by CHRIS LEE, Opinion/Editorial
The Harris campaign released a detailed economic plan on September 29, with proposals on inflation, housing affordability, child tax credits, and taxes. The plan offers new ideas to support small businesses and key industries like AI, but a large part of the plan is expanding current Biden/Harris policies like increasing taxes on the wealthy, cutting student loan debt, subsidizing the Affordable Care Act, and lowering the cost of prescription drugs. The plan raises the corporate tax rate on corporations from 21% to 28% and cracks down on landlords who raise the rent too much.
The plan was delivered during a speech at Carnegie Mellon University where she talked about creating an “Opportunity Economy.” The crowd enjoyed the speech especially as it touched on small business support, apprenticeships, and funding for strategic and innovative industries such as AI.
Her most important and largest budget item is making the refundable child tax permanent. If the child tax credit was not allowed to expire, the child poverty rate would have been 50% lower: 8.4% versus 12.4% in 2022 according to the Center on Budget and Policy Priorities.
The US economy continues to do well. The jobs report for September was surprisingly strong with 254,000 jobs added, and inflation was reported at 2.4% over the last 12 months. There were 8 million open jobs in August.
The politics of the plan
You have to give credit to the Harris-Walz team for releasing a plan. At least they have a real plan, instead of vague “concepts.” It’s a real plan; it shows competence, professionalism, and seriousness. All very presidential.
The campaign’s economic plan is targeted at swing voters who are unsure about her ability to be president. Polls show those key voters believe former President Donald Trump would handle the economy better. Undecided voters say their No. 1 issue is “wanting to know more about her economic proposals.”
How will the Harris plan help Black voters?
Harris’s economic plan offers a lot to help Blacks, the middle class, and the working poor. Her core proposals: expand the child tax credit and Earned Income Tax Credit, help for first-time home buyers with $25,000 in down payment assistance and increase taxes on the wealth all benefit Black people.
What is often overlooked is that as President, Harris and her team set the tone and direction of U.S. national economic policy. The president decides what matters in the economy. VP Harris’s policies broadly benefit middle-class workers. And by extension Black People. The contrast could not be clearer.
While Harris rarely mentions race-specific programs, she does talk about increased funding for HBCUs, building generational wealth, helping Black farmers, and job apprenticeships, all of which squarely benefit Black people. As a senator, she endorsed funding for a reparations study commission. She endorsed the green new deal but later modified her position.
Trump’s economic message
In stark contrast, we have Trump’s economic plans. Trump has not put forward anything close to a thoughtful plan for the economy. Trump focuses entirely on the message. The closest he came to an economic agenda was his now infamous bumbling speech to the Economic Club of NY. He spent 20 minutes attacking Biden, Harris, and immigration. He then offered tax breaks to the wealthy. He did outline a plan to use “cheap energy” and tariffs to grow the economy
Every Trump economic proposal steers back to restricting immigration to make everything better. Trump does have a basic set of economic policies.
Trump’s core economic plan consists of five key points: restricting immigration, reducing the cost of energy, reducing regulations, cutting the corporate tax rate to 15%, and “no taxes on tips.” His ideas on tariffs and bringing back manufacturing to the U.S. are talking points, and are not taken seriously by economists and business leaders.
The Harris-Walz economic plan benefits the middle class
Now let’s look at some of the important details of the Harris / Walz economic plan. The plan focuses on four key areas: inflation/affordability, taxes, government help for the middle class and, and support for key industries.
Housing: Her biggest proposal is to increase the number of housing units by 3 million during her administration. 1.2 million units would come with tax incentives for private developers. Additional credits would support owners rehabilitating existing property. Finally, there is a $40 billion fund for a housing innovation fund. However, housing is a local issue and there is generally little the federal government can do.
Rent affordability: Harris briefly discussed cracking down on corporate investments in rental properties. She had proposals to curb predatory investing by corporations and to prevent landlords from colluding to raise rents. She stopped short of endorsing Biden’s proposal to cap rent increases at 5% for existing properties.
Down payment assistance: for new housing units and providing $25,000 in assistance for first-time homebuyers. There will also be additional assistance for homebuyers whose parents did not own a home. There is some controversy regarding this proposal since many economists believe homeowners will simply raise prices by $25,000 which will fuel inflation.
Take on price gougers in the grocery and rental industry. She would use the FTC to stop price gouging in the supermarket industry. Economically, this is difficult but it sets a tone that her administration will be tougher on monopolies, mergers, and excessive price increases.
Child Tax Credits: Harris’s most important plan is to restore the $3,600 tax credit for children This is the largest spending proposal and probably the most important. She would also add a $6,000 credit for each newborn child in the first year. This tax credit reduced the poverty level when enacted by 5.2%.
Affordable Care Act: She would cut premiums for the ACA by adding more funding.
Prescription Drug Prices: Harris has proposed expanding Medicare drug negotiation power to all pharmaceutical drugs beyond the current 10 common drugs.
Taxes: Raise the corporate tax rate from 21% to 28%. This is her largest revenue item. The revenue would be used to fund other social programs without increasing the national debt. Her plan also would let the Trump tax cuts expire and replace them with tax relief for those making $400,000 dollars a year or less.
Small Business: Harris wants to increase the number of new businesses to 25 million from the current level of 16 million. That’s a 50% increase. Harris also wants to expand the new business tax from $5,000 to $50,000. She cites during her speech that the average cost of starting a new business is $40,000.
Expanding apprenticeships: Harris wants to double apprenticeships.
No tax on tips: Harris quickly adopted the policy of no tax on tips, showing campaign nimbleness, and killing a major Trump issue. The policy itself, while superficially good, is bad economics. Tips are used to substitute for employers paying decent wages. Tips are not a substitute for a real minimum wage.
Industrial Policy: Harris has proposed subsidies for key U.S. industries such as artificial intelligence, bio-manufacturing, aerospace, clean energy, and computing. This is a huge step, at least acknowledging the US needs and Industrial Policy rather than a “shadow” policy defined by corporations.
Biden Administration policies Harris would continue or expand
Harris would allow the Tax Cuts and Jobs Acts (TCJA) to expire or be amended to limit tax cuts to those making below $400,000.
Non-Interference: Harris will not interfere with the actions of the Federal Reserve. The “FED” will remain independent.
Raise Minimum Wage: Kamala Harris would raise the minimum wage nationally.
What Harris’s economic policy discussions are missing
Two big things that are missing are how she will deal with difficult economic issues and aspirational leadership. Inequality is not going away.
We all agree that Harris’s policies are needed. They are reasonable and non-controversial, but there is nothing new, innovative, or aspirational for the country. Just a bunch of common-sense proposals. But maybe that is what the country needs compared to the alternative.
Kamala Harris has a lot of room in economic policy discussions because her economic bench is so deep and the Trump campaign is so shallow. Economic policy is a winner and makes for great messaging, so expect to hear more on the topic.
Policies are great, but the vision is missing.
The Harris campaign has delivered poll-tested, extensions of Biden policies, but nothing inspiring.
What’s missing is a long-term vision or an inspirational call to action. JFK had civil rights and put a man on the moon. LBJ had a ‘War on Poverty.’ And Reagan had the ‘Morning in America’ and “Government is the problem.” Instead, we get a $25,000 new buyer tax credit and cheap gasoline.
Let’s look at the facts. The U.S. economy is doing great compared to the rest of the world. Our GDP growth exceeds all other Western nations and our inflation rate is among the lowest. What we are suggesting is that she needs to discuss long-term economic goals for the United States. She is missing an opportunity.
Here are some other key topics avoidedby the Harris economic plan:
How to create middle-class jobs: This has been the core issue for the past 40 years in the US Economy and all subsequent political campaigns. We outsourced huge numbers of jobs in the Midwest and killed US manufacturing. No candidate left or right has figured out how to create good jobs.
Trump would impose higher tariffs and reduce immigration. Harris would offer incentives to small businesses, support unions, and increase apprenticeships. But neither candidate discusses the difficulty of creating middle-class jobs. Both are ignoring the biggest issue of a modern, service economy.
Inequality: For the past 45 years the U.S. has split between high-income workers and those at the bottom. The middle class has been hardest hit.
National debt: No discussion of the national debt. Does the debt even matter?
The environment: There is little mention of the environment and no mention of energy policy. “Cheap Energy” is the cornerstone of Trump’s plan. Yet Kamala fails to mention how destructive it might be for the environment.
Military budget: The U.S. spends $820 billion on the military (Fiscal Year 2023). We are approaching the $1 trillion level. There has been no discussion of the huge military and homeland security budget ($183 billion in FY 2023).
Housing affordability: There is no detailed discussion of housing, rent, zoning, affordable housing, or building public housing. Only a crackdown on landlords.
Price controls: There is no specific discussion of reducing rent inflation such as price controls on rent or staples like groceries. While most economists hate them on principle, they work in many places. Biden proposed a national 5% cap on rental price increases.
Educational funding: There has been no talk of educational funding beyond student loan forgiveness. And, even worse, they don’t talk about how to improve educational outcomes.
Infrastructure policy: The candidates don’t even mention the word “infrastructure.” They are content to let Biden’s Inflation Recovery Act ride.
Industrial Policy: No one wants to say “industrial policy,” but the U.S. is the only major Western democracy without one. In the U.S., we have a “free-market” streak and believe the market will sort things out. Interestingly, both candidates quietly agree on some form of industrial policy. Both see a need to support key industries of the future (AI, clean energy, and data centers) while limiting the abuses of China.
Government efficiency and effectiveness: This is always one of our big issues. The government has to work better at delivering services. This has been one of the greatest lost opportunities in the U.S. economy. It is a complex issue, but the goal is clear. Clinton-Gore had reinvented government. Since then, it’s been slash-and-burn Republicans or look-the-other-way Democrats. But we have to get better.
Conservative Ideas: We would like to see a progressive Democrat at least discuss some conservative ideas. Not just patriotism, the military, and the police. There are plenty of topics to discuss that are left of the table: school vouchers, tax reform, or social media regulations. But what is most important is returning conservatives to their traditional “Watchdog” role and participating in governing.
Summary
The Harris-Walz economic plan is good for Black people, middle-class Americans, and the poor. It is a continuation of the Biden administration plan. There are a few new ideas. It dodges difficult questions, but it certainly is “presidential.” Her opponents’ “concepts” of a plan would be far worse for the country, for working people, for Black people, and for the poor.
Economically speaking, the choice is obvious. Kamala Harris for president.