Vice President Harris presented her first set of economic plans to an audience in Raleigh, North Carolina (WaPo [1]).
Vice President Kamala Harris [2] on Friday unveiled an aggressively populist economic agenda to an enthusiastic but intimate crowd, providing the most detailed vision yet of her governing priorities since becoming the Democratic Party’s presidential nominee.
In a pivot from the raucous rallies that have so far defined Harris’s month-old campaign, the vice president instead opted for a smaller setting of about 250 supporters that allowed her to explain a number of economic policies aimed at “lowering costs for American families.”
So, do the “aimed” policies hit the target? I’ll take them one at a time, but in general, there was some good and some bad. It also revealed just how low Trump set the bar when it comes to economic policies.
Family Tax Credits: Pro-Life Policies by Another Name
I’ve argued [3] here that the Democrats have become the pro-life party due to their focus on reducing the cost of parenthood (and thus encouraging more children to be saved). Harris maintained that with her own plans to expand the child tax credit to $3,000 annually and $6,000 in the child’s first year. She also proposed an expansion to the Earned Income Tax Credit, which is good, but would be better if it came with a reduction in welfare spending to counter. A Negative Income Tax (of which EITC would be part) could replace much if not all of the entire government welfare bureaucracy. The Democrats aren’t there yet, but I expect the incoming concern about deficit spending (and it’s coming) would sharpen a few minds in a Harris Administration.
Housing Plans: Build and Buy
Most of the attention regarding Harris’ housing plans involve her plans for home buyer tax credits (up to $10K for first-time buyers). I’m more interested in plans for “an expansion of tax credits to incentivize housing construction.” The details were light, but they do include, “Tax incentives for builders that build starter homes sold to first-time buyers, An expansion of a tax incentive for building affordable rental housing, (and) A new $40 billion innovation fund to spur innovative housing construction (CNN [4]).” The rubber will hit the road on this matter when Harris addresses the local NIMBY epidemic. Biden has made some moves against it during his tenure. Harris needs to build on that, first and foremost.
Ban on “Price Gouging” (I’m facepalming)
Things went south when Harris addressed grocery prices. Leaning fully into Biden’s assertions of “greedflation,” Harris called for a federal ban on “price gouging.” Even some of her well-known supporters are hoping this comes to nothing. Price controls are one of the few items that unites nearly all economists in disdain. Moreover, food inflation has been largely inline with overall inflation during the Biden Administration (St. Louis [5] Fed [6]). I fear the popularity of “$35 insulin” has led too many politicians to embrace this terrible idea – never mind the unique market and government failures [7] surrounding insulin.
Yes, the Opposition is Worse (Really)
How do I know “$35 insulin” has been a political winner. Trump himself is claiming he did it (CNN [8]). Whether or not we should believe him isn’t the point. We simply have two major candidates for president who are ready to seize upon price controls for votes and let the damage be counted later. As the Republican Party has ended its commitment to freer markets and smaller government, Democrats are taking advantage [9] to more fully follow their instincts …
… with one exception.
During her speech, Harris warned that Trump’s economic proposals would translate into higher costs borne by middle- and working-class families. She characterized Trump’s plans to impose a tariff of 10 percent on all U.S. imports as a “national sales tax,” arguing it would raise prices on everything from food to gas to clothing.
Thus we have a $350 billion tax increase [10] separating the Republican and Democratic nominees, with the Democrat standing up for taxpayers and the Republican openly demanding the right to gouge them.
So while Harris’ proposals include a mix of good and bad, it doesn’t include Trump’s massive, supply-side-crushing tariff plans. For the Vice President, that makes the comparison a net plus for her.