2024 Showdown: Will Harris or Trump’s Economic Vision Shape Your Financial Future?
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Ever wonder how two drastically different tax plans could shape your paycheck? Keep reading to find out.
The 2024 election offers two starkly different economic directions for the U.S., shaped by Vice President Kamala Harris and former President Donald Trump. Both candidates are proposing distinct visions, each with significant implications for the future of the economy. Let’s break down their approaches and how they might play out in a politically divided Congress.
1. Harris' Vision: Tackling Inequality Through Targeted Investments
Vice President Kamala Harris is focused on reducing income inequality through progressive taxation and expanded social programs. Her plan hinges on increasing taxes on high-income households and corporations to fund critical services like:
- Expanded Child Tax Credits: Harris plans to enhance child tax credits, aiming to lift more families out of poverty, building on policies like those introduced in the American Rescue Plan Act.
- Healthcare Subsidies: By strengthening the Affordable Care Act, she seeks to reduce medical expenses for Americans through increased healthcare subsidies.
- Affordable Housing Initiatives: Harris wants to tackle the housing crisis by expanding affordable housing projects, making homeownership more accessible to middle- and lower-income Americans.
Her strategy is clear: use targeted taxes to fund programs that help struggling families. But it faces a major obstacle—Congress. If Republicans control one or both chambers, passing these tax hikes could be a significant challenge, putting much of her plan at risk.
Impact on the Federal Budget: The Balancing Act
Harris’ tax increases aim to generate revenue for her social investments, but the real test will be navigating Congress. A divided government could block these efforts, leaving her with few options to fully implement her agenda. The question is whether she can overcome political gridlock or if her vision will be scaled back by opposition.
2. Trump’s Vision: Tax Cuts to Spur Growth
Donald Trump’s approach is focused on extending the tax cuts from his previous term, emphasizing lower taxes to fuel business investment and economic growth. His key proposals include:
- Corporate Tax Reductions: Trump plans to further reduce the corporate tax rate, betting that lower taxes will drive businesses to invest more in the U.S., boosting jobs and the economy.
- Individual Tax Cuts: He also aims to extend tax cuts for individuals, particularly benefitting high-income earners, arguing that this will help stimulate broader economic growth.
While these cuts may stimulate the economy in the short term, critics point out that they primarily benefit the wealthiest Americans and could exacerbate the national debt if not offset by spending reductions.
Impact on the Federal Budget: Debt Concerns
Trump’s tax cuts would likely add trillions to the federal deficit over the next decade if no spending cuts are made to balance them. This could create long-term challenges, as mounting debt might limit the government's financial flexibility in the future. For investors, understanding how these policies could affect the market is critical.
3. Navigating a Divided Congress: What’s Possible?
Regardless of who wins the White House, passing either candidate’s economic plan will require cooperation from Congress. With the possibility of a split government—one party controlling the presidency and another controlling Congress—legislative deadlock could make it difficult for either Harris or Trump to fully implement their visions.
- Harris' Challenge: If Republicans control the Senate, her tax and spending proposals would likely face strong opposition. This could force her to make compromises or face significant delays.
- Trump's Challenge: If Democrats hold one or both chambers of Congress, Trump may find it difficult to push through additional tax cuts, especially for the wealthy. The political dynamics of a divided Congress will be critical in shaping economic outcomes post-election.
4. The Debt Ceiling: A Looming Issue
Both candidates will have to confront the federal debt ceiling, which could trigger a fiscal crisis if not addressed by Congress by 2025. Here’s how each candidate might approach it:
- Harris: In a divided government, Harris may have to negotiate spending cuts in exchange for raising the debt limit, potentially scaling back her social programs.
- Trump: A Republican-controlled Congress may push for spending cuts in exchange for raising the debt ceiling, particularly targeting social programs, which could lead to substantial changes in government priorities.
Conclusion
The 2024 election sets up a choice between two very different economic futures. Kamala Harris offers a plan to address inequality through higher taxes on the wealthy, funding social programs to help working families. Donald Trump aims to further reduce taxes to spur growth, but his approach could add to the national debt. Ultimately, the ability to enact these plans will depend heavily on the makeup of Congress, making this election pivotal not just for the presidency but for the balance of power in Washington.
Created by Doug Greenberg, President of Pinnacle Wealth Advisory.