WSJ editorial board whacks Trump’s newest economic proposal

[Thiệu Ngô]

Donald Trump is “bidding himself into policy and political dead ends,” the board wrote.

By Greta Reich

The Wall Street Journal’s editorial board compared Republican presidential nominee Donald Trump to Sen. Bernie Sanders following Trump’s announcement that if he were reelected, he would instate a temporary 10 percent cap on credit card interest rates.

The former president made the surprise pledge, which would require congressional approval, during a rally last week.

In Trump’s effort to “microtarget working-class voters,” the board wrote in their Sunday piece, he is “bidding himself into policy and political dead ends.” A 10 percent cap is “a price control on credit” that would cut off people with poor credit scores, they continued.

Ten percent is even lower than the rate that “America’s two leading socialists” — referring to Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sanders (I-Vt.) — proposed in 2019, which was 15 percent, the board wrote.

They highlighted Trump’s criticism of Vice President Kamala Harris’ proposed price controls on groceries, critiquing him for employing the same idea for credit cards.

“It’s bad enough to have a Democratic Party that ignores economics,” the board wrote. “What’s the point of a Republican Party that follows suit?”

In a statement, Trump campaign national press secretary Karoline Leavitt wrote to POLITICO, “Under Kamala Harris, credit card debt is at an all-time high as wages have not kept up with the pace of inflation. That’s why President Trump has promised to cap interest rates at 10% to provide temporary and immediate relief for hardworking Americans who are struggling to make ends meet and cannot afford hefty interest payments on top of the skyrocketing costs of mortgages, rent, groceries and gas.”

The average annual percentage rate charged on credit cards is 22.8 percent, according to Federal Reserve data from May this year. These rates “reflect operating costs, including nonpayment,” the board wrote.

The board argued that if the policy were instated, card companies could simply raise fees in response.

Trump’s new proposal also comes as credit card debt reached a record high of $1.14 trillion in the second quarter, according to the New York Fed.

Citing a 2023 study in the journal Public Choice, the board argued that people with poor credit are the ones who would suffer most from a 10 percent cap. After Illinois capped consumer interest rates at 36 percent APR in 2021, the board wrote, “‘financial well-being declined’ for residents who lost access to short-term, small-dollar loans.”

“Why do Messrs. Trump and Sanders think it’s helpful to limit credit access and send folks to the pawn broker or leg breaker instead?” they asked.

--------------------------------------------------------------------------------------------