Let's evaluate Kamala Harris' entire economic policy program!
Fun!!
When Kamala Harris replaced Joe Biden as the Democratic nominee, there were a couple of weeks when everyone (including myself) was talking about her positive, sunny “vibes”. Trump supporters responded by saying that Trump was the candidate of substance and policy, while vibes were all Harris had to offer. This was a little unfair, both because A) Harris is the Vice President, so we should assume that she’ll largely continue Biden’s policies, and Biden has been a very policy-heavy substantive President, and because B) Trump only really has three policies, mass deportation, tariffs, and tax cuts. But at the same time, it’s totally fair to demand that Harris spell out her policy vision for the country.
At first, Harris’ ideas started to come out piecemeal, and I’ve written about a few of them already. For example, I love Harris’ housing policy — it promotes abundant supply while also helping first-time homebuyers build wealth. On the other hand, I wasn’t a big fan of the idea of banning price gouging (which Harris subsequently walked back), and I think the idea of taxing unrealized capital gains is a pointless hassle. More recently, she gave a speech about manufacturing and competition with China, which I liked a lot.
But these are just the handful of ideas that got the most attention in the blogosphere — in fact, last month, Harris released an 82-page economic policy platform and a website with shorter descriptions of her stances on various issues. She also recently gave a big speech about manufacturing policy, and released a fact sheet reiterating some of the points from her platform.
So far, Harris' policy agenda seems to be finding a generally favorable reception overall, both among experts and among the general public. Recent polls show that although she still slightly trails Trump on the question of who would handle the economy better, she has erased his edge on inflation and the cost of living (though admittedly this could have as much to do with Trump’s tariff and deportation plans as anything Harris has proposed):
Meanwhile, most top economists polled by the University of Chicago thought that Harris’ policy ideas would be less inflationary than Trump’s, and add less to the deficit. And Goldman Sachs has predicted higher growth if Democrats win in November. But corporate CFOs generally like Trump’s policies better. So both the public and experts are fairly divided here.
So just like I did with the GOP party platform back in July, I want to go through Harris’ list of ideas and give some brief reactions. Unlike the GOP platform, this document only deals with economic policy, not with social policies like abortion, or with foreign policy.1
My general impression here is very good. Much of the platform is about abundance — building more housing, building more energy, lowering costs for health care and groceries, etc. When it comes to lowering costs, Harris tends to favor deregulation and pro-competition policy instead of handing out big subsidies (which raises the cost to the nation even if it lowers the price for the user). The platform is also surprisingly pro-business, with lots of proposed deregulations, as well as financial and logistical support for small businesses and startups. The combination of a strengthened welfare state and pro-business policy reminds me a bit of the model that Scandinavian countries have implemented over the last few decades. But it adds a healthy dollop of industrial policy.
Anyway, let’s dive in to the details.
Part 1: Child Tax Credit and EITC expansion
Generally speaking, the CTC and the EITC are the best forms of welfare spending that the U.S. government has ever implemented. For one thing, they’re cash benefits, meaning A) they’re simple to understand and administer, and B) they let people choose how to spend the money. And they’re very effective in fighting poverty — in fact, the expanded CTC in 2021 reduced child poverty by a huge amount, until the program was canceled.
Also, both the EITC and CTC have the “trapezoid” payout structure — they require you to earn a little bit of your own income to get the government money.2 Although there’s still some debate, most economists think this “trapezoid” payout successfully encourages poor people to go get a job, thus raising labor supply and — at least in theory — avoiding the accusation that welfare recipients are deadbeats.
So basically, if you’re going to expand the welfare state, programs like this are the best way to do it. Harris would expand both, with an extra payment in the first year of a child’s life. This is a good idea. The only thing I worry about here is the deficit, which really has to come down. At a time when interest costs are soaring and we need to increase defense spending to counter China for the remainder of this decade, an expanded welfare state may not be something we can immediately afford. (But of course, Trump’s policies would increase the deficit by far more.) In the long term, though, Harris’ plan for welfare is the right one.
Part 2: Measures to lower grocery costs
Harris’ plan to lower grocery costs relies mostly on increasing competition in the space. She’ll step up antitrust, encourage entry by new small food businesses, and take unspecified measures to diversify supply chains for farming and food processing.
Most of these measures wouldn’t have an effect for years, so they won’t do much to affect grocery prices. The as-yet-unspecified measures to diversify the food processing industry might be good, since food processing is highly concentrated and this may be driving up costs. But we don’t know what those measures are yet.
Also, Harris needs to be careful in her choice of industry targets here. The grocery store industry is already highly competitive and has very low profit margins compared to other industries, so trying to lower those even further is not a good idea. Harris needs to focus on the middle of the supply chain — the industries that turn meat, grain, dairy, fruits, and vegetables from farm produce into its final, retail-friendly form.
Harris also includes the price gouging ban. But instead of an Elizabeth Warren-style idea to introduce price controls under the guise of “anti-gouging” laws, Harris would only create a federal law that mimics state laws against price gouging during natural disasters and other crises. Whether those laws are harmful or helpful isn’t clear, but what is clear from long experience at the state level is that their impact is very limited. Crises are rare, so the law rarely applies. So I’m glad to see Harris endorsing this much more limited, time-tested form of anti-gouging law.
In any case, food inflation appears to be over now, and grocery prices have begun to fall without any significant policy intervention. So I judge Harris’ policies on this front to be mostly symbolic, with the potential for some upside if the food processing industry can indeed be diversified.
Parts 3 & 4: Measures to lower health care and drug costs
First of all, I’m very glad to see that Democrats’ approach on health care has shifted from expanding coverage to lowering costs. The problem with the U.S. health care system, especially after Obamacare, is not that Americans don’t have access to health insurance. It’s that actual health services are overpriced. We need cost control.
The best way to control costs, in my opinion, is to have the government negotiate lower prices. This is easier if you have a national health insurance system like Japan’s or Korea’s, where the government pays for part (usually 70%) of any health service you buy. But in America, we have the Medicare system, which is a big important buyer of health services. Already, Medicare’s attempts to negotiate down drug prices appear to be making drugs cheaper for Americans. Harris would expand that. Good.
Harris also wants to increase competition in the health care industry. That will be hard to do, but good if she can manage to do it, since monopoly power does look like part of the cost problem.
Finally, Harris wants to cap out-of-pocket costs to $2000 for everyone in America. I don’t think this is a good idea — out-of-pocket costs help control costs by making health care recipients more aware of just how much they’re paying for things. And America’s out-of-pocket costs are actually very low as a percentage of total spending anyway and have been decreasing in recent years. So I think this is not a helpful idea.
Part 5: Measures to lower energy costs
Harris has definitely embraced an “all of the above” energy policy, trumpeting both increased oil production and increased renewable deployment:
This is a very courageous thing to do in a Democratic party where climate worries and antipathy to the fossil fuel industry dominate, so she should be commended for this.
Harris’ plan is to continue subsidizing green energy and allowing fossil fuel drilling. Good. She also recognizes the national security benefits of having a battery supply chain in the U.S. instead of relying entirely on China. Also good.
Basically, Harris’ energy policy is perfect.
Part 6: Measures to lower financial fees
I am a big fan of the theory that hassle costs — everyday risks, fees, small punishments, paperwork, and so on — are one thing that keeps poor people in poverty, especially in America. These are also just a general annoyance for everyone else, and reduce quality of life. So I’m glad to see Harris proposing a campaign to limit these hassle costs:
Under her leadership as Vice President, the Administration has launched a historic effort to crack down on junk fees and save consumers time and money. This includes rules to ban junk fees across the board and make it as easy to cancel a subscription as it is to subscribe…A Harris-Walz Administration will…continue to take on the everyday hassles that waste Americans’ time and money, whether these be subscriptions, insurance claims, or other types of customer service doom loops and dead ends. They will also continue the work to eliminate junk fees and ensure their disclosure, and robustly address scams of all kinds from robocalls and texts to financial fraud, particularly those that target seniors.
I find it very hard to argue with that. I’ve long maintained that transaction costs are one of the big glaring problems with pure free-market policy (and in fact, this comes directly from basic econ theory). So I’m glad to see a politician finally noticing the issue.
Part 7: Housing policy
I’ve already written a whole post about what I think of Harris’ general approach to housing policy:
In her new platform, Harris maintains the dual focus on increasing supply and encouraging expanded homeownership. Good. And she spends most of the time in the section — which is one of the longest sections in the document — talking about the supply shortage. Also good.
But we also get more detail about what exactly she intends to do in order to increase supply. Most of the policy relies on various tax credits for homebuilding. These will probably have a noticeable effect on nationwide housing supply, though they’ll also cost the government some money. I think the cost will be worth it.
Of course the most important thing we need to do in order to increase housing supply is to slash the regulation that stops homes from being built — zoning, parking requirements, and so on. The federal government cannot do this, since the relevant regulations are at the local and state level. What it can do is hand out a bunch of money to any local and state governments who are willing to build housing. This appears to be what Harris plans on doing, with a $40 billion “local innovation fund for housing exploration”:
Vice President Harris’s plan would provide state and local governments, and private developers and homebuilders, funds to invest in innovative strategies to expand the housing supply. This could include financing the construction of new housing paired with efforts to reduce regulatory burden and cut red tape, employing innovative building and construction techniques to lower costs, and using self-sustaining financing mechanisms to scale new housing construction. This will be a results-driven innovation fund with one core requirement: state and local governments must show that they will deliver results in building rental properties and homes that are affordable.
The problem with this idea is that unless there’s very strict oversight, lots of NIMBY cities will just pocket the money while claiming to be building housing, or even hand the money to corrupt well-connected nonprofits who claim to be creating housing but are actually just pocketing the money. That is certainly exactly what San Francisco will do. So I think this proposal needs some serious work. The funds should be conditional on results — on actual verified housing supply increases — rather than on local governments simply claiming to have a plan to build housing.
Part 8: Startup and small business support
This section has a bunch of pro-business policies:
The Harris-Walz plan would:
Set goal of 25 million new business applications
Call for expanding the startup expense deduction from $5,000 to $50,000
Cut red tape, including by making it easier for small businesses to file taxes and removing unnecessary or excessive occupational licensing requirements
The middle of these is especially important. Startup founders and venture capitalists should be paying attention to this, especially those who support the “little tech agenda”.
Harris would also provide cheap loans to both startups and small businesses, with an emphasis on manufacturing. This is a good idea, since America’s industrial base is rapidly aging and decaying, and small manufacturers are absolutely key to any manufacturing ecosystem (I plan to write more about this in the future). In countries that do manufacturing well, these small companies generally run on bank loans rather than equity investments or bond markets, so Harris’ idea to use lending to encourage these businesses is a good one. She’d also expand a government lending program for startups, with the aim of increasing VC investment.
This section also has a bunch of deregulatory policy, including tax simplification for small businesses, reduction of occupational licensing, reducing red tape overall, and encouraging states to remove red tape as well. This is all very good stuff. Again, VCs and founders should take note.
There is one bad idea in this section, which is to allocate a third of all federal contracting to small businesses. I’m very much against government contracting requirements as a policy tool, since these are one of the key policies holding back state capacity in America.
Part 9: Manufacturing policy
This section reaffirms Harris’ commitment to Biden’s industrial policy, which regular Noahpinion readers know I strongly support. The additional policy proposals are mostly about A) improving U.S. R&D, and B) deregulation.
In addition to manufacturing industries like chips, aerospace, and biopharma, Harris seems very cognizant of the need for the U.S. to maintain and build a lead in AI:
Vice President Harris and Governor Walz…are proposing a historic investment to shore up our national and economic security by making sure the United States—not China—leads in AI by scaling up and making permanent the National Artificial Intelligence Research Resource, a shared research infrastructure to give startups and researchers access to the most advanced computing power, data, and analytical tools, to surge responsible discovery and innovation in AI.
There’s also quite a bit of deregulatory stuff in here, including permitting reform:
Vice President Harris and Governor Walz will push America to build more—and faster— by cutting red tape. They know that it takes too long to build in America….The Vice President…helped finalize a rule to streamline the National Environmental Policy Act review process, and pushed to increase the number of projects that qualify for the simplest form of environmental review so that agencies can expedite projects that will lower costs without harming the environment…Now, we must push for projects to stay on track and finish on time, so America can keep moving forward. A Harris-Walz Administration will be laser-focused on accelerating projects and unleashing the full potential of American industry by cutting red tape that slows projects down, including through permitting reform.
That all sounds great to me, and I think the ramifications of permitting reform will probably go beyond manufacturing. Note that this is another courageous move by Harris, given the fact that many progressive think tanks and pressure groups have fought against permitting reform.
Part 10: The “care economy”
Regular Noahpinion readers will know that I am generally opposed to the notion that America needs to subsidize already-overpriced service industries. Biden did too much of that, and it added to deficits and helped to push up service costs. Harris trumpets these subsidies as a success, and makes vague promises to “expand affordable, high-quality home care services for seniors and people with disabilities”, which might indicate more of the same.
But contrary to the title, most of this section of Harris’ platform is not about subsidies. In fact, her main policy for helping people afford child care is just the expanded Child Tax Credit, which I already talked about. This is a good policy, since it gives people cash instead of trying to tell people to spend their money on specific things.
In fact, much of this section of Harris’ platform is about helping workers without college degrees get good jobs. Harris wants to greatly expand apprenticeship programs, end college degree requirements for lots of federal jobs, and expand training for construction workers. That all sounds good to me! I’d love to extend the great run that the working class has enjoyed since 2013.
Harris would also push up the federal minimum wage and end the lower minimum wage for tipped workers. This policy could conceivably hurt employment if the level of the wage were set too high, but it won’t be. (And to be honest, this policy will eventually be canceled out by inflation, though ending the tipped minimum wage will move the needle in a more lasting fashion.) This policy is pretty safe.
Harris also wants to subsidize college education for poor kids. That is absolutely fine, though I doubt it’ll do much to stop falling college enrollment, since most people who are qualified to handle college are already going.
There are also a bunch of pro-union policies in the platform, which I think will do little to stem the relentless decline of unionization in America, but which are probably not harmful.
Part 11: Rural policy
Most of this section is just trumpeting the fact that Biden’s industrial policies have disproportionately benefitted rural areas and red states. That is true. I don’t expect Harris (or Biden) to get the credit they deserve for that. But it probably does mean that there will be some degree of policy continuity to Biden’s industrial policy — red-state legislators and governors will be loath to cancel investments that are bringing them jobs. And the fact that Harris spends a significant chunk of her platform trumpeting the achievements of Biden’s industrial policy means that if she gets elected, she’s unlikely to lose focus and let those policies wither. So that’s good.
Part 12: Protecting Social Security and Medicare
This section is all about how Harris will protect Social Security, Medicare, and other existing government benefits for seniors. In fact, protecting those benefits also features prominently in the GOP platform, and Trump never seemed like he wanted to cut those benefits either. So the upshot here is that seniors don’t need to worry — their benefits are almost certainly safe, at least for now.
Part 13: Tax policy
Harris promises to mostly reverse the Trump tax cuts, which I think is necessary for fiscal austerity (though it needs to be paired with spending cuts that neither Trump nor Harris is currently willing to contemplate). She also supports a minimum tax for billionaires — a symbolic policy that won’t do a lot, since there aren’t many billionaires. She also wants to raise taxes on long-term capital gains for the rich, which is a good idea and won’t hurt the economy. The idea of taxing unrealized capital gains is not mentioned in this platform, which I’m happy about.
Anyway, the thing that makes me happiest about this platform is that it really shows who Harris and her campaign staff have been listening to. There’s a ton of stuff here about abundance and reindustrialization, and little if any of the unworkable and polemic Bernie Sanders agenda. The agenda is heavy on antitrust, deregulation, and public-private partnership — “developmental state” type things. The clear influences here are 1) the YIMBY movement, 2) hawkish industrial policy types like Jake Sullivan and Jen Harris, 3) antitrust proponents, and 3) family-oriented “new welfarists”3 like Heather Boushey. The one thing that’s mostly missing here is fiscal responsibility, but I guess America just isn’t ready for that conversation this election cycle (and again, Trump is far worse on that score).
Overall I give this an A-, which is just about the best grade I could reasonably expect to give for a political platform that’s intended to please a vast array of constituencies and interests.
There is a Democratic Party platform, which does include those things. I may evaluate it later if I have the time and people are interested.
A term I just invented.
The fact that she is not a rapist or a fascist fuck is all I need to know.
You left out an important piece: Is there any weird capitalization in the document??