Vice President Kamala Harris’s speech Friday was an opportunity to get specific with voters about how a Harris presidency would manage an economy that many feel is not working well for them. Unfortunately, instead of delivering a substantial plan, she squandered the moment on populist gimmicks.
By the Editorial Board
Never mind that many stores are currently slashing prices in response to renewed consumer bargain hunting. Ms. Harris says she’ll target companies that make “excessive” profits, whatever that means. (It’s hard to see how groceries, a notoriously low-margin business, would qualify.) Thankfully, this gambit by Ms. Harris has been met with almost instant skepticism, with many critics citing President Richard M. Nixon’s failed price controls from the 1970s. Whether the Harris proposal wins over voters remains to be seen, but if sound economic analysis still matters, it won’t.
Ms. Harris’s housing plan is built on a slightly firmer foundation. In urging construction of 3 million new homes over the next four years, she puts her finger on the essence of the housing-affordability problem: insufficient supply. She offers clever tax incentives to help make it happen. But her proposed $25,000 in down payment assistance for first-time home buyers stimulates the demand side, which risks putting upward pressure on prices. Such a measure might make sense if Ms. Harris paid for it by eliminating other demand-side housing subsidies, such as the mortgage interest deduction, a roughly $30 billion annual drain on federal revenue that benefits many wealthy Americans — but she does not.
Ms. Harris is on firmest ground when she advocates increasing the child tax credit from the current level of $2,000 per kid up to $3,600 per kid for middle-class and low-income families, and for making it easier for those lower on the income scale to access the benefit. These levels were in place in 2021 and resulted in many families being lifted above the poverty line. Assuming it’s designed with appropriate work incentives, the child tax credit can be highly effective anti-poverty policy. Ms. Harris also suggested expanding the earned income tax credit for childless low-income “front-line workers,” a smart idea that has enjoyed bipartisan support in Congress. She would extend beyond 2025 tax breaks to help Americans of modest means afford to buy health insurance on the Affordable Care Act marketplaces; those tax breaks are part of the reason more than 92 percent of Americans have health insurance now. She also wants to expand the government’s limited power to negotiate Medicare drug prices and permanently cap out-of-pocket drug spending at $2,000 per year for everyone.
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Her ideas would cost money, yet she insisted in her speech that she would hold to President Joe Biden’s pledge not to raise taxes on any household earning $400,000 or less annually. That excludes 80 percent of taxable income, and does not take into account the recent surge in families earning over $400,000. The Harris campaign says it plans to raise revenue to cover these costs but did not provide specific offsets in its economic plan rollout. Without them, Ms. Harris’s full plan would add $1.7 trillion to federal deficits over a decade, according to the Committee for a Responsible Federal Budget, a nonpartisan budget watchdog.
To be sure, every campaign makes expensive promises that will never come to pass, especially with a divided Congress. Remember Mr. Biden’s pledge to make community college free? Even adjusted for the pandering standards of campaign economics, however, Ms. Harris’s speech Friday ranks as a disappointment.
