Harris Unveils Positive Economic Policies; Experts Share Their Insights

Democratic presidential nominee Kamala Harris unveiled significant economic plans on Friday, aiming to address the pressing challenges faced by American families. However, experts have mixed feelings about how effective some of these proposals will be in aiding everyday Americans.

In a fact sheet, Harris emphasized her commitment to tackling “the sharpest pain points” affecting families, outlining plans to mitigate rent increases, establish a cap on prescription drug prices, support first-time home buyers, curb grocery price gouging, and expand the child tax credit.

While many of these initiatives align with the concerns of voters grappling with rising inflation, experts express caution. They are particularly doubtful about the proposed “price controls” and how Harris intends to fund her initiatives. Furthermore, changes to the tax code will require congressional approval, which is contingent on the composition of the House and Senate, according to tax specialists.

Mark Baran, managing director at CBIZ MHM’s National Tax Office, remarked, “It’s optimistic and targeted to improving the middle class; however, we have yet to see details. It’s unclear how congressional elections will influence the likelihood of passage.”

Former Republican Congressman and tax consultant Rick Lazio cautioned that the Harris campaign must consider “the societal costs of unsustainable higher public debt and its impact on inflation and the ability to respond to unexpected events like recessions or natural disasters.”

According to the nonpartisan Committee for a Responsible Federal Budget, Harris’s full plan could increase deficits by $1.7 trillion over ten years, potentially reaching $2 trillion if temporary housing policies were made permanent. The committee noted, “The Harris campaign claims this would be funded through taxes on corporations and affluent individuals, supporting revenue measures in the President’s fiscal year 2025 budget, but has yet to specify offsets to lower costs for American families.”

To provide clarity on what elements of Harris’s proposals were praised or scrutinized, a detailed examination from experts was compiled by USA Today.

• Child Tax Credit: The plan proposes a return to COVID-era child tax credit policies, providing $3,600 for eligible children under six and $3,000 for those under 18. Currently, the child tax credit is $2,000 per qualifying child under 17, phasing out for single filers earning above $200,000 and married couples above $400,000. Additionally, it suggests new tax relief of up to $6,000 for families welcoming a newborn. Mary Nugent of Save the Children US expressed enthusiasm for the proposed expansion, highlighting its potential to significantly reduce child poverty.

“Most families would see an increased credit, which could lead to massive cuts in child poverty,” Nugent stated.

• Health Care and Food Prices: Proposed measures include a $35 cap on insulin costs for Medicare recipients and an overall annual out-of-pocket limit of $2,000 for all Americans. The plan would also introduce tighter regulations to keep drug and food costs in check, alongside a federal ban on price gouging in the food industry. While the Groundwork Collaborative praised Harris’s focus on corporate accountability, some economists criticized the approach as tantamount to price controls, which could inadvertently cause product shortages during times of inflation.

Paul Ashworth, chief North America economist at Capital Economics, commented on this thematic continuity with the Biden administration, arguing that the response to inflation must also consider other economic factors brought forth by pandemic-era policies.

• Housing Initiatives: Harris’s housing proposals include blocking data firms from escalating lease rates, preventing large-scale purchases of homes by Wall Street investors, and introducing new tax incentives for builders of affordable “starter homes.” Additionally, she aims to offer up to $25,000 in down-payment assistance for first-time buyers. Lazio acknowledged the recognition of the housing crisis but noted that effective implementation would require careful detailing of the initiatives.

Experts like Ashworth noted that many countries have faced significant challenges in increasing home construction due to various limitations, including zoning regulations.

Harris’s proposals raised questions about certain missing elements, particularly regarding the expiration of the Tax Cuts and Jobs Act at the end of 2025. This legislation, passed in 2017, could significantly alter tax rates for many Americans if allowed to lapse. Baran referred to this as “the big elephant in the room,” stressing that failure to address it could adversely impact middle-class households.

Moreover, there was little discussion about potential support for small and medium-sized businesses, which represent half of America’s employment sector and are often the source of innovation. Lazio expressed disappointment over the lack of reference to these businesses, stressing the need for tax incentives tailored to encourage their growth.

In summary, Harris’s economic policies have sparked various opinions among experts, highlighting both optimism and concern over their feasibility and potential impacts on everyday Americans.

Source: USA Today