Populist ideas sound great, but someone has to pay for them.
Like kids running for class president promising free lunches and extended recess, both Vice President Kamala Harris and former President Donald Trump are doing their best to tell voters what they want to hear – even if what they want to hear is bad ideas.
Our presidential candidates are tripping over themselves to appeal to Nevada voters by offering to eliminate federal taxes on tips because of the influence of the Silver State’s Culinary Workers Union.
It started with Trump, who, at a campaign stop in Nevada, announced “vote for Trump because there’s no tax on tips.”
Did someone say “Free lunch?”
This idea, however, doesn’t make a lot of sense. Estimates say it would cut $150 billion or so from federal receipts over a decade.
It might not be that much money, at least in federal budget terms, but someone has to pay for it.
That means either an offsetting reduction in spending, which we know won’t happen, or adding to the $35 trillion federal debt or raising someone’s taxes. In other words, it’s irresponsible.
I love tax cuts, but why only cut taxes on tips? Why not cut federal income taxes across the board? The fact that this is purely to appeal to a segment of voters in one swing state (even though it would help workers in other states) is a terrible justification for a policy.
After the policy was panned by observers, Harris, at a campaign stop in Nevada, decided to steal the idea. According to the Washington Post, Harris ran with it “to neutralize the political advantage Trump gains from the idea.” This is also a bad justification for a policy.
It’s make matters worse, Harris is said to be considering capping how much income from tips can be taxed.
Why? Again we turn to the Washington Post, which writes that the discussions to add guardrails to the policy “reflect(s) a desire among Democratic experts to refine a policy idea many of them criticized when Trump introduced it in June.”
I guess that’s one way to differentiate yourself.
Here’s an original(ish) idea from Harris: combat inflation by implementing price controls for food.
Always with the price gouging!
This is the same bogeyman Gov. Gavin Newsom blames for high gas prices, seemingly to avoid admitting it’s bad government policies that are driving up the price of gas.
Harris is apparently following his lead.
Many voters blame corporate greed for high prices, so you can see what Harris was thinking, but I would hope that someone who could possibly be the next President would rely more heavily on something more concrete to support economic policies.
Really, you just need Google, which tells me that in May the Federal Reserve of San Francisco found that price markups were not a driver in the inflation of the past few years.
Like all of Harris’ proposals so far, this one is light on details (her campaign website still doesn’t have an issues section). The severity of the unintended consequences will depend on the details.
Though if you want to see how bad price controls could get, Venezuela offers a recent example. It implemented price controls to fight both hunger and inflation, but instead made hunger and inflation substantially worse.
Because price controls don’t work.
Harris has also called for the production of three million new homes, which is a great idea. The president is limited in how much he or she can drive housing production, but it’s a nice sentiment.
Unfortunately, instead of stopping there, Harris floated the idea of $25,000 down payment assistance for first-time home buyers.
Again, who will pay for this? Likely you and me. It would also make matters worse by driving up the cost of housing, artificially increasing demand while doing nothing to increase production.
Trump apparently wants to stop taxing Social Security benefits. While this is also a pandering proposal, it at least makes sense. Why does the government tax money it gives you, especially when you gave the government the money in the first place?
It’s an ok idea, if only on a technicality (offer tax relief to everyone, not just those you need to help you win an election). But any gains seniors get will be undercut by his tariffs.
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Tariffs sound good in a lot of blue collar areas, like Ohio and Pennsylvania (I’m sensing a theme). Allegedly, tariffs support American workers, but only if you ignore the job loss and higher prices for goods.
Trump’s tariffs during his first term cost a quarter million American jobs, according to The U.S.-China Business Council, while dumping $80 billion in new taxes on consumers.
Take that, China!
These new tariffs are supposed to increase prices by up to 1.7 percent, according to Deutsche Bank. They will also impose taxes of $524 billion per year, shrink GDP by 0.8 percent and slash 684,000 jobs, according to the Tax Foundation.
Instead of telling voters what they want to hear, Harris and Trump should try telling them things that might actually improve their lives.
