An Election Race the Whole World is Watching

The United States is steadily approaching the date for its presidential election. The progress of the campaign is being closely followed across the globe, from Japan and Australia to the United Kingdom and Ukraine, and from China and India to Russia and Iran. The global economic and geopolitical landscape will likely change, but how exactly remains uncertain. This depends on who wins the election and, equally, on how American voters perceive their country's role in the world. After all, the future president, whoever that may be, will have to listen to the voters and taxpayers. Nonetheless, some things are already clear, regardless of the winner.

At present, Kamala Harris and Donald Trump have roughly equal chances of victory. There are still over two months and several weeks left until the voting date, and much can happen. The loyalty of many voters is not as stable as the candidates might wish.

What are the candidates doing now? They are working on the ground, communicating their plans and intentions to voters and their supporters. They are trying to retain their sympathisers and win over those who are still undecided. On many sensitive issues, Harris and Trump’s platforms overlap, but they differ significantly on many more points.

On purely domestic issues, both candidates focus on tackling inflation, combating unwanted imports and illegal immigration, reducing unemployment, and cutting taxes. The foreign policy challenges also appear quite similar: the war in Ukraine, the threat in the Taiwan Strait, and the role of China in global geopolitics, as well as the crisis in the Middle East. However, the approaches to addressing these challenges are, in most cases, diametrically opposed between Trump and Harris.

Despite this, there are some similarities. What might remain the same, regardless of the election outcome?

Both Harris and Trump share the intention of shifting more of the burden of paying for Europe's security back to Europe. They both wish to curb the superpower ambitions of Beijing and authoritarian regimes in general. Ending the uncontrolled aggressive expansion of imported goods in the American market is also a common interest for both Republicans and Democrats.

So, of course, we will all need to watch the interim results of the race and the intentions of both candidates. In reality, they have much more in common than is often believed.

Money Talks, Supporters Consolidate

Kamala Harris is actively fundraising for her campaign, and she is doing significantly better than Donald Trump. How much better?

Initially, right after Joe Biden announced he would not run for re-election, Harris's campaign funds totalled $425.16 million, while Donald Trump's were at $450.26 million, giving Trump a $25.1 million lead (according to opensecrets.org data).

However, by 6 August, when the Democratic National Committee unconditionally declared Kamala Harris as the Democratic Party candidate, she had already overtaken Trump by $24.7 million – her funds stood at $497.52 million, while her Republican opponent's were at $472.77 million.

Things got even more interesting with a significant surge in donations during the Democratic National Convention in Chicago from 19-22 August. By 29 August, Harris’s funds had reached $754.877 million compared to Trump’s $574.81 million, creating a gap of $180 million in favour of the Democratic candidate.

Of course, money does not determine everything, but it indirectly indicates the scale of support and the ability to finance a campaign.

Trump, however, is not giving up. Notably, Georgia Governor Brian Kemp announced that he would participate in fundraising for former President Trump in his state, despite previous sharp disagreements with the Republican candidate. Kemp is also a Republican, but after the previous presidential election, he refused to support Trump when he demanded help in contesting the voting results in Georgia during the 2020 presidential election. This was crucial for Trump, as Biden’s lead in Georgia was only 12,000 votes at that time.

In 2022, Trump backed Kemp's opponent in the gubernatorial election in Georgia, but Kemp still won with a large margin. Thus, the antagonism between them was more than strong. However, Kemp, like many Republicans, decided to support Trump.

On 27 August, in an interview with Fox News Digital, a network close to the Republicans, Kemp declared that "it's impossible for former President Trump or any Republican... to get 270 [electoral votes] without Georgia." Later in the interview, Kemp insisted that Georgia "has to be one that we win if we have all the mechanisms in place. And I am working hard to help secure them from all sides and turn out the Republican vote." This interview took place just two days before Vice President Kamala Harris's two-day bus tour through Georgia.

The story of Brian Kemp is relevant in this article because it illustrates the process of Republicans consolidating around Trump. Some Republicans, who were recently opposed to him, are even gravitating back towards him.

As for Harris, there is also much happening. During the Democratic Party’s pre-election events, everyone sees packed arenas and powerful fundraising, including from small donations. Hundreds of thousands of new volunteers are joining the campaign. About a third of the small donations to Harris's funds come from donors contributing for the first time. This is reminiscent of the magic of 2008, when the Democratic Party captured the vibe that brought Barack Obama to the presidency – the first African American president who won with 365 electoral votes.

Now, the momentum seems even stronger as women join the movement, aiming to support Harris against the MAGA (Make America Great Again) and GOP (Grand Old Party) movements. It is important to note that Harris does not emphasise gender or race, although both women and African Americans are undoubtedly mindful of this. Her persona truly has the potential to consolidate a large number of voters.

Photo: A great journey: Kamala Harris and Tim Walz during a bus tour to voters in Georgia, August 28. Source: Getty Images

Harris to Support the Poor: Not the Worst Plan

If one were to summarise Vice President Kamala Harris's economic agenda briefly, it focuses on two main points:

• Reducing expenses for lower and middle-class Americans. To achieve this, she proposes implementing tax breaks and lowering the prices of prescription drugs.
• Increasing taxes for wealthy Americans and large corporations. Harris has proposed raising tax rates for individuals earning more than $400,000 annually and increasing the corporate tax rate from the current 21% to 28%.

The combination of these two approaches aims to balance each other out. Reducing taxes and providing price reductions for the less wealthy will be offset by increasing the tax burden on the wealthy and large corporations.

The reason behind this is that the Tax Cuts and Jobs Act, signed into law in 2017 by former President Donald Trump, is set to expire in 2025.

How does Trump respond to this challenge? He has already announced plans to retain the existing tax cuts under his law and further reduce corporate tax rates.

Now, let's discuss the details of Harris's programme. She proposes reintroducing the expanded child tax credit that was included in the American Rescue Plan (ARP) enacted by the Democrats in March 2021. This credit, like many other components of the American Rescue Plan, has expired. The reason for the discontinuation of this credit is that the ARP was introduced as a measure to support the population and businesses during the COVID-19 pandemic.

This was a fairly costly programme with various measures, and the child tax credit was arguably the most expensive for the budget. However, it is considered crucial, particularly for the future, as it significantly reduces child poverty and provides opportunities for children from less affluent families.

Photo: Joseph Stiglitz, Nobel laureate in economics and Columbia University professor, considers child poverty the number one enemy. Source: Getty Images

Why Fighting Poverty Matters

Joseph Stiglitz, Nobel Prize winner in economics and professor at Columbia University:

"...Poverty is not the choice of individuals but a result of our policies, which lead to inequality. A prime example of this was the ability of the Biden administration, through actions taken in response to the pandemic, to reduce child poverty by about 40-50% in just one year. We could have done this at any time in the past. We could have adopted policies that had such a massive impact on child poverty.

The reason I am so vocal about childhood poverty is that children who grow up in poverty cannot learn effectively and will not become productive and efficient citizens. What we do today affects our economy and society in the future. I am concerned, for instance, that the special nutrition provided during the pandemic just ended this month — last month, in February (2023). And as a result, millions of children, who were lifted out of poverty by this extraordinary food assistance, are now falling back into poverty."

From an interview for Democracy Now!, an independent global news hour.

The most controversial proposal in Harris's programme is the introduction of a federal law to prevent price increases on food and groceries. She believes that if new penalties by the Federal Trade Commission and other agencies are applied to corporations that violate price increase regulations, this could enhance the competitiveness of the food industry. Most economists reasonably believe that such direct price controls are a bad idea. However, on the other hand, if antitrust practices are used to combat price hikes, this could genuinely improve competitiveness in this sensitive sector.

Tax breaks and medical subsidies for the poor, increased taxes for the wealthy and corporations, and possible price regulation are key elements of Kamala Harris's agenda.

Another challenging area is the incentives for first-time home buyers. Harris's programme includes a proposal to provide $25,000 towards the down payment for first-time home buyers. She also proposes tax breaks for builders constructing such homes and the establishment of an innovative fund of $40 billion to introduce innovations in housing construction. Clearly, these innovations aim to reduce construction costs and improve the energy efficiency of such homes.

These measures seem beneficial for less affluent homebuyers. However, such incentives could increase demand for housing, potentially leading to faster growth in new property prices.

Harris also proposes subsidising the costs of prescription drugs, specifically insulin for diabetics.

Among the somewhat quirky proposals is the abolition of federal taxes on tips in restaurants and hotels. However, the large number of people employed in low-paid jobs in this sector would probably agree and would eagerly support this proposal.

Trump to Shield America from the Undesired and Promote MAGA

Donald Trump’s programme includes 20 points. Some are somewhat repetitive, while others address issues that are too specific to be considered key intentions for his potential future administration.

One of the main ideas Trump is campaigning on is "Mass Deportations Now!" He has made the issue of illegal immigration a cornerstone of his campaign. The first two points of Trump’s programme are dedicated to illegal immigration: "Close the Border and Stop the Invasion of Migrants" and "Carry Out the Largest Deportation Operation in American History."

And it's not just Trump who is calling for action. Republicans in Congress have also been tirelessly raising this issue. JD Vance, a candidate for vice president recruited from the Senate, does not rule out that, if they win, the Republican administration will begin by deporting one million people.

A million deported in a year? That’s a significant number and, perhaps, achievable. For example, during his tenure, Barack Obama (D) once deported over 430,000 illegal migrants in a single year.

Why is deportation such a popular topic? Because this issue touches on values like personal security. Indeed, illegal migration is often associated with various criminal activities and crime in general. Appealing to xenophobia, combined with concerns about personal security, creates a potent mix.

Photo: The new and ambitious face of Trump’s campaign: US Senator and Republican vice-presidential candidate JD Vance greets voters in rural Michigan, August 27. Source: Getty Images

That’s why these calls resonate powerfully with voters. But what about implementation? The labour market in America, as in other developed countries, eagerly absorbs diligent workers who have migrated from afar. This includes everyone from unskilled workers taking up jobs with poor conditions and low pay to "white-collar" professionals who bring acquired experience and ambitions for a robust career.

On the other hand, society rejects those who do not wish to follow existing social and behavioural norms, creating ethnic ghettos and imposing imported rules and traditions in their new homeland.

Therefore, this idea is likely to work, perhaps more than any other in Donald Trump’s election campaign arsenal.

Even if the goal of deporting a million people proves difficult to achieve, this is unlikely to be held against Trump and his running mate.

From a purely economic standpoint, combating inflation is a key focus. This is indeed a strong plan and simultaneously a major critique of Joe Biden’s administration. The current administration, forced to combat the economic consequences of the COVID-19 pandemic, implemented measures that required significant expenditure and, therefore, stimulated inflation. Now, thanks to the qualified actions of the Federal Reserve, inflation is quickly slowing down. So, can Trump and his team take advantage of this trend and report victory over inflation in a year’s time? It’s not that simple.

Trump indeed proposes a return to deregulation policies, particularly in energy and fossil fuel extraction, to achieve cheaper energy and thus lower inflation. He even calls for adjustments to the "Green Deal" so that the fight against the carbon footprint does not cost Americans too much.

Interestingly, Trump’s calls include the proposal to "Return Peace through Strength" as a means of achieving price stability. He links geopolitical risks and war to inflation. Therefore, in his view, geopolitical stability brings price stability. Thus, achieving peace should lead to lower raw material prices. This is somewhat innovative for Republicans, though not entirely: Ronald Reagan, who was in the White House from 1981 to 1989, also saw establishing geopolitical order as a foundation for economic prosperity. He managed to achieve this in the competition with the USSR.

Trump promotes his economic agenda, "America First," and the five pillars it should be built on:

• Deregulation,
• Tax cuts,
• Securing fair trade deals (in relation to foreign manufacturers),
• Ensuring reliable access to inexpensive energy,
• Championing innovation.

The Republicans promise to return to common sense in regulations, meaning that regulations should not be too burdensome for businesses.

Trump proposes making his temporary tax reduction law permanent, that is, not ending its action in 2025. Like Harris, he proposes not taxing tips received by restaurant and hotel workers. And like Harris, he proposes not only maintaining the child tax credit but also strengthening it.

Trump's favourite topic is the pursuit of foreign manufacturers who, thanks to illegal subsidies from their governments or other unfair practices, offer low prices and thus capture the American market. Interestingly, the Biden-Harris administration has partly taken this issue away from Trump by introducing devastating import tariffs on Chinese electric cars in May.

Deregulation, tax cuts, access to cheap energy without excessive reverence for the “Green Deal,” fighting inflation, establishing geopolitical stability even through strength—these are Donald Trump’s key positions.

Overall, such pursuit creates some tactical inconveniences, as consumers like cheap goods, and talk of unfair competition is not immediately clear to them. But strategically, fighting against unfair competition from foreign companies will provide huge advantages and ultimately bring production back home, making supply chains much more reliable and sustainable.

Photo: Donald Trump has promised to make America great again. Source: Getty Images

Trump promises to make America energy independent again, capable of providing for itself without the involvement of autocratic regimes. The importance of this is clearly demonstrated by the example of Western Europe, which continues to pay money to Russian suppliers of oil and gas, thereby allowing the Kremlin to retain the financial capability to wage war on the doorstep of Western European countries—in Ukraine.

What about innovation? A very interesting position is held regarding crypto finance: to remove restrictions as much as possible, not to introduce CBDC (Central Bank Digital Currency), and to promote innovation and the development of artificial intelligence. Trump promises to lift the restrictions on crypto and AI imposed by the current administration.