Higher interest rates mean that the next president, whoever it is, will find it much harder to reduce taxes and increase spending.
For all the bold talk of tariffs and price controls, the economic legacy of the next president will mostly depend on something far more mundane: the tax code — specifically, the 2017 Tax Cut and Jobs Act, much of which will expire next year. Whoever is in the White House, working with whichever party controls Congress, will need to decide whether to extend it, change it or let it expire.
Given that Donald Trump favors extending all of it, and Kamala Harris most of it, odds are that the TCJA will survive and most voters will keep their lower tax rates. If so, it may well be the last gasp of the free-lunch era — the delusion the US can cut taxes, increase spending, and never pay the consequences.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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