Kamala Harris' presidential campaign has been dogged by demands for more specific details about what kinds of new policies she would pursue. But the real economic stakes of this election relate to a law passed seven years ago: the Tax Cuts and Jobs Act.
The truth is that
Both candidates have made their positions clear on the law, whose provisions expire at the end of 2025 for individuals and in later years for corporations.
But what's actually going to happen? A Trump administration, backed by a
With a Harris administration, things are much less clear. Harris will in all likelihood be dealing with a Republican
The interesting question is what happens next. The best precedent is the "fiscal cliff" standoff between then-President
The administration, somewhat to the chagrin of progressives, didn't just take "yes" for an answer — that is, allow taxes to go up, and then bargain down from there (or not). Obama's concerns about that strategy were in part political and in part substantive: The US economy was then still suffering from very weak demand and high unemployment. Interest rates and inflation were low. He worried that a large tax increase might tip the economy into recession, and the political fallout would hurt
Harris' decision — and, to an extent, that of
The economic outlook is certainly different. The US has full employment, but inflation is still above-target and interest rates are higher than anyone wants them to be. Under the circumstances, while voters of course prefer paying lower taxes to higher taxes, there's no particular reason to think that a sharp tax increase would be macroeconomically damaging.
Drawing a hard line — saying she is perfectly happy to let the TCJA fully expire if
Alternatively, she might be able to bring the
Which approach she takes will set the tone for her presidency. But her campaign isn't talking about this, nor is it likely to before November — in part because it doesn't want to be seen as overconfident, and in part because no one wants to concede how unlikely it is that
The upshot is that there certainly will be a high-stakes debate over tax policy in 2025 — and the broad outlines of it are already clear. But there is very little insight into the tactical considerations that will shape the outcome.
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(1) To be clear, because of the way tax brackets work, even high-income households benefited substantially from the middle-class tax cuts that Obama wanted to keep. It's not so much that he was opposing tax provisions that benefited rich families, he was opposing provisions that only benefitted high-income households.
(COMMENT, BELOW)
Previously:
• 04/04/24: Why even a Harris transition would be challenging
• 04/04/24: In Baltimore, Biden can show how to build back faster
• 03/27/24: Raising the retirement age won't help anyone
• 03/13/24: Now Biden needs to show his moderate side
• 02/27/24: Will Dems ever embrace charter schools again?
• 10/19/23: Federal budget deficit: From freakout to eff you
• 10/05/23: Ramaswamy likes one of Jimma Carter's worst ideas
• 09/13/23: What happens when renewable energy isn't so cheap?
• 08/09/23: Is Bidenomics working? Ask your waiter
• 08/03/23: America's colleges are also facing a housing crisis
• 07/18/23: Bidenomics' became a doctrine by accident
• 06/20/23: America can fix its highways much faster, if it wants
• 06/07/23: The debt-limit crisis is over. Now on to the debt crisis
• 05/31/23: America needs more housing, but NOT more public housing
• 05/09/23: Football stadiums belong in the suburbs
• 05/02/23: Only Mitch McConnell can save the US from default
• 02/15/23: Biden's building boom will be needlessly expensive
• 01/25/23: Manchin's plan to avert a debt crisis just might work
• 01/10/23: George Santos doesn't deserve to be kicked out of Congress
• 10/03/22 Ron DeSantis and the rise of free-lunch conservatism
• 09/07/22 A debate over the deficit is just what America needs
• 09/03/22 College tuition is too high, but it isn't actually rising
• 08/02/22 Dems need more Manchins
• 06/30/22 Biden 2024? America needs to know now
• 05/30/22 The flaw in the progressive stance on guns
• 05/18/22 Biden can do much more to fight inflation
• 04/05/22 We'll miss globalization when it's gone
• 12/27/21 How 2021 could have been different for Biden
• 11/09/21 Where have you gone, Joe Biden of the primaries?
• 10/05/21What Dems need: More short-term thinking
• 06/02/21
Shh, Congress IS working
Matthew Yglesias writes the Slow Boring blog and newsletter. A co-founder of Vox and a former columnist for Slate, he is also host of "The Weeds" podcast and is the author, most recently, of "One Billion Americans."