【MACRO Insight】Policy and Controversy: Economic and Social Issues in the Debate between Harris and T

Vice President and Democratic candidate Kamala Harris and former President and Republican candidate Donald Trump held their first televised debate at the National Constitution Center in Philadelphia, Pennsylvania. The debate, hosted by the American Broadcasting Company (ABC), took place without an audience and lasted 90 minutes, with two commercial breaks. With less than two months to the election, the American media has described this debate as the “decisive 90 minutes” for both candidates.

At the onset of the debate, Harris took the floor first, stating that she has a plan to assist American families concerned about the economy and the cost of living. Harris strongly advocated for an “opportunity economy,” which includes proposals to make housing more affordable and to expand the child tax credit. She also criticized Trump's proposals, such as corporate tax cuts, arguing that they would harm the interests of middle-class American families. Trump responded by reiterating his intention to impose tariffs on other countries. Using his first opportunity to speak, he attacked immigration issues, accusing immigrants from “mental institutions” of stealing job opportunities from African Americans and others. Trump also claimed that Harris had no plan and that she was plagiarizing Biden's plan.

Regarding the issue of tariffs, Harris stated that Trump's proposal to impose a comprehensive tariff of up to 20% on all imported goods was a “tax on the daily necessities you rely on for survival.” Harris said that Trump “started a trade war.” When discussing immigration, Harris said that due to Trump's lobbying of the Republican Party, the bipartisan immigration bill was rejected in Congress. She said, “Our former president prefers to solve problems rather than propose them.” Trump was also asked how he would deport undocumented immigrants. In response to Trump's claim that immigrants eat dog meat, Harris also responded by saying, “That's why in this election, I have the support of 200 Republicans who have worked with President Bush, Mitt Romney, and John McCain, including former Vice President Dick Cheney and Congresswoman Liz Cheney.”

Subsequently, Harris stated that the Biden administration had to “clean up the mess” left by Trump after four years in the White House. She accused Trump of plunging the United States into the “worst unemployment since the Great Depression,” the “worst attack on our democracy since the Civil War,” and the “worst public health pandemic in a century.” Mainstream economists believe that her economic plan will promote economic growth, while Trump's economic plan will cause the economy to shrink. Trump stated that his tariff plan would “cost tens of billions, even hundreds of billions of dollars.” He said that during his presidency, “there was no inflation, almost no inflation.” Trump claimed that the Biden administration has reversed this progress. “These people in our country will absolutely die because of what they have done. They have destroyed the economy.”

The debate then turned to abortion. Harris said that the government and Trump should not tell women how to deal with their own bodies. If elected, Trump would sign a nationwide abortion ban. Trump said last month that he would not support a referendum to expand abortion rights in his home state of Florida. Trump said, “Now, I believe in exceptions for rape, incest, and the life of the mother... Now states are voting on this... Every state is voting. It's a vote of the people. It's no longer tied to the federal government.”

Trump criticized the Biden administration's crime record. Harris responded by saying that Trump also has legal issues. She said, “I think it's absurd because this comes from someone who has been prosecuted for national security crimes, economic crimes, election interference crimes, and has been convicted of sexual assault. His next court appearance is in November, to receive his own criminal sentence.” Trump responded by saying that he has been politically persecuted and that the charges against him are “fake cases.” Trump added, “They speak ill of me, and I may have suffered a severe head injury as a result.”

In this televised debate, Harris specifically mentioned Trump's current litigation issues and talked about his upcoming trial, pointing out that “the crimes he has committed are harmful to the country.” American media commented that “forming a stark contrast between the two has become the core of Harris's campaign, and she has brought this strategy to the debate stage.” Unlike the last televised debate with the current President Biden, in this debate, under Harris's continuous offensive, Trump repeatedly raised his tone and interrupted and talked over the host, even when reminded, causing the host to stop and not ask questions as planned.

According to the polling data compiled by the American election information website “Real Clear Politics,” as of the 8th, Harris is leading Trump by an average of 0.5 percentage points in national polls, but in key “swing states” such as Pennsylvania, Wisconsin, and Michigan, Trump is leading by 1.4 percentage points. Both camps have recently been holding intensive campaign activities in “swing states.” China International Capital Corporation (CICC) believes that, at present, Harris has not significantly shaken Trump's votes, and her leading advantage may mainly come from mobilizing more support from Democratic, independent candidate voters, and moderate voters. The composition of Congress, especially the House of Representatives, will directly affect the advancement of fiscal and tax-related policies, and the Republican Party is still leading. Against this backdrop, the debate on September 11th is crucial. From past experiences, especially the last Trump-Biden debate, such a deadlock state may directly affect the direction of the election.

From the current perspective, Harris's policies may support U.S. Treasury bond yields and the U.S. dollar but are unfavorable for the U.S. stock market; Trump is beneficial for the U.S. stock market, cyclical goods, and Bitcoin but may intervene in the U.S. dollar. In terms of market and asset impact, Harris's “lukewarm” and largely status quo policies have also basically determined that the impact on the market will most likely be less than Trump's. Her direct fiscal expansion to subsidize residents will increase debt issuance in the short term and even bring about phased demand inflation pressure, thus being unfavorable for bond assets and supporting the U.S. dollar; her tax increase policy is also not conducive to the U.S. stock market; the supply of bulk goods may continue to be limited. Under Trump's policies, the downward space for U.S. Treasury bond yields is constrained by inflationary policies; the U.S. stock market is supported by tax cuts and is more favorable for cyclical goods; the U.S. dollar benefits from interest rate cuts and policies or strengthens, unless administrative intervention promotes competitive devaluation; the supply of bulk goods may increase.