Worried about inflation? Kamala Harris has the better plan | Opinion

I teach students about inflation using Milton Friedman’s quip — inflation happens when too much money chases too few goods. As prices rise, consumers face an incentive to buy today before prices go up tomorrow. That increased demand pushes prices still higher, incentivizing still more buying, pushing prices still higher. Workers demand higher wages to keep up with the prices, but that adds upward pressure on prices.

If inflation was a problem during the Biden-Harris administration, why are Trump’s policies more worrisome than Harris’?

The public discussion of inflation under Biden-Harris misses some key points. It ignores that Trump’s tax cuts for the wealthy and other policies added $8.4 trillion to the national debt, which contributed to inflation. While stimulus packages under Biden-Harris probably played a role, research shows that the most important drivers of inflation were breaks in global supply chains and other COVID-related disruptions. Those stimulus packages did, however, help the U.S. recover more quickly from the COVID-driven economic crisis than any other wealthy country.

Contrary to most predictions, the Biden-Harris team so far has managed a “soft landing.” Inflation slowed, but unemployment also fell to a record 3.4% , including near-record unemployment rates for the Black (5.4%) and Hispanic (4.5%) populations. “Real” wages from the start of the pandemic until January 2024 went up. In other words, wages grew more quickly than prices, so many people are actually making more money, even accounting for inflation . This is especially true of people in the middle and lower ends of the economic scale. From 2019-2023, the bottom 25% of the wage distribution earned a 3.2% increase in real wages. Black and Hispanic Americans’ wages increased by 5.7% and 2.9%, respectively. These are remarkable results. If the working class feels worse off, it is in part because Republicans rolled back social programs that would have offset the cost of rising prices, especially for food .

With that record in hand, it is not surprising that Harris’ economic plan mostly continues down the same path. There are some additions that aim to control costs — incentives to build more housing, down payment assistance for first-time home buyers, expanded Child Tax and Earned Income Tax Credits and increased health insurance subsidies. Some of those costs would be offset by increasing the tax share paid by corporations and those making over $400,000 a year.

While Harris’ policies aim to control costs, both of Trump’s signature policies would drive them up.

Trump has promised “ the largest deportation operation in American history .” Consider the impact in North Carolina. Foreign-born workers in 2022 made up nearly one-quarter of the agricultural workforce, one of our most important industries. That is why farmers here have long opposed any deal on “securing the border” unless it includes ways to ensure that agricultural laborers be allowed in. In construction, foreign-born workers make up 29% of the workforce . Those are likely conservative estimates. Mass deportations would lead to a shortfall in production in both of these sectors and others. Less housing built and less food produced would lead to higher prices.

The math is simple — mass deportation equals higher prices.

Some of those costs could be offset by increasing imports, more food or housing materials from abroad, for example. But Trump’s other signature policy is to put tariffs on nearly all imports — 60% on goods from China and 20% on all other goods. Despite Trump’s insistence to the contrary, tariffs are not paid by the exporting company or country. Tariffs are paid by consumers, hitting low- and middle-income workers especially hard. Tariffs equal higher prices.

For those concerned that deficits cause inflation, the contrast again is stark. The Committee for a Responsible Federal Budget projects that Harris’ proposals would add an additional $1.7 trillion over a decade to the national debt. Trump’s plans would add an additional $7 trillion over a decade .

Mark Nance is Associate Professor of Political Science and teaches International Political Economy in N.C. State University’s School of Public & International Affairs.