Trump vs. Harris—Policy Promises vs. Economics

Energy

Former President Donald Trump’s energy platform is “drill baby drill,” with some rhetoric about reversing the green and renewable initiatives instituted by the Biden administration.

The reality is that Trump would have little ability to increase oil production from already historic highs. If the past is any guide, during his previous term in office, he cut a deal with Saudi Arabia to increase oil production and drive down oil prices in exchange for a pass on the murder of Jamal Khashoggi.     

Vice President Kamala Harris now says she is pro-fracking, reflecting a boom in U.S. natural gas and oil production during the Biden-Harris administration that led to a sharp drop in carbon emissions as inexpensive natural gas has chased coal power plants off the grid.

A Harris administration may raise the cost of production, but the higher oil prices that are typical under Democratic administrations would offset the increased costs. U.S. oil production with fracking has soared from less than 5 MMbbl/d to more than 13 MMbbl/d, with a net gain to U.S. gross domestic product of more than $200 billion.  

Both candidates pay lip service to making U.S. electric grids more resilient. Prior to the growth of solar, wind and batteries, the nation was facing more than $2 trillion in required investment to update the old grid.

The new grid, soon to be dominated by wind and solar resources, will require a larger buildout of transmission facilities and relative overspending on batteries to the extent that these replace coal, natural gas and nuclear power plants. Regardless of who sits in the White House, there is no way to avoid higher electricity bills for America.

Energy is, however, deep on the second page of voters’ concerns. The economy ranks higher, so what of the candidates’ economic policies?

Taxes, Deficits, Trade and Tariffs

President Ronald Reagan took office with an old-fashioned Keynesian economic stimulus package driven by increased government spending (enough to force an end to the Cold War) and tax cuts. Later, Reagan increased taxes and fees for government services.

President George H.W. Bush’s tax increases set the stage for balanced budgets during the Clinton administration. In succeeding administrations, Republicans and Democrats have raced to deplete the nation’s credit line.   

Trump has proposed additional tax cuts and renewing those enacted during his first administration that currently are set to expire. Estimates are that his proposals will add up to $5 trillion to the nation’s debt.  

Harris has also proposed targeted tax cuts—taking some cues from Trump—but would let the Trump tax cuts expire to address the increasing and extreme concentration of wealth among very few taxpayers.

The middle class was hammered by the Trump tax cuts, and the growing disparity of wealth is increasingly a red flag for the 98%. Change is coming sooner or later. Harris’ proposals are projected to add less than $500 billion to the nation’s debt.

Both candidates suggest tariffs to provide more revenue and encourage domestic industry. Simplistic assumptions that our trading partners will absorb the tariffs without increasing U.S. inflation is not borne out by experience. The brutal Smoot-Hawley tariffs of 1930 sparked a global trade war that brought on the Great Depression, and that is the risk for a broad-spectrum tariff policy.

Education

Both candidates say they would reinvigorate domestic industry with innovation, technology and capital, but both have ignored the related need for reinvigoration of U.S. higher education, a modern-day reboot of the efforts following the Soviets’ launch of Sputnik in 1957.

For decades, many nations have sent their best and brightest to U.S. colleges and universities. These international students pay more in tuition than U.S. students, making them profit centers for cash-strapped U.S. research universities.

But domestic student enrollment in the sciences hasn’t kept up, leading to concerns about how the U.S. will maintain its technological edge over competitors. A key concern?  If our nation’s top minds can make more as hedge fund managers or clever tax attorneys, why would they instead choose careers as researchers to solve the pressing science and technology problems of the day? 

Assuming that the market will solve our problems is a failure of neoclassical economic thought and bears thinking about as voters prepare to head to the polls. Executive leadership is needed if we expect long-term results and a positive return on investment.

That’s true in politics, just as it is in business. That means the choice for voters is clear—pick the candidate who is focused on the future, that shining “City on the Hill,” or pick the candidate who is focused on expediency.