On the second anniversary of the Inflation Reduction Act, Democratic presidential nominee Vice President Kamala Harris outlined an extensive economic agenda that would focus on lowering grocery prices, addressing housing costs, and bolstering the middle class.
The proposals in her most substantive economic policy announcement Friday in Raleigh, North Carolina, mark a significant shift from previous Democratic positions, aim to address financial pressures on households and provide support in key areas of the economy.
Harris’s plan includes a federal ban on price gouging in the grocery and food sectors, an increase in the child tax credit, and substantial assistance for first-time homebuyers.
Harris called for raising the minimum wage in a Las Vegas speech earlier in August, but her campaign has not specified how high it should be. July 24 marked 15 years since the last time the $7.25 federal minimum wage was raised—extending by yet another year the longest period in its history without an increase.
Disgraced former President Donald Trump has opposed raising the federal minimum wage and said the issue should be decided by the states, rigging the economy for the ultra-wealthy at the expense of the middle class.
“Kamala Harris is a radical California liberal who broke the economy, broke the border, and broke the world, frankly,” said Trump, who has struggled to make a rational case for his economic policies. “She is in favor of the death of the American dream,” Trump said at another point. “She’s not smart. I don’t believe she loves our country.”
Sixteen Nobel prize-winning economists have cautioned that Trump’s plans to impose fresh 10% duties on all imports plus minimum 60% tariffs on Chinese goods, in combination with his fiscally irresponsible budgets, would reignite inflation and cause lasting harm to the global economy if he wins in November.
“The left attacked Donald Trump for those tax cuts said they would make the deficit worse when in reality we took in more revenue because the government got out of the way on the regulatory side and the tax cuts spurred a lot of growth which means more people working, which meant more economic production which meant the entire economy was healthier,” said Ohio Senator JD Vance, the Republican vice presidential nominee, repeating a frequent GOP talking point that is a lie.
Tax cuts reduce government revenue. As a share of GDP, revenue has fallen from about 19.5 percent in the years immediately preceding the Bush tax cuts to just 16.3 percent in the years right after the Trump tax cuts, with deficits increasing the national debt to more than $35 trillion.
The proposed ban on price gouging would empower the Federal Trade Commission (FTC) to impose fines on stores that implement excessive price hikes. Grocery prices have risen by 26% since 2019. While details on enforcement are not fully outlined, economists have expressed concerns that price controls could lead to shortages and reduced supply.
In addition to the price gouging ban, Harris has proposed a $6,000 child tax credit for families in the first year of a baby’s life, alongside reinstating the previous $3,000 credit for most children. This plan follows a suggestion from GOP vice-presidential nominee JD Vance to raise the credit from $2,000 to $5,000. The combined cost of these changes is estimated to be around $100 billion over ten years, in addition to $1.1 trillion for reinstating the $3,000 credit.
The plan also includes a $25,000 federal subsidy for first-time homebuyers, aimed at reducing financial barriers to homeownership. Critics argue that this initiative could drive up housing prices, which have increased significantly since the pandemic. The proposal also seeks to expand housing supply through tax credits for construction.
Harris continues her focus on medical debt with a federal initiative to cancel medical debt for millions of Americans. This initiative builds on recent efforts in North Carolina and includes removing medical debt from credit reports. The plan also extends provisions from the 2022 Inflation Reduction Act, such as capping insulin prices and annual out-of-pocket prescription drug costs.
Harris’s economic platform represents a more progressive stance compared to previous Democratic proposals. It diverges from suggestions by some advisers for centrist measures like income tax cuts for middle-class households.
The proposals reflect a broader Democratic strategy to address economic disparities and rising living costs in preparation for the November presidential election.
Harris wants to expand the Earned Income Tax Credit for workers in lower-income jobs, which would cut taxes by up to $1,250, and has previously said she would continue President Joe Biden’s promise not to raise taxes on American households earning $400,000 or less annually.
She supports raising taxes for high earners and corporations, which received big reductions during the Trump administration, translating into higher profits instead of lower prices.
The proposals have sparked debate among policymakers and economists. Critics argue that measures like the price gouging ban could have unintended consequences, such as market distortions and supply issues. Harris’s campaign maintains that these policies are designed to tackle critical economic issues and support working families.
As the Democratic National Convention approaches, Harris’s detailed economic agenda marks a significant moment in her campaign, defining her approach to economic policy if elected.