Kamala Harris’s economic agenda is a façade

In a recent ABC News interview in Philadelphia, vice-president Kamala Harris faced a straightforward opening question: how would you make life more affordable for Americans? Her unclear answer meandered through an anecdote about how her childhood middle-class neighbours had nice lawns and ended with vague promises that she’d “invest” in small businesses. How this would lower prices for Americans remains a mystery.
Economic policy has proven challenging terrain throughout Harris’s campaign. Americans in general dislike her boss’s “Bidenomics” given the high inflation that accompanied it. Moreover, Harris’s Senate voting record ranks her among the two most left-wing members of the 21st century. To assuage swing voters’ economic concerns, she is therefore desperate to signal that she’s both a fresh start (distinct from Biden) and a moderate centrist (in contrast to her own positions of four years ago).
To bolster that image, Harris recently released A New Way Forward for the Middle-Class — an 82-page manifesto. Declaring herself a “capitalist” — a striking clarification for a potential US president — the document is filled with centrist buzzwords like “opportunity” and “investment.” Look beneath the verbiage, however, and one sees the age-old progressive agenda of higher spending, higher taxes, industrial meddling, and price controls.
Under the Biden-Harris administration, the US has a staggering annual budget deficit nearing $2 trillion already, over 6 per cent of GDP. Yet Harris plans to expand the welfare state with new or more generous “tax credits” for children, newborns, childless workers and housing assistance. That’s on top of a $25,000 deposit subsidy for first-time homebuyers, alongside unspecified new programmes on childcare, paid leave, and social care. Already, we’re talking many hundreds of billions in additional annual government spending.
It’s not just the welfare state she seeks to expand. Harris operates under the assumption that anything desirable requires government subsidy. The document promises to flood small businesses, the housing sector, and “strategic industries” like semiconductors and biotech with — surprise — yet more tax credits, cheap loans, and government innovation support. The only upside to this interventionism is the occasional mention of reforming regulations to make building easier.
How would she finance all this spending? Harris pledges not to increase taxes for families earning under $400,000 a year. In fact, she would guarantee new widespread tax avoidance by matching Donald Trump’s pledge to eliminate income taxes on tips. No, she wants “the rich” and “corporations” to pay. Harris pledges to increase the maximum capital gains tax rate to 28 per cent (from 20 per cent) and raise the corporate tax rate to 28 per cent (from 21 per cent), despite economists warning that much of that burden will fall on workers through lower investment and, ultimately, wages.
Unfortunately, those revenues would fall far short of covering the spending and tax credits she plans. What fills the black hole? It’s unclear, but Harris previously backed Joe Biden’s budget with a $5 trillion tax rise across a decade — the largest in American history. That included an unprecedented call for an investment-crushing tax on unrealised capital gains for high earners.
Americans show no love for this tax-and-spend agenda; what animates them are living costs. That’s why Harris previously blamed corporations and landlords for inflation in justifying plans for a national rent control and price caps on groceries. Those policies earned a backlash from economists and allowed Trump to label her a “communist”. She’s since de-emphasised them, failing to mention them when asked how she’d lower living costs, but her document maintains plans for government regulation of rents, companies’ fees and grocery prices in emergencies.
All told, then, this is no moderate manifesto. Yes, her opponent, the former President Trump, himself promises fiscal recklessness, more protectionism, and (most worryingly) perhaps a presidential role in setting monetary policy. Yet the vibes around Harris’s supposed “centrism” on economics is itself a façade. Beneath her campaign’s assuring rhetoric lies a a pretty dramatic plan to balloon American government.
Ryan Bourne is an economist at the Cato Institute and editor of the book The War On Prices