Voters Will Decide Future of Key Monetary Policies

By Johan Trejo

Reporter

As the 2024 elections approach, the nation faces a critical crossroads. With inflation, taxes, and the overall performance of the economy dominating headlines, voters are gearing up to decide the future of key policies.

At the heart of this decision lies a deep divide between the major party candidates’ economic strategies. Currently, the United States economy is doing well despite poor public perception. In September, the Federal Reserve Board held a meeting and subsequently decided to cut interest rates by 50 basis points to combat growing inflation, bringing rates down to roughly 5% according to Trading Economics.

Earlier this October, the U.S. Bureau of Labor Statistics reported an increase of 254,000 jobs for last month (a figure higher than the average monthly gain of 203,000 over the previous year), with the unemployment rate remaining at about 4%. Both being positive signs for what many economists refer to as a “soft landing” which is when an economy achieves a form of gradual slowdown in economic growth, avoiding a recession.  Despite this, public opinion of the U.S. economy has remained low, with 62% of individuals surveyed saying the economy is doing “bad” according to a study conducted by AP NORC.

Each candidate has a contrasting view on how they would like to address the country’s inflation issues. Former President Donald Trump has strongly advocated for a directly involved role as president when it comes to monetary policy. According to an NPR report in August, Trump was speaking to reporters at his Mar-a-Lago home when he said,  “I feel the president should have at least say in there, yeah. I feel that strongly. I think that, in my case, I made a lot of money. I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.” When asked about this, Vice President Kamala Harris said, “The Fed is an independent entity, and as president, I would never interfere in the decisions that the Fed makes.” Though her strategy when it comes to inflation isn’t set in stone, many economists expect Harris to uphold tariffs set by the Biden administration in hopes of continuing to lower inflation amongst a divided government.

When it comes to taxes, each candidate varies quite differently in their proposals. Kamala Harris’ proposed tax plan aims to raise taxes on the wealthiest Americans while cutting taxes for lower and middle-income groups. If implemented in 2026, the richest 1% ($914,900 & above) would see an average tax increase of 4.1% of their income, while the middle fifth ($55,100- $94,100) would receive an average tax cut of 2.7%, and the lowest-income fifth ($0-$28,600) would see cuts of 7%. Key proposals include extending parts of the 2017 tax law for those earning less than $400,000, raising taxes on capital gains for high earners, and implementing corporate tax reforms to reduce income inequality according to the Institute of Taxation and Economic Policy. Former President Donald Trump’s proposed tax changes would, on average, benefit the richest 5% of Americans while increasing taxes on all other income groups. The wealthiest 1% would receive a tax cut of around $36,300, while the middle fifth would face an increase of about $1,500, and the lowest-income fifth would see their taxes rise by $800. His proposals include extending the 2017 tax cuts for the wealthy, lowering corporate taxes, and repealing green energy tax credits. Trump has also proposed a new 20% tariff on imported goods and up to 60% tariffs on imported goods from China.