I intend to do something similar to what I did in the earlier Trump/Biden debate; I ran three posts and did not finish the series because Biden's withdrawal preempted the series. A source for the transcript is here. .A copy of the debate video is embedded at the bottom of this post. This post includes the first debate exchange. Because of the length of my responses, I'll continue in subsequent post(s)
DAVID MUIR: Good evening, I'm David Muir. And thank you for joining us for tonight's ABC News Presidential Debate. We want to welcome viewers watching on ABC and around the world tonight. Vice President Kamala Harris and President Donald Trump are just moments away from taking the stage in this unprecedented race for president.
LINSEY DAVIS: And I'm Linsey Davis. Tonight's meeting could be the most consequential event of their campaigns, with Election Day now less than two months away. For Vice President Kamala Harris, this is her first debate since President Biden withdrew from the race on July 21st. Of course, that decision followed his debate against President Donald Trump in June. Since then, this race has taken on an entirely new dynamic.
DAVID MUIR: And that brings us to the rules of tonight's debate: 90 minutes with two commercial breaks. No topics or questions have been shared with the campaigns. The candidates will have two minutes to answer questions. And this is the clock. That's what they'll be seeing. Two minutes for rebuttals and one minute for follow-ups, clarifications or responses. Their microphones will only be turned on when it's their turn to speak. No prewritten notes allowed. There is no audience here tonight in this hall at the National Constitution Center. This is an intimate setting for two candidates who have never met.
LINSEY DAVIS: President Trump won the coin toss. He chose to deliver the final closing statement of the evening. Vice President Harris selected the podium to the right.
DAVID MUIR: So let's now welcome the candidates to the stage. Vice President Kamala Harris and President Donald Trump.
VICE PRESIDENT KAMALA HARRIS: Kamala Harris. Let's have a good debate.
FORMER PRESIDENT DONALD TRUMP: Nice to see you. Have fun.
VICE PRESIDENT KAMALA HARRIS: Thank you.
FORMER PRESIDENT DONALD TRUMP: Thank you.
DAVID MUIR: Welcome to you both. It's wonderful to have you. It's an honor to have you both here tonight.
LINSEY DAVIS: Good evening, we are looking forward to a spirited and thoughtful debate.
DAVID MUIR: So let's get started. I want to begin tonight with the issue voters repeatedly say is their number one issue, and that is the economy and the cost of living in this country. Vice President Harris, you and President Trump were elected four years ago and your opponent on the stage here tonight often asks his supporters, are you better off than you were four years ago? When it comes to the economy, do you believe Americans are better off than they were four years ago?
VICE PRESIDENT KAMALA HARRIS: So, I was raised as a middle-class kid. And I am actually the only person on this stage who has a plan that is about lifting up the middle class and working people of America. I believe in the ambition, the aspirations, the dreams of the American people. And that is why I imagine and have actually a plan to build what I call an opportunity economy. Because here's the thing. We know that we have a shortage of homes and housing, and the cost of housing is too expensive for far too many people. We know that young families need support to raise their children. And I intend on extending a tax cut for those families of $6,000, which is the largest child tax credit that we have given in a long time. So that those young families can afford to buy a crib, buy a car seat, buy clothes for their children. My passion, one of them, is small businesses. I was actually -- my mother raised my sister and me but there was a woman who helped raise us. We call her our second mother. She was a small business owner. I love our small businesses. My plan is to give a $50,000 tax deduction to start-up small businesses, knowing they are part of the backbone of America's economy. My opponent, on the other hand, his plan is to do what he has done before, which is to provide a tax cut for billionaires and big corporations, which will result in $5 trillion to America's deficit. My opponent has a plan that I call the Trump sales tax, which would be a 20% tax on everyday goods that you rely on to get through the month. Economists have said that Trump's sales tax would actually result for middle-class families in about $4,000 more a year because of his policies and his ideas about what should be the backs of middle-class people paying for tax cuts for billionaires.
COMMENT: CBO estimates the extension of expiring Trump tax cuts will cost $4.6T, not $5T (over 10 years). I myself hhave been critical of the GOP failing to make sufficient spending cuts to balance the loss of revenues.. What Harris fails to disclose is she wants to keep about $2.5T tax cuts . Her other goodies here (tips, child tax, first home subsidy, etc.) could add another $2T--this on top of a projected baseline $22T over the decade. (Keep in mind the existing debt service is already one of the largest line items in the federal budget, rivaling DoD expenditures.)
Harris' solution is a morally corrupt Politics of Envy. She is targeting the rich to pay their "fair share", including an unconstitutional wealth tax on unrealized gains plus hiked corporate taxes. Unrealized gains are not income, and the sixteenth amendment only allows one direct tax (income). SCOTUS already has declared taxation of unrealized gains unconstitutional. Think about it; your home value may increase but that's not money in your pocket; you have to sell the property to realize any gains (or perhaps finance related taxes). Never mind the difficulties of calculating gains in unique or illiquid assets. Not to mention an owner may need to liquidate all or part of an asset to pay taxes. This could exacerbate volatility in related markets and depress realized gains (as sellers outnumber buyers and drive down price). But there's more to the story: wealth taxes have had a short life in Europe; they never raised projected revenues, and wealthy people can "vote" with their feet.
This argument that middle-income taxpayers will have to pay for billionaire tax cuts is patently and provably absurd. The average 2021 tax rate was almost 15%. The top 1% paid a rate of about 26%. The bottom 50% paid less than 3% of aggregate individual taxes.. The top 25% pay over 72% of taxes
There are also issues with progressive business taxes (in fact, progressive vs. taxes in general). It's a disincentive to maximize income (We can also talk about the issue of double taxation for the business and the owner) But, more importantly, we are part of a very competitive global economy and Harris would make America less competitive in producing goods and services.
The real way to encourage new businesses is not with federal tax gimmicks for new businesses but by lowering barriers to entry, especially government paperwork, taxes, mandates, and other regulations. Reducing economic uncertainty, promoting a sound dollar, stop competing with businesses for labor, investment and other resources, expand global trading alliances,,,
Now Harris' analysis of Trump's positions is simplistic and incompetent. For example, the business tax rate cut in Trump's tax cut reform was permanent (a target of Harris). On the other hand, many provisions of the Tax Cuts and Jobs Act of 2017 are expiring at the end of next year, particularly at the individual level, including higher child allowances, higher standard deduction and simpler/modestly lower tax rates. Even the top rate (note this doesn't include any applicable state and/or local taxes) went from a Clinton-ers 39.6% to 37%, not the 28% of the Reagan Presidency. The fact is, while the top 1% made up 22% of 2021 income, they also paid nearly twice (46%) of US individual income tax revenue. [I would argue they've paid far more than their "fair share".] Note also that the rich probably have tax accountants and lawyers, can defer income, invest in tax-free bonds, and take advantage of various deductions, exemptions, etc. in the tax code. Not to mention their existing invested capital enables ongoing and future jobs and relevant goods and services benefitting the economy as a whole. In fact, even if Harris could legally steal all the assets of the rich, it would only finance government temporarily, and then what? You've already eaten the golden goose laying the golden eggs.
Here's where I've been going with this discussion of Harris' analysis of Trump here. He has gone beyond mere extending tax cuts expiring next year, which has been an ongoing critique of how the 2017 tax reform wasn't paid for (Democrats see this as a revenue problem, while we conservatives see this as a spending problem. In part, we argue dynamic aspects of lower taxes: higher growth may expand taxable income ,which should offset at least some revenue lost by lower tax rates; this generally reflects the law of supply and demand.) The point is, Kamala here doesn't really critique Trump's own debt-financed additions to the t ac reform extension, including a lower corporate tax rate. But she did notice Trump did double his ex-China global tariff to 20% from 10%.
But importantly. Harris here confounds the difference between a tariff and a sales tax (like the Fair Tax). Generally, economists prefer consumption taxes over income taxes. We conservatives are wary, however, when others suggest a VAT, a type of national sales tax the problem is that Statists want multiple sources of revenue and they don't want to lose the income tax. Trump has never promoted a sales tax/"Fair Tax" (in fact, Trump attacked DeSanctis' past support of the Fait Tax, arguing most working class Americans would pay more in taxes.)
Harris' use of the term "sales tax" is deliberately misleading. She's really referencing Trump tariffs. (As a free trader, I oppose protectionist tariffs intended to protect domestic vendors from competitive pricing of foreign goods or services.) It's not really a sales tax in that tariffs do not apply to domestic goods or services. now "Tariff Man" Trump notoriously raised tariffs, especially on Chinese goods and certain commodities like steel and aluminum. At least some of these basically got passed onto American consumers. Curiously, Harris does not mention this. Instead, Trump has spoken about expanding his tariffs to other country vendors, initially at 10% and more recently 20%
Harris herself is no free trader herself You aren't seeing arguments like how other trading partners may reciprocate Trump's tariffs at the expense of American exporters, costing domestic jobs. No, unions and their progressive allies argue that domestic companies arbitrage cheap foreign labor at their expense. As historian Brion McClanahan has pointed out, Trump is more of a New Deal Democrat and has adapted populist arguments to appeal to working-class Americans more successfully than prior nominees.
The impact of tariffs can depend on context, e.g., the amount of the tariff, producer margin, middleman margin, domestic competitor prices, etc. It could be the supplier chain offsets some of the cost to remain competitive. Note, however, it's the American importer who pays the American tariff., and studies showed that almost all of Trump's tariffs got passed along to the American consumer. So, it could be a de facto surtax, at least on Chinese imports. But Kamala Harris has a problem here because Trump has higher tariffs on Chinese goods, and she's using the ex-China rate. It's likely some or all will be passed on. As for the costs of tariffs per houseful, a number of studies show far less than her $4K estimate, and there are often domestic alternatives to foreign goods, not subject to tariffs. If anything, tariffs provide domestic producers some flexibility to raise prices without losing market share.
Harris has a bigger problem than it may seem in dealing with tariffs. For example, inexpensive Chinese exports help low/middle income Americans to stretch their dollars; Trump's tariffs likely were passed along to them, lowering their standard of living. So, the obvious question is: why didn't Biden/Harris repeal Trump's tariffs? Didn't they become the Biden/Harris sales tax? In fact, Biden.Harris not only kept Trump's tariffs but expanded them to include items related to their industrial policies like EV's, clean energy products, and semiconductors
I could go on. Harris doesn't own up to the fact that inflation has been exacerbated by government spending and bad Federal Reserve policy. Biden signed record spending bills into law and he has made 8 appointments to the Fed, including the renomination of chair Powell. The GSE's in college financing and mortgages have exacerbated market inflationary pressures, never mind state/local zoning restrictions, permits, etc. Statism, industrial policy don't create opportunity; they incompetently pick winners and losers in the economy and their "investments" are both inefficient and ineffective.
Consider, for instance, the 2021 Infrastructure Investment and Jobs Act, which includes the $42.5 billion to the Broadband Equity, Access, and Deployment (BEAD) program intended to provide under-served and rural areas with internet access. The program has solicited state projects to expand Internet access due by the end of the year. No one new connection to date, I believe So what has happened to underserved areas the last 3 years without federal money?
In the years between 2021 and 2023 ...grew from 80% to 83% for U.S. households. These gains largely came from new additions to areas that historically have not had access or where costs used to be prohibitive.
Well. what about these plans in process? They seem to prioritize a fiber optic cable buildout vs, e.g,, satellite (Starlink, Hughesnet or Viasat) and/or fixed wireless solutions (e.g., T-Mobile Home). For example Starlink has 99% coverage across the US.
DAVID MUIR: President Trump, I'll give you two minutes.
FORMER PRESIDENT DONALD TRUMP: First of all, I have no sales tax. That's an incorrect statement. She knows that. We're doing tariffs on other countries. Other countries are going to finally, after 75 years, pay us back for all that we've done for the world. And the tariff will be substantial in some cases. I took in billions and billions of dollars, as you know, from China. In fact, they never took the tariff off because it was so much money, they can't. It would totally destroy everything that they've set out to do. They've taken in billions of dollars from China and other places. They've left the tariffs on. When I had it, I had tariffs and yet I had no inflation. Look, we've had a terrible economy because inflation has -- which is really known as a country buster. It breaks up countries. We have inflation like very few people have ever seen before. Probably the worst in our nation's history. We were at 21%. But that's being generous because many things are 50, 60, 70, and 80% higher than they were just a few years ago. This has been a disaster for people, for the middle class, but for every class. On top of that, we have millions of people pouring into our country from prisons and jails, from mental institutions and insane asylums. And they're coming in and they're taking jobs that are occupied right now by African Americans and Hispanics and also unions. Unions are going to be affected very soon. And you see what's happening. You see what's happening with towns throughout the United States. You look at Springfield, Ohio. You look at Aurora in Colorado. They are taking over the towns. They're taking over buildings. They're going in violently. These are the people that she and Biden let into our country. And they're destroying our country. They're dangerous. They're at the highest level of criminality. And we have to get them out. We have to get them out fast. I created one of the greatest economies in the history of our country. I'll do it again and even better.
COMMENT: First of all. no, Trump did not create the greatest economy in American history:
GDP Annual Growth Rate in the United States averaged 3.15 percent from 1948 until 2024, reaching an all time high of 13.40 percent in the fourth quarter of 1950 and a record low of -7.50 percent in the second quarter of 2020. source: U.S. Bureau of Economic Analysis
[Guess who was POTUS in the second quarter of 2020?]
So, as you can see by the above chart, Trump only slightly edges Biden and is essentially also tied with Bush 43 and Obama. Almost all prior listed POTUS had higher except Hoover, Truman, and Bush 41. Ford, Reagan, and Clinton all finished over 3.15%.
Trump is correct: Harris is deliberately and incompetently calling a tariff a sales tax.
He is now inventing a gaslighting pretext of collecting on some imaginary country debts to the US. Trump doesn't conceptually understand the trade balance. And Trump incompetently and falsely claims other countries pay his tariffs. No, just like all other product costs, they are ultimately paid by consumers, US ones in this context. At the border the tariff is paid by the US importer.
The United States Constitution gives Congress the power to impose and collect taxes, tariffs, duties, and the like, and to regulate international commerce. While the Constitution gives the President authority to negotiate international agreements, it assigns him no specific power over international commerce and trade. Through legislation, however, Congress may delegate some of its power to the President, such as the power to modify tariffs under certain circumstances. Thus, because the President does not possess express constitutional authority to modify tariffs, he must find authority for tariff-related action in statute
Trump as POTUS doesn't have the constitutional authority to unilaterally set tariffs. Authority rests with the Congress. We are party to multiple international trade agreements, in particular Uruguay Round Agreements Act 103rd Congress (1993-1994) i.e., WTO. Trump's tariffs violated WTO rules:
Late last week [Dec. 2022], World Trade Organization (WTO) dispute settlement panels ruled against the United States on four separate cases involving the US imposition of tariffs on steel imports and duties on imports of aluminum. China, Turkey, Norway and Switzerland brought the cases against the United States. Two other cases—brought by Russia and India—are pending, and three—with Mexico, Canada and the European Union—have been settled.
These cases are unique because the United States did not apply these duties to offset predatory pricing (dumping), or to countervail foreign subsidies that place US producers at a disadvantage. Instead, Trump administration US Trade Representative Bob Lighthizer—a former steel industry lawyer—dusted off a Kennedy administration statute and claimed that these imports constituted a threat to the national security of the United States.
[Trump has a history of sham rationalizations for his illegal/unconstitutional power grabs ]
Trump abused his legal and constitutional authority by engaging in corrupt protectionism:
The Trump tariffs (sometimes referred to in media as the Trump-China trade war) were protectionist trade initiatives during the Trump administration against Chinese imports. During the presidency of Donald Trump, a series of tariffs were imposed on China as part of his "America First" economic policy to reduce the United States trade deficit by shifting American trade policy from multilateral free trade agreements to bilateral trade deals. In January 2018, Trump imposed tariffs on solar panels and washing machines of 30 to 50 percent. In March 2018, he imposed tariffs on steel (25%) and aluminum (10%) from most countries, which, according to Morgan Stanley, covered an estimated 4.1 percent of U.S. imports. In June 2018, this was extended to the European Union, Canada, and Mexico. The Trump administration separately set and escalated tariffs on goods imported from China, leading to a trade war.
The tariffs angered trading partners, who implemented retaliatory tariffs on U.S. goods. In June 2018, India planned to recoup trade penalties of $241 million on $1.2 billion worth of Indian steel and aluminum, but attempted talks delayed these until June 2019 when India imposed retaliatory tariffs on $240 million worth of U.S. goods. Canada imposed matching retaliatory tariffs on July 1, 2018. China implemented retaliatory tariffs equivalent to the $34 billion tariff imposed on it by the U.S In July 2018, the Trump administration announced it would use a Great Depression-era program, the Commodity Credit Corporation (CCC), to pay farmers up to $12 billion, increasing the aid to $28 billion in May 2019. The USDA estimated that aid payments constituted more one than one-third of total farm income in 2019 and 2020.
It's not obvious why Trump starts to talk about inflation but there is no doubt that Chinese imports provide competition on domestic alternatives, and Trump's tariffs were bad for US consumers (meaning higher prices: they were paying the price for Trump's tariffs. I haven't seen good data on how much Trump's tariffs have contributed to overall inflation, but inflation under Trump's tenure averaged 1.9%, not zero, which he implies; this range, by the way, essentially replicates the Fed's target rate for inflation in the economy; it slightly erodes the principal of Treasury statistics.
Trump's claims about inflation are mistaken. At least 3 Presidents during my lifetime had lower overall inflation: JFK, Eisenhower, and Obama. Moreover, the US has endured higher inflation over the past century multiple times: it was nearly 24% near the end of WW1; about 20% right after WWII, it jumped at the start of the Korean War in the early 50's, Nixon's closing the gold window triggered a decade of inflation (remember Ford's "Whip Inflation Now" and Reagan citing Carter's "Misery Index"?), and energy spikes around 1990 and 2008?
Trump's trying to blame Biden/Harris is somewhat disingenuous and arbitrary. The Fed Reserve is largely independent beyond POTUS appointments. Trump himself nominated current Fed chief Powell and wanted to add a currency war to his trade wars; even with near zero interest rates, Trump, furious with Europe's flirtation with negative interest rates heavily lobbied Powell to do the same; he wanted a "beggar thy neighbor" currency war to weaken the dollar, i.e., make American exports cheaper.
Trump wants you to forget his last year had a negative GDP rates; jobless people cut down purchases and their driving. Still, Trump signed a huge, unpaid-for COVID relief bill (and in fact added $7.8T to the national debt. Any Econ 101 is aware of policy lag. For example, people may have initially saved stimulus checks, in part because state/local economic shutdowns except for "essential services" limited shopping opportunities. This doesn't mean the huge spending bill he signed and the easy money Fed policy didn't play a role, like when that spending circulated after he left office
Let's be clear: neither Trump nor Biden were responsible for the pandemic, the delayed response from the Fed which regarded early signs of rising prices as transitory, or Russia's invasion of Ukraine and the impact of tight global oil markets as second producer Russia oil wasn't traded under sanctions. Even now Trump doesn't have an answer to the inflation problem other than more oil exploration, which is more a long-term solution.. He still doesn't want to cut spending and doesn't believe in a sound dollar.
Trump engages in a xenophobic rant, arguing (provably falsely) that immigrants are primarily criminals and/or mentally ill, a totally unsupported, false allegation. His fearmongering is morally contemptible. We know his reckless rhetoric incites his minions yo target others. For example, two Trumpkins from Boston in 2015 came across a sleeping homeless Latino, pissed on him and beat him with a metal pipe. How did Trump respond? "I will say, the people that are following me are very passionate,” Trump said. “They love this country, they want this country to be great again."
The fact is, Trump is exploiting certain highly publicized tragedies, in an immoral scapegoating of aliens. I have often cited Cato Institute's research in debunking Trump's manipulative garbage:
Accordingly, illegal immigrants were 26 percent less likely than native-born Americans to be convicted of homicide, and legal immigrants were 61 percent less likely (Figure 1). This general trend also holds for 2022, where the illegal immigrant homicide conviction rate was 3.1 per 100,000, 1.8 per 100,000 for legal immigrants, and 4.9 per 100,000 for native-born Americans (Figure 2).
Trump's lie about a purported zero-sum games between migrants and black/Latinos/unions goes beyond inflammatory and totally unsupported by data. Black unemployment has reached a record low under Biden. Take, for instance, the LRGAL Haitians in Trump's notorious Springfield, OH. The local business owners couldn't find enough local workers to staff operations. [There are certain steps before the US approves temporary workers.] Migrants are typically more mobile to find work,
In fact, immigration is a key driver of economic growth .
