Five ways Philly’s economy could be shaped by a Harris or Trump presidency

Vice President Kamala Harris and former President Donald Trump are both turning their focus to the issue most important to Pennsylvania voters: the economy.

Harris rolled out a series of economic promises this month. She said she’ll ban grocery price gouging, provide a subsidy for first-time homebuyers, make a $40 billion investment in constructing affordable housing, and expand the child tax credit.

Trump has also homed in on the economy, but is offering different solutions. Trump pledged to sign an executive order to lower inflation and, in a campaign speech, he announced plans to increase U.S. oil drilling and halve energy prices within 18 months.

He’s also expected to extend his 2017 tax cuts and promised a tariff of at least 10% on imported goods.

“In the end, the policy differences between the candidates are really quite dramatic,” said Stephen Herzenberg, an economist who runs the left-leaning Keystone Research Center.

But what could all this mean for Philadelphians? It turns out, quite a bit. Here’s what to know.

People care about how much everything costs. Both candidates are addressing that with pitches that aim to lower individual expenses and increase cash on hand, but voters trust Trump with the economy more than Harris, according to an August New York Times/Siena College poll of Pennsylvania voters.

“If I’m a strategist in either party, I’m telling you to talk about the economy in a plain way,” said Frank Robinson, a former director at Philly-based consulting firm Econsult Solutions. “That’s how you’re going to get the votes.”

Harris has promised to ban price gouging on food and groceries, an idea that Sen. Bob Casey has made a hallmark of his Senate campaign. Casey promoted the proposal during last week’s Democratic National Convention.

Harris also vowed to go after mergers and acquisitions that consolidate too much power with too few grocery-related corporations.

Economist Joshua Mask, an assistant professor at Temple University, said that approach could actually lead to higher prices. Mask estimates that Harris’ approach would reduce supply, which could increase hoarding, increase grocery prices, and increase inflation.

“If you’re blaming inflation on corporate profit margins, that’s not going to be the culprit,” Mask said.

Trump wants to eliminate taxes on Social Security income, a move the nonpartisan Committee for a Responsible Federal Budget said could add $1.8 trillion to the national deficit over 10 years.

Trump also wants to restore his high tariffs on foreign imports, which he believes will protect U.S. production. Economists, including Mask, said the tariffs would cause inflation and basically be a tax on U.S. consumers.

Another Harris proposal that could mean a lot to Philadelphia families is a restoration of the Biden-Harris administration’s expanded child tax credit, with an additional $2,400 to families with babies younger than 1. In Philadelphia, the poorest big city in the nation, those extra dollars went far for families during the pandemic.

The expanded tax credit was in effect during the 2021 tax period under President Joe Biden’s American Rescue Plan. He sought to make it permanent, but it was blocked in the Senate. Harris’ plan would revive and expand it.

Under the Biden-Harris expansion, the childhood poverty rate dropped from 9.7% to 5.2%.

One of Trump’s biggest policy wins as president was the tax cuts he signed into law in 2017. If he returns to the White House, Trump wants to further cut the corporate income tax rate from 21% to 15%, a move he claims would spur investment and create more jobs. Harris wants to raise taxes for big business. Her campaign has pledged to increase the rate to 28%. Before Trump’s cuts, the tax rate was 35%.

Harris has also proposed lowering taxes for the middle class.

The Committee for a Responsible Federal Budget, found that Harris’ corporate tax increase could reduce the U.S. deficit by $1 trillion over 10 years. Trump’s cuts, on the other hand, could increase the deficit by nearly $5 trillion according to the Senate budget committee.

Both campaigns drew sharp contrasts between the other in responses to The Inquirer. The Harris campaign said Trump and his running mate, Sen. JD Vance of Ohio, want “tax giveaways for their billionaire friends.”

Kush Desai, a spokesperson for Trump’s campaign in Pennsylvania, contended that the former president offered a better economic agenda for the state.

“Pennsylvanians remember the low inflation, hot job market, and rising wages that they experienced under President Trump, and no amount of spin is going to change that reality,” Desai said.

Lack of specifics from both Harris and Trump make it hard to know exactly what would happen in Philly if either won the November election, experts said.

Harris’ housing agenda is one that stands to have a pronounced and positive impact on Philadelphians, if it’s done right, Robinson and Mask said.

Harris’ housing affordability package includes $25,000 in down payment assistance to first-time homebuyers, an incentive package for builders, and a $40 billion fund to incentivize local governments to build affordable housing.

“We need the housing, we need the jobs, we need to continue to build our businesses,” said Robinson, who left Econsult in August to become director of economic development in Montgomery, Ala. “We need all those things, and if we do it right, it could be a boon.”

Mask, the Temple University economist, said that, in concert, all those housing proposals could be effective.

Trump’s commitment to “drill, baby, drill” for fossil fuels might bode better in parts of the state, such as Southwestern Pennsylvania, bolstered by the fracking industry.

In Philadelphia, the Biden-Harris administration’s investment in clean energy is bringing hundreds of jobs to the city, said Mark Muro, senior fellow at the Brookings Institution.

The $750 million Mid-Atlantic Hydrogen Hub coming to Philly, Delaware, parts of South Jersey, and parts of Southeastern Pennsylvania is expected to bring a total of 20,000 jobs across the region.

On the flip side, Harris would need to counter clean energy’s disruption to traditional fossil fuel jobs, said Muro.

“I have been a critic of, in the past, our ... neglect of transition costs,” Muro said of the impact that comes with shifting from one economic engine to another. In the past, “we didn’t do as much to help people hurt or left behind.”

A recent study from the Keystone Research Center found that the state’s economy has performed better under Democratic presidents for four out of five economic indicators.

The unemployment rate is lower, employment growth is higher, household income grows more and more equally, and the gross domestic product or GDP growth rate is higher when a Democrat is leading the country, Herzenberg and other researchers found.

Starting in 1949, Pennsylvania lost about 140,000 manufacturing jobs under Republican presidents, including Trump, while gaining 60,000 manufacturing jobs under Democratic presidents, including a gain of 28,000 during Biden’s administration, according to data from the Bureau of Labor Statistics cited by Keystone.

Under Republican administrations, the real median wage is higher, but low-wage workers see more growth under Democratic presidents.

“The choice is whether we want to lock in shared prosperity or we want to get back to an economy for the 1%, and that contrast basically describes the partisan divide,” Herzenberg said.