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What are Tim Walz’s economic policies? Here’s a look at what he’s done in Minnesota.
Minnesota Gov. Tim Walz may be best known for his Midwestern roots, having grown up in Nebraska and spent years as a public school teacher and football coach in Minnesota. But voters will get a chance during his debate Tuesday with vice presidential rival Sen. JD Vance on CBS to hear more about Walz’s views on the economy, a critical issue in the November election.
With polls pointing to a tight 2024 presidential race, the share of voters who describe the economy as good has inched up, helping lift support for the Democratic ticket of Vice President Kamala Harris and Walz. Yet almost 6 in 10 voters describe the economy as “bad,” CBS News polling shows, with the economy ranking as the most important issue among likely voters.
Already, Walz’s approach toward economic issues is visible through his actions as governor of Minnesota, a job he’s held since 2019 and where he is now serving his second term. His policies have included enacting the largest state Child Tax Credit in the nation and enacting free school meals for the state’s K-12 students, while raising taxes on high earners in the state to help pay for those and other social programs.
Walz “has added to the progressivity of Minnesota’s tax code,” noted Carl Davis, research director at the Institute on Taxation and Economic Policy (ITEP), a left-leaning think tank. “Having a system like Minnesota’s, where you ask more of folks at the top, that type of progressive system makes it a whole lot easier to pay for spending on side initiatives like free school lunch.”
The taxes and social programs that Walz signed into law in Minnesota echo some of the plans that the Harris-Walz ticket have so far rolled out, including a more generous federal Child Tax Credit and plans to increase taxes on higher earners and corporations.
“The parallels are pretty obvious” between Walz’s track record in Minnesota and the Harris-Walz national campaign, Davis said.
Minnesota’s Child Tax Credit
A number of states enacted or expanded a Child Tax Credit following the pandemic, when the federal government boosted the national CTC to as much as $3,600 per child. That bigger benefit was credited with helping reduce child poverty to historic lows, but when that enhanced CTC expired in 2022, child poverty rates surged.
That prompted some states, including Minnesota, to explore enacting their own CTCs, ITEP’s Davis noted.
Minnesota’s CTC of $1,750 per child is the most generous state child tax credit in the U.S., according to the Tax Policy Center, a tax-focused think tank. Walz touted it as “the best child tax credit in the country” and encouraged Minnesota parents to file their taxes in order to claim the benefit.
Vance, meanwhile, has proposed expanding the federal CTC to $5,000, but Republican lawmakers earlier this year blocked a modest expansion in the tax benefit. Vance didn’t vote on the failed Senate bill to provide a bigger CTC to low-income families, as he wasn’t present for the vote. He told “Face the Nation” in August that the vote was for “show” and destined to fail, regardless of the direction of his vote.
The debate on Tuesday is likely to pit Walz’s ideas for how to help families afford the rising cost of living against Vance’s economic views, which aside from expanding the CTC have included criticizing Democrats as “anti-family.”
Lowering Social Security taxes
Walz has also sought to help Minnesota residents on the other end of the age spectrum — retirees. As part of the state’s 2023 tax bill, Walz eliminated Minnesota income taxes on Social Security benefits for three-quarters of beneficiaries.
Under the Minnesota law, couples with annual income of less than $100,000 and single filers earning less than $78,000 are now exempted from state taxes on their Social Security checks.
Scrapping taxes on Social Security benefits has also been proposed by former President Donald Trump, who earlier this year vowed to eliminate federal income tax on the monthly government payments. About 40% of the nation’s 67 million Social Security recipients earn enough from their benefits to owe taxes to the IRS.
But there’s one major difference between the dueling proposals: Walz paid for his cuts to Social Security taxes — as well as the CTC — by raising taxes on higher-income households, according to the Tax Policy Center. Trump and Vance, meanwhile, have indicated they want to lower taxes on corporations and renew the tax cuts in the 2017 Tax Cuts & Jobs Act, which gave the most generous tax cuts to higher earners.
Walz accomplished his tax cuts for families and seniors by limiting the amount of standard or itemized deductions that high-income filers could claim, as well as reducing a deduction for dividend income and creating a surtax on capital gains income, the Tax Policy Center notes.
How does Minnesota’s economy compare?
Minnesota’s gross domestic product has expanded about 5% since 2018, when Walz was elected governor, according to the Minnesota Compass, a data site created by Wilder Research, a Minnesota-focused research group that focuses on topics such as homelessness and public health.
Since the height of the pandemic, when employers cut workers across the nation, Minnesota has regained its lost jobs and is now back to where it was before the health emergency, its data shows.
Minnesotans also earn more than the typical American worker, with median income in the state of $85,000 in 2023, compared with about $78,000 nationally, Minnesota Compass found. To be sure, Minnesota residents’ incomes have paced ahead of the U.S. median for at least three decades, long predating Walz’s election, the data shows.
The state ranks highly for doing business, with one recent study from business news site CNBC ranking it No. 6 among the 50 U.S. states based on a number of criteria, including competitiveness, workforce, infrastructure, economy, quality of life and business friendliness.
A number of businesses have recently planned expansions or investments in Minnesota, including a $5 billion expansion from the Mayo Clinic and a historic $525 million investment from Polar Semiconductor.
The state’s relatively strong economy also helped generate enough tax revenues to provide surpluses at the start of the 2019 and 2021 budget cycles, as well as an enormous $17.6 billion budget surplus for 2023. The latter helped the state fund the ambitious social programs signed into law by Walz, which include free school meals for children.
—With reporting by the Associated Press.
Israeli Prime Minister Benjamin Netanyahu on Tuesday dismissed his popular defense minister, Yoav Gallant, in a surprise announcement that came as the country is embroiled in wars on multiple fronts across the region.
Netanyahu and Gallant have repeatedly been at odds over the war in Gaza. But Netanyahu had avoided firing his rival. Netanyahu cited “significant gaps” and a “crisis of trust” between the men in his Tuesday evening announcement.
“In the midst of a war, more than ever, full trust is required between the prime minister and defense minister,” Netanyahu said. “Unfortunately, although in the first months of the campaign there was such trust and there was very fruitful work, during the last months this trust cracked between me and the defense minister.”
In the early days of the war, Israel’s leadership presented a unified front as it responded to Hamas’ Oct. 7, 2023, attack. But as the war dragged on and spread to Lebanon, key policy differences have emerged. While Netanyahu has called for continued military pressure on Hamas, Gallant had taken a more pragmatic approach, saying that military force has created the necessary conditions for a diplomatic deal that could bring home hostages held by the militant group.
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Gallant, a former general who has gained public respect with a gruff, no-nonsense personality, said in a statement: “The security of the state of Israel always was, and will always remain, my life’s mission.”
Gallant has worn a simple, black buttoned shirt throughout the war in a sign of sorrow over the Oct. 7 attack and developed a strong relationship with his U.S. counterpart, Defense Secretary Lloyd Austin.
A previous attempt by Netanyahu to fire Gallant in March 2023 sparked widespread street protests against Netanyahu. He also flirted with the idea of dismissing Gallant over the summer but held off until Tuesday’s announcement.
Gallant will be replaced by Foreign Minister Israel Katz, a Netanyahu loyalist and veteran Cabinet minister who was a junior officer in the military. Gideon Saar, a former Netanyahu rival who recently rejoined the government, will take the foreign affairs post.
Netanyahu has a long history of neutralizing his rivals. In his statement, he claimed he had made “many attempts” to bridge the gaps with Gallant.
“But they kept getting wider. They also came to the knowledge of the public in an unacceptable way, and worse than that, they came to the knowledge of the enemy – our enemies enjoyed it and derived a lot of benefit from it,” he said
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Interest rates are on the decline. Or at least the federal funds rate is. That seems to be the confusing but somewhat accurate interpretation in recent weeks after the Federal Reserve issued its first cut to the federal funds rate in more than four years in September. Cut to a range between 4.75% to 5%, the expectation was that rates on borrowing products would soon ease. While mortgage rates did temporarily drop in the month, they rose again by close to a full percentage point in October. And credit card interest rates, admittedly influenced by a complex series of factors besides just the federal funds rate, just hit a record 23% last week.
Against this backdrop, then, prospective home equity borrowers may be wondering about the future of home equity loan interest rates. Specifically, what will happen to home equity loan rates after this week’s Fed rate cut? That’s what we’ll break down below.
See what home equity loan interest rate you qualify for here.
What will happen to home equity loan rates after this week’s Fed rate cut?
The average home equity loan interest rate is 8.35% right now. And while that could certainly fall if the Fed issues a 25 basis point cut to the federal funds rate as expected on Thursday, it’s unlikely that home equity loan rates will change dramatically once the meeting has concluded. Here are three reasons why:
Lenders may have already made adjustments: A Fed rate cut this week is essentially a certainty (the CME Group’s FedWatch tool has it pegged at over 99%). Understanding this, many lenders may have already priced this presumed cut into what they offer borrowers. Remember that mortgage rates, for example, actually hit a two-year low before the Fed formally issued a rate cut in September. Home equity loan lenders may have done the same thing here.
See what home equity loan rate offers are available now.
The Fed doesn’t directly dictate home equity loan rates: Can the Federal Reserve influence home equity loan rates? Sure. But they can’t and won’t directly dictate what lenders can offer borrowers. So even if there is a 25 basis point reduction this week, don’t expect home equity loan rates to fall by the same margin. If there’s a 50 basis point cut, however, then rates may fall more significantly.
Market conditions also play a role: The Fed’s actions (or lack thereof) are only one component in a series of factors that affect home equity loan interest rates. Economic growth considerations, like the unemployment rate and inflation, also play a major role in what lenders ultimately offer borrowers. And figures there have been mixed lately with unemployment in October poor while inflation continues to drop closer to the Fed’s preferred 2% target. With these additional factors moving in opposite directions, then, it may negate any additional significant reductions in home equity loan rates, at least temporarily.
The bottom line
Home equity loan rates, in theory, could fall after this week’s Fed rate cut. But that drop is unlikely to be significant and, for many borrowers, that cut may already be preemptively priced in with their current lender offers. Still, the rate climate is evolving and home equity loan rates are significantly cheaper than many alternatives. So it may still make sense to pursue this unique borrowing option now while looking for an opportunity to refinance your loan to a lower rate in the future.
Have more home equity loan questions? Learn more here.
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After an aggressive rate hike campaign in which Americans saw the federal funds rate rise from near zero to over 5%, the Federal Reserve is positioned this week to issue its second rate cut of the year. Following a 50 basis point cut in September, the federal funds rate dropped to a range between 4.75% to 5%. And after the Fed concludes its November meeting, that rate is widely expected to fall to a range between 4.50% to 4.75%. While a 25 basis point reduction will have a minimal effect on borrowers, it could cause many savers to reconsider their options, if they haven’t already.
In this climate, many savers may be pondering the benefits of opening a certificate of deposit (CD) account, specifically. Rates on these accounts surged in recent years alongside the federal funds rate, giving savers a safe and effective way to earn a significant return on their money. But now, with the second rate cut in three months set to be issued (and another likely for when the Fed meets again in December), some may be wondering if a CD is still worth opening. Below, we’ll break down three reasons why you should consider opening one now, even as the Fed continues to cut rates.
See how much more you could be earning on your money with a top CD here.
Why you should open a CD even as the Fed continues to cut rates
Not sure if it’s worth opening a CD in the face of looming rate cuts? Here are three reasons why it may still be worth doing right now:
Rates are still elevated (if slightly lower than what they were)
Sure, rates are falling. But they haven’t dropped so dramatically to render CD accounts useless. Remember, CD interest rates follow what the Fed does but they don’t mirror it directly. As such, you can still find a CD with a rate close to 5% right now. And additional cuts in the form of 25 basis points will have a small but gradual influence on the savings rate climate, meaning that it will take time for CD rates to significantly decline. Now is not yet that time.
Your money could use the extra layer of protection
With interest rate cuts being issued, unemployment data uneven, inflation falling and geopolitical tensions and concerns over the U.S. presidential election prominent, there are a variety of factors contributing to economic volatility right now. In circumstances like these, then, it’s beneficial to add an extra layer of protection for your money.
And a CD, with its fixed interest rate, can offer just that. Not only will you not need to worry about adverse market conditions affecting your CD account, you’ll also be able to budget with accuracy by knowing exactly how much interest you’ll earn upon account maturity.
Your window of opportunity is (slowly) closing
This may seem obvious but is worth reiterating. The window of opportunity to earn today’s elevated rate is closing. It’s important to remember that CD rates were under 1% just a few years ago. And while no one is predicting that rates will fall that low anytime soon, as noted above, they are on a downward path.
It doesn’t make sense, then, to wait for rates to fall further, particularly if you have a sum of money that you can comfortably afford to deposit into a CD right now. Just remember to only deposit an amount that you can leave in the account until maturity or you’ll risk having to pay a costly early withdrawal penalty to regain access.
The bottom line
CD account rates are on the decline, but not so dramatically or so rapidly that savers can’t still earn a major return on their money right now. But with another rate cut likely in just days and additional ones possible for December and into 2025, savers should act promptly before this window of opportunity fully closes. It took years, after all, for these CD rates to rise as high as they currently are. It makes sense, then, to open one while you still can.
