A Tufts professor weighs the candidates’ economic policies and their potential impact
“It is important to consider not just who wins the presidential election, but also what happens to Congress, since that helps determine a president’s ability to get legislation passed,” says Michael Klein. Image: Shutterstock
In any presidential election, one of the key issues on voters’ minds is money. How would the policies proposed by the major candidates affect the U.S. economy, from the price of groceries to the cost of housing? Tufts Now asked Michael Klein, William L. Clayton Professor of International Economic Affairs at The Fletcher School, for expert guidance on the potential impact of policies proposed by former President Donald Trump and Vice President Kamala Harris.
Klein served as chief economist in the Office of International Affairs of the United States Department of the Treasury in 2010-2011, is a research associate at the National Bureau of Economic Research, and founded and is executive editor of EconoFact, a website that provides nonpartisan economic analysis on timely policy issues.
While the U.S. president certainly exercises power over the economy, Klein notes that Congress plays a significant role, too. “It is important to consider not just who wins the presidential election, but also what happens to Congress, since that helps determine a president’s ability to get legislation passed,” he says.
Of the presidential candidates, both Trump and Harris “have been somewhat vague about specific policies, Trump more so than Harris,” says Klein. But based on what they have been saying, here are five key takeaways.
Trump’s tariffs would raise prices
“Trump would increase tariffs to levels not seen before in the modern era. This would raise prices for consumers, not generate nearly as much revenue as he claims, and invite retaliation from other countries, as was the case with China restricting U.S. agricultural exports when Trump raised tariffs on Chinese goods during his term in office. Economists view this as a very bad policy choice,” says Klein.
Mass deportations would harm the economy
“Trump has also called for mass deportations. This is unlikely to take place to the extent he would like, but even a much more limited policy would have detrimental effects on the economy by reducing the labor force—almost all of the increase in the labor force is due to immigration, given the flat population growth of the native born,” says Klein.
Both candidates’ policies would increase the national debt
“Estimates are that both Harris’ proposed policies and Trump’s proposed policies would add to the national debt,” says Klein. “The effect of Trump’s policies would be more than twice that of Harris’; over 10 years, it would increase by $3.5 trillion with Harris’ policies and $7.5 trillion with Trump’s policies.”
Politicizing monetary policy could have bad consequences
“Trump talks about making the Federal Reserve more responsive to the president’s desires—the president should, he argues, ‘have a say’ in setting monetary policy,” Klein says. “This would politicize monetary policy, and we see lots of bad examples of this, for example Turkey, which had very high inflation as a result of this kind of intervention.”
Inflation is already coming down
“Inflation has come down without the softening of the economy that many people thought would be needed,” Klein says. “Some prices have stayed elevated, but wages have also risen, so real purchasing power has not been eroded to the extent one might think just looking at prices. And I’d add again that tariffs would raise prices and politicizing the Federal Reserve is also a formula for having higher inflation.”
