Economic policies may offer gains for US presidential rivals

Donald Trump and Kamala Harris are both advancing populist economic messages aimed at the American electorate. Populism, by definition, involves the promotion of political ideas that resonate with the general populace, often setting them in opposition to a perceived elite.
This economic rhetoric primarily targets low-income voters, who made up 35 percent of the total 168 million eligible voters in the 2020 presidential election. In the upcoming Nov. 5 election, campaign experts estimate that low-income voters could constitute up to 7 percent of the undecided electorate — a segment that could prove decisive. Among them are blue-collar workers in industrial states like Pennsylvania, where job declines have had a significant impact.
The economic themes of this election cycle diverge from those of previous campaigns, which largely centered on middle-class benefits. The current discourse has shifted leftward, focusing on addressing the economic needs of a demographic that may determine the election’s outcome.
Two prominent examples of this populist economic messaging are Trump’s proposal to eliminate taxes on tips and Harris’ commitment to subsidized housing and a federal ban on price gouging for food. Harris has recently shifted her position to align with Trump’s no-tax-on-tips policy. Trump, in turn, accused Harris of idea theft, labeling her a “copycat” and a “flip-flopper,” asserting on his social media platform, Truth Social, that “this was a TRUMP idea — she has no ideas, she can only steal from me.”
Harris has been criticized for a lack of detail in her economic policies, leading The Economist to describe her platform as offering “only the vaguest of policy proposals.” Conversely, Trump’s tax suggestion is likely to have a more substantial impact on the economic direction of the next administration than Harris’ initiatives.
Harris’ proposed economic models, such as capping grocery prices, face significant challenges. Many states and cities already have laws against food price increases. Moreover, the implementation of federally subsidized housing is complex, as it involves the interplay of local government regulations, zoning laws and building codes. States in the US often employ the Low-Income Housing Tax Credit to provide tax credits aiding rent payments, relying on local funding to support affordable housing. Even if Harris now supports Trump’s no-tax-on-tips proposal, her interpretation and implementation could differ, potentially introducing new tax categories. 

The current discourse has shifted leftward, focusing on addressing the economic needs of low-income voters.

Maria Maalouf

Trump is vigorously promoting his policy as common sense, claiming that it was inspired not by economic theory but by a conversation with a restaurant owner who lamented the high taxes on tips. Early assessments indicate that this policy, if enacted, could significantly alter the federal budget. According to one association’s report: “While servers aren’t the only tipped workers, the restaurant industry is the second-largest private sector employer in America, employing roughly 15 million people … Restaurants are also the No. 1 employer of single mothers, Americans without college degrees and the recently incarcerated. The tips generated by these positions are critical to the financial health of these often-forgotten groups.”
The potential consequences include reduced tax revenues, an increased budget deficit and the possibility of tax evasion. The policy might also bolster the cash economy, although the prevalence of credit transactions, such as tips paid by Visa, could mitigate this. Congressional approval is necessary for the policy to become law, which could either complicate or simplify the enforcement of minimum wage laws across states. The labor market might also shift, with workers gravitating toward sectors benefiting from the no-tax-on-tips policy. However, no comprehensive study has yet evaluated the policy’s full implications.
The Los Angeles Times observes similarities in the economic plans of Trump and Harris, suggesting that the latter’s version of the no-tax-on-tips plan could mirror Trump’s. If both candidates agree on the need to support economically disadvantaged Americans, it could signal the potential for bipartisan solutions to the nation’s economic challenges. However, the current divisive campaign rhetoric suggests that reconciliation remains unlikely.

• Maria Maalouf is a Lebanese journalist, broadcaster, publisher, and writer.
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