Ahead of the 2024 U.S. presidential election, polls reveal that most Americans are focused on kitchen-table issues—primarily inflation, jobs, crime, illegal immigration, education, and health care. These are the pressing domestic concerns, while global matters such as global pacts and security alliances remain secondary. Among these, inflation has become a pressing public concern.
A Sharp Increase in Government Spending
Though supply chain disruptions during the pandemic had an impact on global inflation as noted by the White House, the main driver has been a massive surge in government spending. Early in his administration, President Joe Biden passed the American Rescue Plan, a fiscal stimulus aimed at helping to lift the economy, especially targeting lower income families to help soften the blow of the pandemic.All in all, Biden rolled out public expenditure plans exceeding $6 trillion—around 30 percent of the annual U.S. GDP. These included infrastructure projects such as green energy expansion, and increased welfare distribution. Since then, the ongoing war between Russia and Ukraine, as well as the influx of illegal immigration, have continued to add significantly to government expenditures.
The United States over the past four years added nearly $10 trillion to the national debt, causing it to rise from close to $27 trillion in 2020 to nearly $36 trillion as of October 2024. This amounts to an average debt per citizen, regardless of age, of $105,000.
For everyday Americans, the rising cost of living has been evident in two main areas.
Over the past five years, 97 percent of occupations saw wages fail to keep up with inflation, with restaurant servers being a rare exception. A Moneywise analysis using data from the U.S. Bureau of Labor Statistics and Redfin suggests inflation rates will continue to outpace wage growth across most sectors.
Meanwhile, a Point2 Homes report from April 2023 found that housing prices in 68 of the 100 largest U.S. cities have doubled in less than a decade. The cost of rent has surged by 10 percent in the past year, and the median monthly rent has risen dramatically. This, along with a supply-demand imbalance, has caused the average U.S. home price to jump from around $200,000 to around $400,000.
In 2023, a report by the Federal Reserve highlighted just how inflation has hurt American households. The total household debt of U.S. families is now $17.8 trillion, a very worrisome number.
The report also shows that 17 percent of adults were unable to pay all their bills in 2023, and 63 percent barely had enough cash to cover a $400 emergency expense. Meanwhile, various welfare programs have contributed to the $10 trillion increase in public debt over the past two years.
Harris’s Responses to Inflation
When questioned about inflation, Harris has distanced herself from Biden. A key component to inflation is the rising housing cost, which is largely due to strong demand and high construction costs. According to U.S. census data, the number of new privately owned housing units has climbed back to the level of the historical average, but construction costs remain at an all-time high.Harris is proposing a $25,000 tax credit for first-time homebuyers. The plan will certainly create more demand, which makes it likely home prices will rise further, most likely affecting lower class to middle class people the most, as well as first-time homebuyers. Thus, in the long run, Harris’s policy, while well intended, could hurt the very group she wants to help.
The second main point of her housing policy is that Harris pledged to build 3 million affordable homes during her first term if she is elected. This plan will require congressional approval, as well as getting local governments on board to avoid any conflicts on zoning and permitting laws. With the housing supply already at a historical average level, government spending on housing will inevitably compete with private sector spending on housing—and thus push construction costs even higher, while increasing the housing supply to a limited extent.
Trump’s Inflation Strategy
A key part of Trump’s economic plan is to raise tariffs on foreign countries. Trump argues that foreigners, including the Chinese and other exporting nations, will bear the cost and Americans won’t have to pay. In the short run, exporting countries may cut prices to keep their sales from falling drastically. However, in the long run, economists argue that a portion of that will be paid by consumers.Another key part of Trump’s platform centers on reducing energy costs by deregulating drilling and increasing U.S. energy production significantly. In addition, Trump seeks to reduce government spending by trimming bureaucratic waste, lowering corporate taxes to bring manufacturing jobs back to the U.S., and cutting expenditures by deporting illegal immigrants. A 2023 study by the Federation for American Immigration Reform estimated that U.S. taxpayers spent $150.7 billion in supporting 20 million illegal immigrants in that year alone.
Trump has also proposed ending the U.S. involvement in the Russia–Ukraine war to reduce military aid costs.
The American Dream
Historically, the federal government has had limited tools to solve housing shortages. However, the government does own roughly 30 percent of the country’s land. Both Trump and Harris support opening some federal lands for housing, neither candidate has gone into detail on this proposal.Owning a home remains at the heart of the American dream. However, surveys show that most renters think the dream is currently dead, as many think the cost of living has become too high, placing that dream out of reach. This November, the voters will decide whether we can revive our American dream.
