Marketplace - How the 2024 presidential candidates compare on national debt

Episode Date: October 11, 2024

As Election Day grows closer, economic-minded voters wanna know: How much do Harris and Trump plan on adding to the national debt? The Committee for a Responsible Federal Budget reviewed the campaign promises of both candidates and predicted a spending range for each. In this episode, will Trump or Harris dig a deeper debt hole — and why should voters care? Plus, thousands in North Carolina are still without power, and why a mining company is paying billions for a lithium firm when the metal’s prices are down.

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app for kids and teens. Greenlight helps kids and teens learn to earn safe, spend wisely, and invest. When you sign up for a Greenlight account at greenlight.com slash million. All you got to do is figure out which way this economy is going. How hard can that be? From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdall. It is Friday today, the 11th of October.

Good as always to have you along, everybody. The economic byword this week, as I think I mentioned yesterday, is data, how much of it we have and what it means for where this economy is headed. And that, surprisingly, is where we're going to start on this Friday. Anna Swanson is at the New York Times. David Gura is at Bloomberg. Hey, you two. Hey, Kai.

Hey, Kai. Anna, let me start with you and the chat that I had with Austin Gulesby yesterday on the program, the head of the Chicago Fed, of course. We talked data because Gulesby's a data guy. I asked him a version of the question that I started the show with, how tough can it be to figure out which way this economy is going? He basically said, all we have to do now is hold the picture steady. Labor market's doing well, inflation's doing well, we just got to hang on.

And my question is, with the limited tools that the Fed has, how are they going to do that? Yeah. Well, I think that, yeah, you've seen data readings in recent months that have kind of come in on both sides of the equation and the Fed is trying to you know parse those. Some have it made us worry that the job market might be a little too weak. Others suggest that inflationary forces are a little too strong and so the Fed just needs to stay attuned to these indicators. I mean that's a very difficult task but but

essentially I think that's right. Just hold the picture steady. When it's hard to tell if the economy is too hot or too cold, you're probably getting the balance just about right. In terms of what they do, I think the data recently probably rules out another supersized 50 basis point cut from the Fed anytime soon. But most investors are still expecting a cut of 25 basis points at the Fed anytime soon, but most investors are still

expecting a cut of 25 basis points at the meeting in November, likely in December too, that probably feels just about right given the data readings that we've seen. David, let me ask you this and this is it's kind of a subjective question, but you know in the grand scheme of things, practical effects on the economy, what difference does it make whether they go 25 basis points or 50 basis points, which is to say a quarter of a percentage point or a half percentage point? I mean, Net-Net, you know, what's the difference? It's such a good question.

And you know, a lot of it has to do with psychology. I think how people feel, the Fed feels about the economy. I love how you call them a data guy today, but data dog. Data dog, there you go. Well, yeah. I really love that. But look, I think they have models for this, how it's worked out in the past when they've done 25 or 50. But data dog. Data dog. There you go. Well, yeah. I really love that. But look, I think they have models for this, how it's worked out in the past when they've

done 25 or 50. I'm sure that they're looking at those now. But I think so much of it has to do with, as Ana was talking about, the data that's come in, where they think things are headed, and kind of the symbols of why go big if they don't need to at this point. So if you're getting readings on both sides of the equation, as Ana said, why would you go for a larger rate cut if a smaller one might do the trick going forward? But it just highlights, I think, the delicacy of this dance.

And I was struck after we got this CPI, this inflation reading this week, what all of these Fed officials were saying. And Austin Goolsbee said he's going to be content staying the course. I think John Williams, Tom Barkin of Richmond said the same thing. Rafael Bostic from Atlanta, you talk to a lot, said he feels like it's going to be a quarter point cut. So, you know, I think my main takeaway from that conversation that you had aside from the dog thing that you really liked was, you know, he loves all of the data. He loves consuming all of it. He loves listening to his colleagues on the committee. That stood out to me. And I think that, you know, this week going into next,

we're just going to be paying more attention to sort of how folks on that committee are feeling about the path forward. I love the way you call me out on my own show, man. Thanks very much. I appreciate that. Anna, one last quick note on the Fed, and David alluded to this. There have been, and I think I said this yesterday, 20 Fed talkers this week. Goolsbee did three of them.

They do seem to be saying slightly different things, and so I wonder if it's okay for consumers to go, eh, you know, the Fed can't figure it out. We're just going to keep on spending money. Yeah, I mean, there is a little bit of a spread. And you even saw that with the big 50 basis point cut that most Fed officials agreed that was the right course. But you certainly had a strong debate about it. And I think that's the experience of most people

in the economy as well. There are some signs that things are strong, some concerns about weakness. So it is a kind of a mixed picture for everybody, but basically we're on a path for a soft landing. You don't get any more soft landing than this, so that's where they want to be. Wait, keep going with that thought.

What about the no landing scenario? Where the economy, I mean, it's growing at 3%. Unemployment's doing well. What do you think, Anna? Yeah, well, I mean, you did still see inflation come down a little bit in the last month, but not as fast as expected. You know, I think that is still a concern,

but it is still ticking down. So for now, we're still on that course. Yeah. David Garrow, a word here about the politics of this economy. You know, voter sentiment on the economy was baked in probably a long time ago, yet still the candidates seem to be trying to squeeze every last dropout. Not too surprising, right? Yeah, we got this new read on consumer sentiment and that was more negative than I

think a lot of economists thought going into it. So there's some fear among consumers that prices are going to climb more than maybe they thought they would. A fear about the direction of the economy. But I have to flag this piece by Heather Long, who's a columnist for Washington Post. And the headline is, this is a great economy. Why can't we celebrate it? And I think it gets to the delicacy that you're talking about, which is, you know, as you set the table with Austin Gulsby, noting how good GDP is and inflation is and the jobs market is, things look so good by so many

measures yet there's a reluctance to talk about it in that way. And I think no politician that's close to the election wants to be sort of trumpeting a good or an improving economy knowing that there are people in this country who are still suffering as a result. But something that really stood out to me in Heather's piece is if you listen to folks on Wall Street, if you listen to economists, academic economists and Wall Street economists, so many of them echo what Ana said just a moment ago, which is the expectation is there's going to be a soft landing. The Fed has pulled this off and things directionally are going well. So the politics is tricky as it's bound to be sort of before an election. But I think looking

at it in kind of an unvarnished way, the economy is looking pretty solid. Yeah. Anna, last word to you and we're going to change gears here a little bit. And I want to give a shout out to a great piece you had on the fragility of global trade in the times the other day. Super interesting. I do wonder though, just bringing it back domestically and politically here, did you have trade on your bingo card for this election?

We're getting tariffs all over the place. Former President Trump was talking about renegotiating the USMCA, the NAFTA successor, which he negotiated in the first place. I just I think this is really interesting. Yeah, absolutely. There's been plenty to dig into and I don't think, you know, with with President Trump again on the ballot that there was any mystery that trade would be a topic. It's really been an interest and kind of an obsession of his for years. And obviously, he's really doubling down on his plans for tariffs. But I think the mystery is kind of what Kamala Harris thinks about all of this, right? So

she said that she would use targeted tariffs. In some ways, she's kind of modeled Biden's approach, but it's kind of hard to tell if she's kind of modeled Biden's approach, but it's kind of hard to tell if she's more of a protectionist or more of an internationalist. And I think, you know, she's just not as focused on economic policy issues. So yeah, I think we know what the direction with Trump is, you know, bigger, more of what we saw in the first term.

With Kamala Harris, it's a little more of a question mark for me. Honest once and at the New York Times, David Gurra at Bloomberg on a Friday afternoon. Thanks you two. Thanks, Kai. Thanks, Kai. Wall Street to end the week, highs of the record variety. We'll have the details price index follows the consumer price index

CPI. We got a couple of days ago. David talked about that. PPI inflation at the wholesale level we got this morning, September data. The core number actually went up more than analysts had been guessing because services got more expensive. Goods, which is stuff, went down. Not a lot either way on either one of them.

So alarm bells aren't quite sounding. But let's talk trends here, shall we? Marketplace's Kaylee Wells made some calls to do just that. Looking at the aggregate numbers, senior U.S. economist Matthew Martin at Oxford Economics is feeling optimistic. He says the fact that final demand was pretty much flat. Really tells the story of a really stable economic environment, which is at the end of the day what the Fed's looking for. But there are two big pieces in this report, goods and services. Martin says the rising price of goods has stabilized and landed right about where it

should be. Service price increases are taking a little longer to get there. Core goods is running at 2%. Core services is running at 2 percent. Core services is running at 4 percent. So services in general have been the really sticky side of things. Martin says the Fed wants to see the services number come down. And the fact that services is the number that increased is not a step in the right direction. And it's actually rising faster than it was in September, October of 2023.

Daniel Lacalle is chief economist with the investment bank Tresas. The services indicated show a very hot and probably hotter economy than one would like. The other big drag on the index is the recent plummet in energy prices, specifically gasoline and diesel. Chief economist Ken Simonson of the Associated General Contractors of America says that dip is making construction appear more affordable, even though copper and lumber prices increased last month. So I don't want to give the picture that everything is calm or declining in price. These numbers are also from a month ago, Simonson says, and a lot has happened since then.

We've had some pretty dramatic things that potentially could affect costs, two hurricanes and a brief dock strike. But he also says these prices are still just the ones that producers are paying. And he's hopeful that the dips and peaks are small enough this month that they won't be all that noticeable for us consumers, at least in the short term. I'm Kaylee Wells for Marketplace. Have you noticed, amid all the policy proposals and promises the two major party candidates are making in their runs for the White House, that the words debt and or deficit are crossing nobody's lips?

Which nobody likes to talk about unpleasant things, right? But with the federal budget deficit at $1.8 trillion for the fiscal year just ended and the national debt at $35.69 trillion as of today and counting, of course, that's real money. The Nonpartisan Committee for a Responsible Federal Budget released an analysis of the campaign promises of the presidential candidates for both parties this week and what they are projected to cost. Both are likely to increase deficits and the national debt.

Trump's buy a good deal more. Marketplace's Spree Benishaw has that one. Vice President Kamala Harris's campaign has promised to extend tax cuts for those making under $400,000 a year, have Medicare, cover home care for the elderly, help with down payments for first-time home buyers, among many other things. The debt price tag on all that? Vice President Harris would add about $3.5 trillion to the debt. That's over 10 years, and Mark Goldwine is senior vice president of the committee for

a responsible federal budget. And that's inclusive of their payfors and their tax increases. Former President Donald Trump has promised to extend tax cuts up and down the income spectrum, lower the corporate income tax and increase defense spending to name a few items. Price tag there? President Trump on net would add about seven and a half trillion dollars to the debt. The CRFB actually imagined several different worlds where things go better or worse for the budget. And in that range, we found that Vice President Harris could be anywhere from deficit neutral to $8 trillion in the hole, whereas President Trump can it be anywhere from

one and a half trillion to 15 trillion in the hole. The Harris campaign sharply disagreed with the analysis and said it'll reduce deficits. The Trump campaign didn't respond to requests for comment, but in speeches the former president has claimed the same. There are models that suggest Harris could reduce or freeze deficits, but no independent models that suggest Trump might. Harris would raise revenue through increasing the corporate tax rate, for example. Trump has pointed to tariffs as a way to raise money.

No, we've included the most revenue you could get from those. Erica York is with the tax foundation and did the math. That doesn't even offset the full cost of just making the 2017 tax cuts permanent. And Trump has identified several more tax cuts on top of that, that he would like to pursue. Neither party seems particularly concerned about deficits, but they should be, says Kimberly Clausing, professor of tax law at UCLA. We're in a booming economy, but you never know when the next recession is coming.

You never know what national security threats the United States might be subject to. And if you're already maxing out the credit card, then when something bad happens, you're not ready. More immediately, interest on the debt is eating up more and more to the budget, says Mark Zandi, chief economist at Moody's. The government's shelling out more on interest than they are on the defense budget for the first time in history. Deficits can also eventually start to push buttons in the economy

that you really do not want pushed, because they end up limiting economic growth. Higher deficits and debt become a problem when they lead to higher interest rates. Suddenly injecting more money into the economy can cause inflation, says Mark Goldwine, which can force the Fed to raise interest rates. But then instead of inflation, what you have is a higher mortgage rate and a higher rate on your car loan. Plus, if the government sells more and more bonds to pay for its spending, somebody has to buy those. If there's so much debt, if there's a lot of bonds out there that need to be purchased,

those people who are buying it begin to say, hey, look, are you going to be able to pay me back? They begin to question it. And they say, you've got to pay me in higher rate of interest to compensate for the risk that you might not. In other countries, that's led to a spiral where the debt gets so big investors don't want to lend. So rates go up and the debt gets even bigger and investors want to lend even less. That is what you call a debt crisis, and Zandi says a crisis is what it may take to get politicians to take deficits more seriously. In New York, I'm Sabri Benashur for Marketplace. Coming up... A lot of people are sharing these pictures of the roads broken up online, but not sharing

exact road names and locations. Details matter after natural disasters, but first, let's do the numbers. Dow Industrial is up 409 points today, 1%, 42,863. The Nasdaq up 60 points, 6-0 points, one-third of 1%, 18,342. The S&P 500 gained 34 points, about 6 tenths percent, 58 and 15 there. For the five days going by, the Dow lifted 1.2%, the and as Dak in the s&p 500 both rose about 1.1 percent Today was a big day for banker earnings JP Morgan chase said profits declined at 2% less than what was predicted So shares went up four and four tenths percent today Wells Fargo reported a profit decline of 11 percent

Also less than analysts expected Wells Fargo shares up 5.6% today. Insurance companies, I'm glad you asked. Progressive insurance picked up 9.10%. All state ascended 1.3% today. Bond prices went down. The yield on the tenured treasury note rose 4.09%. You're listening to Marketplace. This podcast is supported by Fundrise. Buy low, sell high. It's easy to say, hard to do. For example, high interest rates are crushing the real estate market right now.

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This is a paid advertisement. This is Marketplace. I'm Kyle Rizdal. It has been a wild couple of years, well, for a lot of things, but most specifically for us right now, the price of lithium. It is, as you may be aware, a crucial component in batteries. Lithium prices shot up a couple of three years ago as investments in electric vehicles and sales of same took off. Then more supply came online and EV sales started to level off and prices tumbled. Despite the down market though, the mining giant Rio Tinto is spending $6.7 billion

to buy a lithium company. Marketplace's Henry Epp reports. If the lithium market has been struggling so much, it's fair to wonder why a big mining company decided to spend billions to increase their footprint in it right now. Chris Berry is president of House Mountain Partners. This is a counter cyclical move on the part of Rio Tinto and pretty opportunistic. Translation, Rio Tinto is following the first half of an old investing adage, by low. Their expectation is that lithium's a good bet in the long run. They're looking out five, 10, 15 years from now and wanna be a part of this shift,

regardless of near-term fluctuations with respect to EV demand. Because even though that demand has fallen well short of car companies' very lofty expectations from a few years ago, it's a technology that's probably not going away, says Jessica Trancic at MIT. There are good reasons to expect that growth

and demand for EVs to continue, and therefore continued growth and demand for lithium. In the US, that demand growth could really start to climb again in the next decade, says Tom Muradout, a professor at Columbia University, because he says costs of EVs could keep falling and. The other element is availability of charging infrastructure, and that is also improving.

And lithium batteries will probably still be powering EVs five to 10 years from now, says Adam Megginson, a senior analyst at Benchmark Mineral Intelligence, because lithium is special. You kind of can't get past that chemistry fundamental, which is how light it is versus how much energy it's able to store, which is so important for EV applications where you're carrying that weight around. And while it's waiting for the price of lithium to rebound, Rio Tinto has other ways to make money, including iron ore and aluminum, says Tom Murinaud at Columbia. That means that they can carry risk for a longer time. That means that they can

wait for the lithium price to risk for a longer time. That means that they can wait for the lithium price to increase for a longer time. And eventually, if all goes to plan, they can complete the other half of that old investing adage and sell high. I'm Henry App for Marketplace. Western North Carolina is a couple of weeks ahead of Florida in hurricane cleanup. The Sunshine State is still, of course, assessing the damage and sorting things out from Milton. In North Carolina though, things are slowly coming back together. Among the many things very nearly wiped out when Helene hit was the communication network in the remote mountain parts of that state. Family and friends on the outside were able to get updates and information into relatives. Sometimes. Now two weeks later, cell service is slowly being restored. From WFAE,

Zachary Turner has more. After Hurricane Helene, many conversations at the grocery store here in Boone, North Carolina began like this one. I hope you and your family and friends have all been safe. Taylor Oakey is a cashier here at Earth Fair in Boone, a college town and base camp for folks looking to explore the scenic Blue Ridge Parkway. Because floods severed communication between western North Carolina and the rest of the world, a lot of information about road closures, distribution centers, and police checkpoints traveled by word of mouth. I heard Capone's was giving free food.

I saw they were cooking pizzas. I know the hospitality house is having a lot of people drop off cooked food. Boone saw some damage, but when Okie's Wi-Fi returned, she got her first look at the devastation outside of town on TikTok and Instagram. Still, social media posts could only tell her so much. A lot of people are sharing these pictures of the roads broken up online, but not sharing exact road names and locations. Cell coverage in Boone returned faster than in many other towns.

Elsewhere in the mountains, a different story played out. Sarah Paddock lives in Durham, North Carolina. The morning of the hurricane, her father sent a video from where he lives in Silva, a town of about 2,600 people situated along a creek. It was flooding I had never seen before in the area in my lifetime, says someone born and raised in Silva. After that, she didn't hear from her parents for 24 hours. When they finally called, they told her they could only get a signal by standing on a small

stretch of highway near town. It was like a 15 second phone call in and out. It was just, hey, we love you. We're okay. House is okay. Dogs are okay. Don't know when we're going to be able to call again. Paddock and others who were not in the storm's path fell into a similar role.

Through text, social media, and piecemeal phone calls, they've been providing information about road closures, internet access, and neighboring towns to their loved ones in the hardest hit areas. That is, if they could reach them. And now, almost two weeks after the storm, service is still spotty in some areas. So how is it that so much of western North Carolina lost connectivity for so long? Well, Hurricane Helene toppled power lines. Around 86,000 are still waiting on power. In the most flooded areas, it may take months

to repair damaged substations. Cell towers typically have backup power, but the fiber optic lines connecting some were damaged, or the generators washed away. But those explanations haven't satisfied everybody. Zeb Smathers is the mayor of Canton, a small town 30 minutes west of Asheville. He wishes cell providers could have done more

to prepare for the storm. Blackouts have hindered everything. Search and rescue, recovery, communication. I'm still getting messages from loved ones looking for their loved ones, not only Canton but the region, because they can't place a phone call." Cell providers mobilized repair equipment before the storm, but no one could have predicted the extent of the damage Helene wrought.

Stacey Tindal, Emergency Management Director at T-Mobile, said the company had been monitoring the storm a week before it made landfall. Stacey Tindal, Emergency Management Director at T-Mobile, said the company had been monitoring the storm a week before it made landfall. Stacey Tindal, Emergency Management Director at T-Mobile, said the company had been monitoring the storm a week before it made landfall. Stacey Tindal, Emergency Management Director at T-Mobile, said the company had been monitoring the storm a week before it made landfall. We're in this for the long haul. I anticipate we'll be out there refueling generators for weeks. In a written statement, an AT&T spokesperson said cell coverage had been returned to 98% of North Carolina communities. Verizon's most recent update stated that repairs in the Southeast were 90% complete. In western North Carolina, cell towers might not be fully operational for a while. But when Smathers, the mayor of Canton, finally connected to the internet, he did get one message from his provider.

Verizon Wireless did send me a cell phone bill by text a few days ago, which I thought was a nice touch. So again, if you can send me a bill, you can turn my cell phone on for myself and others. He only got the notification because he connected to satellite Wi-Fi. In Boone, North Carolina, I'm Zachary Turner for Marketplace. This final note on the way out today, cause, effect, and the American housing market. This data is from Redfin, the real estate site. So far this year, Redfin says, just two and a half percent of the homes in this economy have changed hands.

Back in the days of low, low mortgage rates, which would be 2021 or so, that number was 4%. Now, of course, what's going on is the people who bought with low rates are simply not feeling the need to move. Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargoli. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager.

And I'm Kai Rizdahl. Have yourselves a great weekend, everybody. We are back on Monday, all right? ["The New York Times"] This is APM. What do they say? More money, more problems, and way more questions from your kids, right? But not to worry. Million Bazillion, a podcast from Marketplace, has you covered.

I'm Bridget Bodner, and with my co-host, Ryan Perez, we take you and your young ones on grand adventures and comedic sing-alongs to answer all the questions your little ones have about money. Join us as we explain how banks work, why name brands are more expensive, and what happened to Black Friday sales. Listen to Million Bazillion wherever you get your podcasts.