The Baker School and Haslam Put Economics in Focus for the 2024 Presidential Election
KNOXVILLE, TENNESSEE – The Howard H. Baker Jr. School of Public Policy and Public Affairs (Baker School) and the Haslam College of Business (Haslam) at the University of Tennessee, Knoxville, welcomed a pair of national pundits – Michael Strain and Matthew Yglesias — to discuss economics and the 2024 Presidential Election on September 25. The event was the Baker School’s second installment of fall programming, encouraging the campus community and the greater Knoxville community to get informed, get engaged, and vote.
Haslam’s Professor of Practice Monica Langley moderated the debate between Strain and Yglesias, drawing on her nearly 30 years of experience covering CEOs, billionaires and presidential candidates for The Wall Street Journal to steer the conversation covering five key topics that are influencing the economy and the election.
Strain is the director of Economic Policy Studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He oversees the Institute’s work in economic policy, financial markets, international trade and finance, tax and budget policy, welfare economics, and health care policy. Yglesias is the founder and author of Slow Boring, a subscription newsletter on American public policy, covering economic policy and political pragmatism.
Strain and Yglesias provided insights on Vice President Kamala Harris and former President Donald Trump’s economic policy plans regarding inflation, industrial and trade, taxes, immigration, and the American dream.
Is inflation really still a problem?
Strain first gave the definition of inflation – the rate at which prices in general in the economy are increasing. He believes that the high inflation numbers that we saw in 2021 and 2022 are in the rearview mirror. Even if we had a zero percent inflation rate, our groceries, clothes, etc., would still be 20% more expensive since President Biden took office. This is what Strain believes people are reacting to – the prices they see and not the inflation. As Yglesias put it, “the public is always going to want things to be cheap,” and what former President Trump’s campaign is putting forward isn’t a policy that would lead to lower price costs.
Tariffs leading to trade wars.
In President Trump’s first administration, he put into place tariffs that lead to what some call a trade war, but the Biden administration kept many of those in place. In his campaign now, Trump is proposing 10 to 20 percent tariffs across the board.
Both Strain and Yglesias agree that this is a bad proposal and that there isn’t a lot of support for it. Strain pointed out that those tariffs in Trump’s first term were sold as “concentrated benefits and diffuse costs,” but what it did was cost manufacturing jobs and raised prices of imported goods.
Yglesias showed a wider view of the trade issue, saying that there used to be a lot of optimism about the economic integration between the U.S. and China. However, over the years, there has been a hard change to that view, and there is more of a security competition with China. The U.S. needs to make sure that the U.S. and its allies are controlling the supply chain of materials.
Which candidate has a better chance of delivering economic prosperity with their tax proposals?
Both candidates are trying to keep the voters they have and gain more with their tax proposals, but Yglesias thinks that this is something voters should ignore. As both Yglesias and Strain point out, no matter who wins, the provisions in the Tax and Jobs Act of 2017 will expire in 2025, and those will need to be addressed – not only by the president but also by Congress. Therefore. it will come down to the balance of political power between the two to determine what and how much of the provisions are extended. Both candidates agree on extending a majority of those provisions and disagree on the others. It’ll be expensive no matter what.
The hot topic that no one agrees on – immigration.
Most of the discussion in the campaign surrounding immigration is with a national security approach, but Langley asked Strain and Yglesias to take it on as an economic impact for the labor force.
Yglesias, who has a book called One Billion Americans: The Case for Thinking Bigger, said a growing population drives prosperity and creates more economic opportunities. He appreciates Trump’s security focus view on open borders as that is what voters are focused on. Yglesias said it allows for the economic impact discussion on immigration. However, he would like to see a more optimistic view of the fact that so many people want to come live in the U.S. That is not to say he is for an open border and chaos, but that it is a tremendous opportunity and we should be trying to find a way to safely and orderly bring people in.
Strain explained that there are two ways to grow an economy – add workers or make the workers you have more productive. The latter of the two is the most difficult, and, for the first, we are currently looking at a demographic situation in which we are going to have a declining workforce. He claimed that if we want to have the economic growth that people expect, we are going to need more immigrants because, in the past, they have demonstrated that they add enormously to our economy. Strain finds Trump and his running mate Senator JD Vance’s rhetoric regarding immigrants and deportation dangerous and sees it as an act of economic self-sabotage.
As Yglesias put it, immigration is what people have done since the foundation of the country, and it’s the cornerstone of the U.S. and its economy.
Does either candidate offer a vision for the American dream to the future generation?
It was clear by this point that neither Strain nor Yglesias had been impressed with either candidates’ campaigns. Strain doesn’t believe we really know what to expect from either of them, and that a lot of what happens will depend on the composition of Congress, not just the presidency.
Yglesias believes that Harris has done a good job focusing on the opportunity economy, something that started in the second term of President Obama’s administration. In her convention speech, she talked all about the opportunities and aspirations of America. However, polls show that people trust former President Trump over Vice President Harris when it comes to the economy. Strain said that comes from her being the Vice President of the Biden administration, which, in Strain’s mind, took part in the most irresponsible and reckless fiscal policy in decades. Even as she tries to distance herself from it, Yglesias believes that isn’t enough and that people, including himself, want to hear her honest opinion about the Biden administration’s economic policy.
Bipartisan support can be found in economic policy.
Although the question on hand for this debate was which candidate could deliver prosperity, both Strain and Yglesias ended on a note of bipartisanship.
Strain stated that America is better than our politics, which you can see if you approach economic policy in a budgetary sense. There is enormous bipartisan agreement that there should be no reduction in Social Security spending or in Medicare spending. Although that has been the status quo for years, there is now bipartisan agreement that the tax burden on the bottom 98 percent of households shouldn’t be increased. All of these are in support of a stronger middle class.
Yglesias says that we should be able to see and admit that the partisan disagreements are fierce around certain dimensions, but in the analysis of bigger picture economic questions, the parties don’t have widely contrasting visions. They just need to sit down at the table together and make a deal.
You can watch the full discussion here.