A potential Kamala Harris victory in the upcoming presidential elections would bring significant implications for America’s economic landscape, characterized by both continuities and departures from the current administration’s policies. As a candidate, she has exhibited nuanced differences from President Biden, particularly in areas like healthcare and tax proposals. With critical economic challenges on the horizon, such as expiring tax breaks from the Tax Cuts and Jobs Act (TCJA) post-2025 and a ballooning budget deficit, Harris would need to articulate clear strategies to address these issues. The Biden administration’s middling economic record, marked by impressive unemployment figures but overshadowed by persistent inflation and increasing federal debt, will form the backdrop of her campaign, posing both opportunities and risks. What will a Kamala Harris win mean for America’s economy?
Kamala Harris might officially replace Joe Biden as the Democratic candidate for president. And she might win. With this, everyone is asking: What will her economic policies look like, and how will they affect America?
Kamala has some differences in her approach compared to Biden. For example, she was a supporter of “Medicare For All” and had distinct tax proposals. Unlike Biden, her student loan forgiveness plan was narrower.
Tax Breaks and Budget Deficit
A significant challenge Kamala will face is the expiring tax breaks after 2025. Without new legislation, many tax cuts from the Tax Cuts and Jobs Act (TCJA) will disappear. This includes lower federal income brackets, a bigger standard deduction, and a more generous child tax credit. If nothing is done, more than 60% of taxpayers could see higher taxes, according to the Tax Foundation.
Biden has been advocating for higher taxes on the wealthy and corporations. A critical question is whether Kamala will maintain Biden’s promise of not raising taxes on those making under $400,000. Back in her 2020 campaign, Kamala wanted to repeal the TCJA’s corporate tax rate, raising it back to 35%. Biden, on the other hand, proposed raising it to 28%.
| Tax Proposal | Harris (2020 Campaign) | Biden |
|---|---|---|
| Corporate Tax Rate | 35% | 28% |
The Biden-Kamala Economic Record: Good Enough for 2025 and Beyond?
Kamala will have to run on Biden’s economic record, which is mixed. While there have been achievements, voters are primarily focused on inflation. Greg Valliere, chief policy strategist at AGF Investments, pointed out that Kamala has to bear some responsibility since she’s part of the administration.
“It’s going to be tough for her to come up with a new plan without looking disloyal.”
Despite low unemployment and growth that has beaten recession expectations, the economy is seen as Biden’s strongest weak point, pun intended. Only 37% of Americans approve of Biden’s handling of the economy, according to a recent Reuters/Ipsos poll. High costs for almost everything have frustrated consumers, even though inflation has eased recently.
Federal debt has increased by $7.2 trillion under Biden and Kamala, a 25% rise, with a budget deficit nearing $2 trillion this year. These economic issues are problematic for Kamala. Her views are expected to align closely with Biden’s, since as Moody’s reminded CNBC, she was involved in forming these policies, so they are “her policies” too.
Economic Positives and Voter Dissatisfaction
Kamala does have some positive economic indicators to campaign on. The unemployment rate, although rising slowly, is still low at 4.1%. Nonfarm payrolls have grown by over 1.3 million in 2024 alone. Consumers, who drive two-thirds of the $28.3 trillion American economy, have been resilient, with retail sales climbing 2.3% in the past year. However, inflation remains stubborn.
The inflation rate hit 3% in June, down from its mid-2022 peak but still more than double the 1.4% rate when Biden took office. Food costs are up 21%, energy prices have soared 33%, and median home prices have jumped 18.5% since Biden and Kamala took office. It will be tough for Kamala to distance herself from these issues, even though she can point to progress in lowering the inflation rate to its lowest in three years.
| Economic Indicator | Value (2024) | Change Since 2021 |
|---|---|---|
| Unemployment Rate | 4.1% | +0.7% |
| Inflation Rate | 3% | +1.6% |
| Food Costs | 21% | |
| Energy Prices | 33% | |
| Median Home Prices | 18.5% |
Federal Reserve and Future Economic Policies
One area where Kamala might differ from Biden is the Federal Reserve. In 2018, as a senator, Kamala voted against Jerome Powell’s confirmation as chair of the central bank. She expressed concerns about his commitment to protecting consumers and ensuring economic stability. Biden renominated Powell in 2022, and he was confirmed again. Powell’s term ends in 2026, and we don’t know if he would want another term. Donald Trump, though, has already said he would NOT be reappointing Powell. It remains to be seen what either action will do to the economy.
Kamala’s stance on Powell and the Federal Reserve could signal different economic strategies going forward. Her history of scrutinizing Powell shows a penchant for consumer protection and economic stability. If she diverges from Biden’s playbook, the direction she takes might bring further reforms or stricter regulations in financial sectors.
Healthcare and Economic Impact
Kamala has been a vocal supporter of “Medicare For All,” which starkly stands out compared to Biden’s more moderate stance on healthcare reform. Medicare For All would undoubtedly have significant economic implications:
- Healthcare Costs: Shifting to a single-payer system could lower the administrative costs of healthcare, but initial implementation could be costly.
- Business Impact: Businesses might see reduced healthcare expenses, potentially increasing profitability and investment capacity.
- Tax Implications: Funding such a system would likely require significant tax reforms, affecting both individuals and businesses.
Healthcare remains a critical issue, impacting the overall economic wellbeing of American families. Kamala’s approach might reduce the long-term financial burden on households but requires careful designing to avoid overstraining federal budgets.
Education and Workforce Development
Kamala’s narrower student loan forgiveness plan underscores her pragmatic approach to education. However, workforce development and education are pivotal to sustaining economic growth and competitiveness. Effective policy in this area would need to address:
- Student Debt Relief: Balancing debt forgiveness with fiscal responsibility.
- Vocational Training: Expanding access to vocational education to fill skill gaps in the labor market.
- Innovation in Education: Promoting STEM fields to prepare for future economic challenges and opportunities.
A detailed plan that enhances educational outcomes while relieving financial stress could pay dividends in economic productivity and innovation.
Climate Change and Economic Strategy
Climate change policy will also play a substantial role in Kamala’s economic agenda. Transitioning to a green economy signifies massive investments but also promises potential gains in job creation and innovation. Key areas include:
- Renewable Energy Investments: Supporting solar, wind, and other renewable energies could diversify the energy sector and decrease dependence on fossil fuels.
- Green Jobs: Creating new job opportunities in sustainable industries.
- Regulations and Incentives: Implementing policies that incentivize businesses to adopt environmentally friendly practices without stifling economic growth.
Balancing short-term economic pressures with long-term environmental sustainability could uniquely define Kamala’s presidency and its economic impact.
Immigration Policy and Economic Considerations
Immigration is another hot-button issue that intersects directly with economic policy. Kamala’s stance on immigration reform might include:
- Skilled Workers: Attracting skilled workers to fill gaps in critical sectors.
- Path to Citizenship: Providing a clear path to citizenship for undocumented immigrants, enhancing their economic contribution.
- Border Security: Balancing security measures with humane treatment of migrants.
A robust, fair immigration policy could rejuvenate the labor market and sustain economic growth.
International Trade and Economic Strategy
Kamala’s approach to international trade will be essential in defining America’s economic standing globally. Key elements might include:
- Trade Agreements: Renegotiating or entering new trade agreements to benefit American businesses and workers.
- Tariff Policies: Adjusting tariff policies to protect industries without igniting trade wars.
- Global Collaboration: Working with international partners to address global economic challenges, such as supply chain issues and international regulations.
Maintaining a balance between protecting domestic interests and fostering international partnerships is crucial for overall economic prosperity.
Conclusion
Kamala Harris’s potential presidency holds many possibilities for America’s economy. From tax reforms and healthcare to climate change and international trade, her policies will likely shape the nation’s economic landscape in multifaceted ways. As she navigates the complex interplay of these factors, her administration will need to address pressing economic challenges while fostering an environment conducive to growth and innovation. The road ahead is intricate, but with thoughtful policies, a Kamala Harris win could steer America towards a resilient and flourishing economy.
