Neither Vice President Kamala Harris nor former President Donald Trump, the Wall Street Journal reported on Wednesday’s front page, has any proposals to cut the rapidly increasing national debt. Instead, both are proposing to hand out goodies to strategically positioned voters.
Harris, with an eye on polls showing young voters not as pro-Democratic as in the past, has been talking about providing $25,000 for down payments to first-time homebuyers. With an eye on young families and single parements, she has also called for restoring part of the refundable child tax credit that was part of what President Joe Biden has now conceded was the misnamed 2021 Inflation Reduction Act.
Trump, hoping to win the electoral votes of Pennsylvania, Michigan, and Wisconsin as he did in 2016 and did not in 2020, has called for cutting taxes on domestic manufacturing firms and reducing taxes on overtime pay.
Nevada, 70% of whose voters live in Clark County, with its hordes of gambling and hospitality workers in Las Vegas, has come in for attention as well. Trump was the first to propose eliminating income tax on tips. Harris, hoping to carry the state as Biden did, endorsed the same policy.
You will search long and hard for statements from major economists and policy experts associated with either party for serious arguments supporting these policies, just as you can find few serious advocates of Trump’s proposed 10 percent tariff on imports from all foreign countries or from Harris’s hints that she’d institute something such as national rent control.
On the contrary, serious analysts will point to likely unintended consequences — home sellers will just increase their asking prices by $25,000 — and, of course, to burgeoning federal budget deficits and increasing national debt.
They are proposals of undisciplined candidates with little interest in serious public policy arguments who are locked in a close race for president. There’s an obvious note of political desperation here but also, I think, a less obvious reliance on outdated political theory.
That theory is that large masses of voters are in serious need of additional cash, whether from tax cuts for Nevada casino employees and waitresses or factory workers on overtime shifts.
Yes, almost everyone would like a few extra bucks on their credit or debit cards. But just as the United States already has the most progressive redistributionist federal tax system of advanced countries, over the years, it has incrementally built generous income supplements for those with the lowest 60% of incomes.
That conclusion finds solid support in The Myth of American Inequality, published in 2023 by former Texas Sen. Phil Gramm and two nonpartisan co-authors. Their conclusion, as I reported in a 2023 Washington Examiner column, is that “government takes and redistributes enough resources to elevate the average bottom quintile household,” the lowest 20% of earners, “into the American middle class.”
Democrats imagine that advancing redistributionist policies will win them votes of whites without college degrees and Hispanics who have been trending Republican on cultural issues. But American policy has long since moved past the New Deal and European welfare states. Democrats, and Trump in imitation, are supplying policies for which there is little demand in the political marketplace.
The proof comes in the dog that didn’t bark. The Biden-Harris 2021 legislation expanded the child tax credit from $2,000 to as much as $3,600 and made it refundable, which means that low-income earners who don’t pay federal income taxes got $15 billion in monthly checks from the government.
The argument for refundability is that it helps those with the lowest incomes. The argument against it is that, in discouraging work, it threatens to reverse the 1996 bipartisan welfare reform that resulted in higher work participation, lower teenage birth rates, and better conditions for children.
That expansion of the child tax credit expired in December 2021. Do you remember the mass demonstrations by modest-income parents angry when the checks stopped coming in? You don’t? Neither do I. We’ve has mass movements to defund police, to reinstate Roe v. Wade, to stop Israel from defending itself from Hamas terrorists. But not much more than a peep to restore the 2021 child tax credit.
Voters are hugely miffed about the inflation they believe was triggered by the 2021 legislation. But the folks who were receiving those refundable tax credit checks seem to have been able to cope without them.
Which leads me to a broader but tentative conclusion that voters, for all their vocal discontent with parties and politicians, actually are not demanding major changes in economic policy. In six of the last eight presidential elections, from 1992 to 2020, both political parties have won trifectas, control of the White House and both houses of Congress — Democrats in 1992, 2008, and 2020 and Republicans in 2000, 2004, and 2016.
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Both parties have seized these opportunities to make serious economic policy changes, with some success. But none of those trifectas lasted more than two years, and the Democratic presidents who were reelected in 1996 and 2012 faced Republican majorities.
So what we have now is Harris and Trump advancing crass campaign promises that lack the seriousness of the policies of Presidents Bill Clinton, George W. Bush, and Barack Obama. Maybe that’s what voters want — for now.