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In recent remarks, Vice President Kamala Harris has cited several economic analyses, claiming they found her plan would “strengthen the economy” and former President Donald Trump’s plan would “weaken it.” But that’s not exactly what some of those reports said.
In a Sept. 19 campaign event with former talk show host Oprah Winfrey, Harris criticized Trump’s economic plans, saying that he wanted to give “another tax break for billionaires and the biggest corporations that would add $5 trillion to our deficit” and that he had proposed “what I call a Trump sales tax, which is basically he’s going to put a 20% tax on everyday necessities, that economists have estimated will cost the average American $4,000 more a year, which is why Goldman Sachs, which is why Moody’s, which is why Wharton School of Business, which is why 16 Nobel laureates have collectively determined after analyzing our plans, one, mine would strengthen the economy, his would weaken it. Two, that on his plan, he would actually blow up inflation and invite a recession by the middle of next year.”
We’ve written before about Harris’ characterization of Trump’s plans. The $5 trillion figure is the estimated 10-year cost of extending all the tax cuts in the Tax Cuts and Jobs Act, which Trump signed in December 2017, but those tax changes benefited people of all income groups — not only billionaires and big corporations. Harris’ reference to “a Trump sales tax” costing average Americans $4,000 a year is a high-end estimate from a liberal think tank about Trump’s plan for “universal baseline tariffs” on imports.
Harris again cited the Nobel laureates, Goldman Sachs and Moody’s in an interview that aired Sept. 25 on MSNBC, saying they found that “my plan would grow the economy, his would shrink the economy,” and the same day in a speech in Pittsburgh, she referred to “a survey of top economists by the Financial Times and the University of Chicago,” saying it “found that, by an overwhelming 70 to 3% margin, my plan would be better for keeping inflation low.”
Harris was mostly correct in her description of Moody’s Analytics, the Financial Times survey and the 16 Nobel laureates, except the latter commented on President Joe Biden’s economic policies, not Harris’ proposals since she became the Democratic presidential nominee. But she is wrong about the Wharton analysis and exaggerates what Goldman Sachs said.
We’ll explain what each economic group determined.
Penn Wharton Budget Model
In the campaign event with Winfrey, Harris cited the “Wharton School of Business.” She is referring to analyses performed by the Penn Wharton Budget Model of Harris’ and Trump’s tax and spending plans, and PWBM did not conclude that her plan “would strengthen the economy, his would weaken it,” as she said.
PWBM found that Harris’ plan would reduce the nation’s gross domestic product more than Trump’s, and would reduce workers’ wages more.
PWBM did conclude that Trump’s plan would add about twice as much to the nation’s debt, but PWBM warned that the debt added by both candidates’ plans would fall on “future generations who must finance almost the entirety of the tax decreases” each has proposed.
PWBM determined that under Harris’ tax and spending plan, “Relative to current law, GDP falls by 1.3 percent by 2034 and by 4 percent within 30 years (year 2054). Capital investment and working hours fall, thereby reducing wages by 0.8 percent in 2034 and by 3.3 percent in 2054.”
It also found that Harris’ plans would increase cumulative deficits by $1.2 trillion over the next 10 years on a conventional basis and by $2 trillion on a dynamic basis. (Dynamic forecasts take into account the policies’ expected effects on economic activity.)
More generally, PWBM concluded: “Lower and middle-income households generally benefit from increased transfers and credits on a conventional basis, while higher-income households are worse off.”
PWBM’s analysis of Trump’s tax and spending plans concluded that his would cause even bigger deficits.
“We estimate that the Trump Campaign tax and spending proposals would increase primary deficits by $5.8 trillion over the next 10 years on a conventional basis and by $4.1 trillion on a dynamic basis that includes economic feedback effects,” the analysis stated.
But it found that the Trump plan’s impact on the GDP, while still negative, was not as bad as Harris’.
PWBM concluded that while GDP would increase during the first part of the next decade under Trump’s plan, “GDP eventually falls relative to current law, falling by 0.4 percent in 2034 and by 2.1 percent in 30 years.” In addition, “After initially increasing, capital investment and working hours eventually fall, leaving average wages unchanged in 2034 and lower by 1.7 percent in 2054.”
“Low, middle, and high-income households in 2026 and 2034 all fare better under the campaign proposals on a conventional basis,” PWBM concluded.
The analyses of Harris’ and Trump’s plans did not include their call to eliminate the taxation of tips earned by service workers. Both campaigns would have to offer “a considerable number of additional details” in order to analyze their plans, PWBM said.
Similarly, PWBM did not include Trump’s proposal to impose across-the-board tariffs of between 10% to 20% on all imported goods. “Key implementation details” are missing from Trump’s plan, the PWBM analysis stated. “While new import taxes and tariffs could raise several trillion dollars in new revenue over the next decade, they could also lead to revenue losses due to potential retaliatory actions from other governments and other economic dynamics.”
Goldman Sachs
In her interview with MSNBC’s Stephanie Ruhle, Harris said analysts at Goldman Sachs, a global investment and wealth management firm, “said my plan would grow the economy” and Trump’s “would shrink the economy.”
In fact, the analysts found that the economy would continue to grow under both candidates. If Trump wins, the growth would be a bit smaller in Trump’s first year, but that “abates in 2026,” the report said. If Harris wins, there would be at best a “very slight boost to GDP growth” in the first two years, the report said, referring to the real GDP, which is adjusted for inflation.
The company’s chief executive officer suggested the difference in the economic impact between the two candidates isn’t significant.
“I think a lot more has been made of this than should be,” Goldman Sachs CEO David Solomon said in a Sept. 11 interview on CNBC, when he was asked about similar remarks that Harris made the previous night during the presidential debate.
The Harris campaign referred us to news articles about a Sept. 3 research note written by several Goldman Sachs research analysts, including Alec Phillips, the firm’s chief political economist. The Harris campaign did not provide us with a copy of the analysis, but we did obtain a copy of the 23-page report.
Here we will summarize the analysis, and what the company’s CEO said about it.
The researchers said they reviewed “likely changes to trade, immigration, and fiscal policy” by both candidates and estimated “the effects on inflation, labor force growth, GDP, and the deficit” under different election outcomes — a Republican sweep, a Democratic sweep or divided government.
For Trump, the analysis assumed that the former president will raise tariffs on Chinese goods by an average of 20 percentage points, and increase tariffs on auto imports from Mexico and the European Union. It also assumed Trump will reduce immigration and extend the expiring provisions of the Tax Cut and Jobs Act of 2017, while discounting other Trump tax cuts as unlikely to pass Congress.
The analysts assumed that Harris, on the other hand, will not raise tariffs and immigration will slow but remain “above the pre-pandemic trend.” They also assumed that Harris would seek to extend some, but not all, of the 2017 tax cuts, as well as increase the child tax credit and propose a tax credit for first-time homebuyers.
What would be the net impact of these plans on the nation’s economic growth?
First, it’s important to note that the analysis includes a chart that shows Goldman Sachs estimates that the nation’s real GDP will increase by 2% or more in 2025, 2026 and 2027. The net effect of Trump’s immigration, trade and fiscal policies would slightly reduce that growth in 2025, the report said.
“We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse, resulting in a peak hit to GDP growth of -0.5pp in 2025H2 that abates in 2026,” the report said.
In short, real GDP would continue to grow, but at 0.5 percentage point less than it otherwise would in the second half of 2025.
As for a Harris victory, the analysts at Goldman Sachs said: “If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates, resulting in a very slight boost to GDP growth on average over 2025-2026. If Harris wins with divided government, the effects of policy changes would be small and neutral on net.”
In the CNBC interview, Solomon was asked about Harris’ use of his company’s report during the debate. Harris said, “What Goldman Sachs has said is that Donald Trump’s plan would make the economy worse. Mine would strengthen the economy.”
“I think a lot more has been made of this than should be,” Solomon said. “What the report did is it looked at a handful of policy issues that have been put out by both sides, and it tried to model their impact on GDP growth. The reason I say a bigger deal has been made of it is what it showed is the difference between the sets of policies that they put forward was about two-tenths of 1%, OK? So [the] economy grows, OK, if you took these particular sets of policies they looked at.”
Moody’s Analytics
Mark Zandi, chief economist at Moody’s Analytics, has said that if Harris and Trump were able to get all their policies enacted, the economy would thrive more under a Harris administration.
“Assuming Harris and Trump are able to fully implement the policies they have proposed when they take office, the economy will perform better under Harris than under Trump in their terms,” Zandi told Newsweek in a Sept. 20 article. “That is, real economic growth will be stronger, inflation and interest rates lower and budget deficits and debt lower under Harris’ policies than under Trump’s policies,” he said.
However, a Moody’s Analytics report published in early August said that it’s most likely if Harris wins the election, she will have to deal with a divided Congress – making it difficult to execute her full agenda, which Moody’s assumed would be similar to what was in the Biden-Harris administration’s proposed budget for fiscal year 2025. But that scenario would still work out better for the economy than if Trump becomes president with a Republican-controlled Congress, the second likeliest outcome, the analysis said.
Even with a split Congress, Moody’s economists projected that Harris’ proposals would lead to average annual economic growth of 2.1% from 2024 to 2028. The economy would still grow under Trump and a Republican-controlled Congress – contrary to Harris’ suggestion in the MSNBC interview that the economy would “shrink” – but the increase would occur at a slower average rate of 1.3% annually.
Moody’s also said that “under the Republican sweep scenario,” consumer price inflation increases from 3% in 2024 to 3.5% in 2025, “fueled by the higher tariffs, outflow of foreign immigrants, the resulting tighter labor market and more quickly rising labor costs, and tax-cut-fueled fiscal stimulus.” Real incomes and consumer and business sentiment would be weighed down by the higher inflation and interest rates, starting a recession by the middle of 2025, the analysis said, as Harris indicated in her remarks about Trump’s plans.
“While the economy recovers beginning in mid-2026,” the analysis said, “employment is still 3.2 million jobs lower and the unemployment rate is nearly half a percentage point higher by the end of Trump’s term” than it would be at the end of a four-year Harris term.
On the other hand, under a Harris presidency with Republicans running the Senate, the annual rate of inflation would decline to 2.4% in 2025, and interest rates would fall to about 3% before the start of 2027. Annual deficits also would be lower under Harris and a divided Congress, Moody’s said, as would the ratio of debt to GDP.
Notably, Moody’s said that a “lack of transparency and specificity” made it difficult to analyze the macroeconomic impact of Trump’s policies, and a wide range of proposals by the Biden-Harris administration complicated the analysis of potential Harris policies.
Financial Times/Chicago Booth Survey
In Pittsburgh, Harris correctly cited a survey by the Financial Times and the University of Chicago Booth School of Business. “A survey of top economists by the Financial Times and the University of Chicago found that, by an overwhelming 70 to 3% margin, my plan would be better for keeping inflation low,” she said.
The survey, which the Financial Times wrote about on Sept. 14, asked 37 economists: “If the Harris or Trump economic platforms were to be enacted, which do you think would be more inflationary in the medium term?” In response, 70% said Trump’s plans would be more inflationary; 27% said that there would be “no material difference in their inflationary consequences,” and 3% said Harris’ plans would be more inflationary.
There was a similar response to the question about federal deficits: 70% said Trump’s plans would lead to larger deficits; 19% said there would be “no material difference,” and 11% said Harris’ plans would “produce larger federal budget deficits in the medium term.”
Those two questions were the only ones in the survey that asked about the presidential candidates.
Nobel Laureates
Harris referred to “16 Nobel laureates” in the event with Winfrey and other events. Those Nobel Prize-winning economists commented on Biden’s record in office, not future plans by Harris. But they did praise the Biden administration, while saying they were “deeply concerned about the risks of a second Trump administration for the U.S. economy.”
The 16 economists wrote a letter in June, when Biden was still running for reelection, saying: “While each of us has different views on the particulars of various economic policies, we all agree that Joe Biden’s economic agenda is vastly superior to Donald Trump’s. In his first four years as President, Joe Biden signed into law major investments in the U.S. economy, including in infrastructure, domestic manufacturing, and climate. Together, these investments are likely to increase productivity and economic growth while lowering long-term inflationary pressures and facilitating the clean energy transition. … An additional four years of Joe Biden’s presidency would allow him to continue supporting an inclusive U.S. economic recovery.”
On Trump’s plans, the letter said: “Nonpartisan researchers, including at Evercore, Allianz, Oxford Economics, and the Peterson Institute, predict that if Donald Trump successfully enacts his agenda, it will increase inflation. … We believe that a second Trump term would have a negative impact on the U.S.’s economic standing in the world and a destabilizing effect on the U.S.’s domestic economy.”
As vice president, Harris clearly supports the actions of the Biden administration and many of the same economic policies as the president, but the Nobel laureates didn’t analyze her plan, as she said.
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