Vice President Kamala Harris and former President Donald Trump held their first presidential debate on Sept. 10, offering stark contrasts regarding a slew of issues. One of these, inflation, remains top of mind for many Americans who have been hit by high prices in their daily life for some time.
Check Out: Trump Wants To Eliminate Income Taxes — Here’s What That Would Mean for the Economy and Your Wallet
Read Next: 9 Things You Must Do To Grow Your Wealth in 2024
Consumer inflation now stands at 2.5%, the lowest point since February 2021 when it stood at 1.7%. This figure is also down from July (2.9%), according to the August consumer price index (CPI) released Sept. 11. This number is inching closer to the Federal Reserve’s 2% target, and further cemented the likelihood of a rate cut next week at the Federal Open Market Committee meeting.
Both candidates not only blamed each other’s administration for causing inflation, but also blamed each other’s economic policy proposals, saying they would drive the cost of living higher up, further hurting Americans’ wallets.
Here are some key inflation takeaways from the debate, according to experts.
Learn More: I’m an Investor — I’m Making These Money Moves Immediately If Trump Wins
1. Tariff Talk
During the debate, Harris referred to the June 25 joint letter in which 16 Nobel prize-winning economists said a Trump win would re-ignite inflation, namely due to his pledge of imposing 10% tariffs on imports.
“Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession,” Harris said.
“The same ‘experts’ who said that Trump’s tariff policies would cause inflation during his first term are now saying that his second term would be highly inflationary,” said EJ Antoni, public finance economist at The Heritage Foundation. “They were wrong last time and they’re wrong again.”
Antoni added that the same experts said runaway spending under Biden and Harris wouldn’t cause inflation, while “it clearly did.”
“No one should pay attention to these people who are so consistently wrong,” he added.
2. Trump Fires Back on Tariffs
“We’re doing tariffs on other countries. And the tariff will be substantial in some cases. I took in billions and billions of dollars, as you know, from China. When I had it, I had tariffs and yet I had no inflation,” Donald Trump stated during the debate.
Brendan Duke, senior director for economic policy at the Center for American Progress, deemed Trump’s proposal an “inflation bomb from his combination of gaping fiscal deficits and taxes on imported goods.”
As Duke noted, Goldman Sachs estimated that Trump’s policies — including the 10% tax on all imported goods — would increase the inflation rate over the next three years by as much as 50%.
“He has now proposed making the tax on imported goods as high as 20% which would cost a typical family around $3,900 annually,” said Duke. “Even worse, Trump has vowed to interfere in the independent Federal Reserve’s decisions on interest rates, which could turbocharge inflation.”
Of note, Goldman Sachs analysts also said that of the potential policy changes, “tariffs would have the largest impact on inflation,” according to a Sept. 3 analysis.
3. As To How They Would Tame Inflation, Both Candidates Were ‘Short on Detail’
The debate began with a focus on the candidates’ positions on the economy and the cost of living in this country, exemplifying how important tax and economic policy are in this election. This was noted in particular by Mark Friedlich, vice president of government affairs at Wolters Kluwer Tax & Accounting.
Yet, the candidates’ responses were “short on detail,” he added.
As Friedlich noted, Harris characterized her plan as the “opportunity economy,” proposing more generous tax benefits for families. This includes a $6,000 child tax credit for parents of newborns, a $25,000 in down payment assistance for starter homes and a $50,000 tax deduction to start up small businesses.
As for Trump, in addition to his position on tariffs, he advocated lowering the corporate tax rate to 15% from 21%, favoring the extension of the TCJA expiring provisions, eliminating the income tax on Social Security benefits, and excluding tips from both income and payroll taxes, added Friedlich.
Yet, “neither candidate specifically addressed how they would control inflation, pay down the ballooning federal debt, or pay for their tax proposals.”
4. Harris’ Policies Will Drive Housing Prices Up (Or Not)
Meanwhile, other experts also asserted that some of Harris’ policies could further inflame inflation — namely due to her housing proposals, which fail to address the root cause of the housing market issue: supply.
For instance, The Heritage Foundation’s Antoni argued that the $25,000 down payment assistance is just “another demand subsidy, which will drive up prices.”
According to him, the scenario has played out repeatedly, such as with education costs. He argued that every time the government gives out more loans or more grants, colleges and universities respond by increasing tuition and fees, making college less affordable.
And when it comes to down payments, it “is even worse” because it introduces leverage into the equation, he said.
“If you’re making a 20% down payment, then every additional $1 in down payment translates into $5 of home price,” he said. “Handing out $25,000 for larger down payments, therefore, will increase home prices by a multiple of that amount. That will take today’s record unaffordability in housing and turbocharge it.”
Yet, Duke took the opposing view, saying that Harris’ commitment to build 3 million new homes will ease cost pressures on renters and Americans trying to buy a home.
Of note, shelter prices were the largest driver of August’s inflation, according to the Sept. 11 CPI report.
5. Both Candidates Offered Policies That Will Drive Prices Up
Now, according to some experts, while both candidates blamed each other for inflation, neither laid the primary blame for the inflationary updraft where it belongs.
“At the feet of the Federal Reserve,” said Peter C. Earle, senior economist with the American Institute for Economic Research.
According to him, the major reason why prices have skyrocketed over the past three years is the injection of trillions of dollars into the economy in the early stages of the COVID-19 pandemic: massive monetary expansion policies. After that, Fed errors and government spending are secondary reasons for the rise in prices, said Earle.
“In terms of government spending, both the Trump and Biden administrations spent trillions of dollars. Neither of the two can brag to any extent about their proclivity for thrift. And both are supporting policies that will raise prices,” said Earle.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
- 9 Cars To Stay Away From In Retirement
- 5 Things You Should Stop Wasting Money on if Kamala Harris Wins in November, According to Experts
- Here's How To Become a Real Estate Investor for Just $1K Using This Bezos-Backed Startup
- 3 Things You Must Do When Your Savings Reach $50,000
This article originally appeared on GOBankingRates.com: Trump Versus Harris Debate: 5 Key Inflation Takeaways, According to Experts
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
