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.
One way to handle it might be to level with voters, telling them that inflation spiked in 2021 mainly because the pandemic snarled supply chains, and that the Federal Reserve’s policies, which the Biden-Harris administration supported, are working to slow it. The vice president instead opted for a less forthright route: Blaming big business. She vowed to go after “price gouging” by grocery stores, landlords, pharmaceutical companies and other supposed corporate perpetrators by having the Federal Trade Commission [enforce a vaguely] defined “federal ban on price gouging.”
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.
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.
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.