Kamala Harris Announced economic policies One thing stood out last week: her approach is to use a combination of populist and regulatory policies to tackle the economic problems that have hurt low and middle-income families.
ofProposed MeasuresThe goals of her “Opportunity Economy” plan are to address high grocery bills, the cost of raising a family, and the difficulty of homebuying by targeting companies that make “excessive” profits on food and household items, lowering the cost of expensive drugs, increasing the child tax credit for middle-class and low-income families, and creating tax incentives to encourage new home construction and subsidize first-time homebuyers.
One of the main criticisms is that Harris appeals to a populist argument and shifts the blame for inflation through price gouging onto corporations.
of The Washington Post Editorial Board “Instead of offering a substantive plan, she wasted time on populist ploys,” The Wall Street Journal wrote. The editorial likened Harris’s price-gouging attacks to wage and price controls. The law, enacted by Richard Nixon in 1970, created “shortages and market chaos” and was ineffective in curbing inflation.
Another criticism was that Harris did not say how much her proposal would cost or how it would be funded.
The Committee for a Responsible Federal Budget estimates that Harris’ policies could increase the federal budget deficit by $1.7 trillion over 10 years. The proposal to restore the child tax credit, which was part of the 2021 coronavirus relief package, is the most expensive item, estimated to cost $1.2 trillion from fiscal years 2026 to 2035.
Paul Krugman said The restoration of the credit was the best part of Harris’ platform because it significantly reduced child poverty during the time the credit was in place. Overall, Harris is seen as taking a center-left position that is not much different from President Biden’s original platform. Build Back Better agenda.
My take is that while Harris’ policy proposals are an extension of Biden’s, her message is very different: she is directly targeting middle- and low-income families who don’t understand how “Biden Economics” will benefit them.
One reason is that Biden has tended to push for overly complicated, big legislative programs that combine broad social programs with specific investments in infrastructure and climate change, but that make it difficult to assess their impacts and weigh their costs and benefits.
for example,Inflation Control LawIt was passed two years ago. The Economist magazine reported:There is little evidence that the law boosted the economy.Due to delays in project implementation.
In a previous commentary, I argued that Harris should take inspiration from Bill Clinton’s economic policies.The era of big government is overIn his 1996 State of the Union address, he said, “A balanced budget may be impossible in today’s divided political system, butFederal debt is on an unsustainable trajectoryTreasury Secretary Janet Yellen also acknowledges this.
One of the themes Harris emphasized was the stark difference between what she wants on taxes and what former President Donald Trump advocated for.
She is proposing Raise the marginal corporate tax rate from 21% to 28%That’s in line with what President Biden has sought, but lower than the 35% she previously preferred. She would also allow the personal tax cuts for households making more than $400,000 to expire.
In contrast, Donald Trump has pledged to cut the corporate tax rate to 15% while extending personal tax cuts. Tax Cuts and Jobs ActAccording to Congressional Budget OfficeThese measures could create a revenue shortfall of $4 trillion to $5 trillion over the next decade.
Trump also said:Reducing Social Security TaxesThe idea is to help the elderly, but it has met with considerable opposition as it threatens the viability of the system and ultimately forces cuts to benefits.
Trump said the revenue shortfallRaising tariffsImports from China and other countries will be subject to tariffs of up to 60% and 10-20%, respectively.
But Harris counters that tariffs are taxes on imported goods and would increase the burden on low- and middle-income families. Falling after-tax income for American households By 2025, that would be an average of $1,800, a 1.8% reduction.
Harris’s main takeaway is that President Trump’s economic policies not only favor the wealthy and corporations, but are also likely to widen the federal budget deficit and accelerate inflation.
So how will all this translate at the ballot box? Before Biden dropped out of the running, voters favored Trump’s economic policies over Biden’s by a much larger margin. With Harris as the Democratic nominee, that margin has narrowed significantly, but it hasn’t disappeared.
Still, Harris’ message that she understands the pain families are feeling from rising prices appears to be resonating with voters.Recent polls of voters in battleground statesWhen asked which candidate cares more about them, Harris shows an edge over Trump.
Ultimately, the big question in this election is whether Harris’ policies and message will translate into good politics, regardless of how the economy is affected.
Dr. Nicholas Sagen is an economic consultant with Fort Washington Investment Advisors and is affiliated with the University of Virginia Darden School of Business. He said:“Investing in the Trump Era: How Economic Policies Affect Financial Markets”
