tariffs and cut taxes will also increase the deficit and inflation rate, not lower them as he has promised.
Trump has recently tripled down on tariffs, calling himself the “tariff man” and threatening to increase them up to 60%. This reveals Trump’s childish tendency to appear like a strong man even though his actions could cause a global trade war. He would raise tariffs to 100% for goods made in Mexico and to 200% for the American company John Deere if they manufacture outside of the US. The problem is that other countries would likely respond with similar tariffs on American products, hurting the companies Trump says he is defending.
What about Harris/Walz? Instead of launching a global trade war, they have positive plans for growth. Harris/Walz has a plan for a pathway to home ownership that includes incentives for home builders to build more affordable starter homes instead of McMansions. The plan would make certain federal lands available for new home construction and stop predatory practices where private equity buys up large swaths of homes for investment purposes. The plan would include grants of up to $25,000 for down payments for first time home buyers. The goal is to expand housing by 3,000,000 units nationwide.
Harris/Walz will also support and incentivise small business by expanding the tax deduction for startup expenses from $5,000 to $50,000, clearing barriers for owners and their employees to obtain or transfer occupational certifications, and launching a fund for community banks to expand entrepreneurs’ access to capital.
You don’t have to take a class to know that economic life has been challenging for ordinary Americans since COVID-19 disrupted our economy. But it is the Democrats, not the Republicans, who have the plan to grow the economy, make home ownership more affordable and support small businesses. These are solid macroeconomic policies that will have a positive influence on the micro level. Vote Harris/Walz for the economic win!
