Kamala Harris’s economic plan is full of poll-tested conservative buzzwords, but this verbiage is a cheap disguise. It masks left-wing, big-government industrial policy as a planned economy in which government picks winners and losers. It is the opposite of the “opportunity economy” that Harris claims.
Harris’s awful big-ticket proposals have earned weeks of well-deserved criticism. These combined with the Biden-Harris administration’s terrible record should make everyone fear four years of her economic stewardship.
Harris’s policies would pile debt on debt and probably produce stagflation, or simultaneous inflation and stagnation, as bad as the days of President Jimmy Carter.
These spring from Harris’s radically marxist (small ‘m’) mindset, which, she says, dictates that “everybody should end up in the same place. And since we didn’t start in the same place, some folks might need more.
If you think everybody should end up in the same place — Harris does not mention merit or effort — you probably shouldn’t be living in the United States, much less leading it.
Harris and her campaign team recognize that candid marxist economics won’t sell well, so they hide it behind conservative vocabulary. Her plan uses “invest” 123 times, “opportunity” 37 times, and “compete” 29 times, as if she is a Ronald Reagan supply-sider. Alas, what she means by those words, to the extent she means anything, is very different from how most people use them.
Her plan doesn’t trust free people making free choices to invest or compete. Instead, it is the government that invests — by which it really means “spends” — the government that incentivizes, the government that creates opportunity, and the government that restrains and guides competition. Sometimes, Harris calls for direct government spending, and at many others, she proposes what most economists consider to be much the same thing: special tax abatements. These are government subsidies for favored groups or causes, or for those in favored groups who can afford pricey accountants to navigate all the government requirements to claim the benefits.
So, rather than getting out of the way of the private sector, Harris vows to have government “partner with the private sector,” “encourage the private sector,” or “leverage[e] federal funding” to do what her planners want. Build more homes! Restore old homes! Start new businesses! Whip state governments into shape! Modernize industries (but only “key strategic industries” approved by her commissars)! Reward workers (but only if they join unions) and reward the companies “that engage with” the right sorts of “unions and communities!”
This is meant to “strengthen the care economy,” which my Washington Examiner colleague Tim Carney calls “level-11 cringeworthy jargon,” and is a euphemism for “an effort to get more parents out of the house and into the office” and institutionalize young children in day care centers. Note that there was a helpful question about a supposed “child care crisis” posed by CBS News in its vice presidential debate on Tuesday.
It is one thing to want safe day care centers available, but today’s leftists actually prefer it as part of what Aldous Huxley warned against in Brave New World — state control rather than parental direction of children.
When the authorities give special preferences to favored industries, it is rarely efficient and it encourages rent-seeking or outright corruption. Witness the Biden-Harris administration creating only seven electric-vehicle charging stations from a $5 billion program started in 2021 and the scandalous waste of $80 billion in the Obama-Biden administration’s “clean technology” program, as exemplified by the 2011 collapse of the Solyndra company.
Even aside from its preference for government interference, the Harris plan’s economics don’t add up of comport with what individual states have shown are the best practices to promote growth and fiscal stability. After being part of an administration that has added more spending and debt than any administration in peacetime history, Harris offers more hackneyed demands to rein in debt, but not spending, by ensuring that “billionaires … pay their fair share” while massively raising corporate income taxes as well.
As has been shown too many times to count, even confiscating all the wealth of every American billionaire, not just taking a percentage of it, would barely dent the national debt while crippling the economy as a whole. Harris wouldn’t actually use tax hikes on billionaires and disfavored corporations to reduce the deficit. Instead, the money would be used to pay subsidies and tax giveaways.
Harris’s proposal to hike corporate income taxes back to 28% would bring in almost no additional revenue but would throw a wet blanket over economic growth and make the U.S. uncompetitive in world markets.
The corporate income tax is an unusual beast, ravenously counterproductive to the whole economy, as revenues fail to rise when rates do. More often they fall. As a perfect example of supply-side theory working in practice, corporate tax cuts sometimes fully “pay for themselves.” The 2017 tax cuts nursed through Congress by then-Speaker Paul Ryan cut the corporate income tax rate from 35% to 21%. Federal corporate income tax revenues rose vertiginiously from $230 billion in 2017 to $334 billion in 2021 and $445 billion in 2023.
By reversing that cut in rates, Harris would probably slow growth in revenue. Her plan assuredly would not pay for her big-spending or special interest giveaways, much less cut the deficit or debt.
Her whole approach, hiking top-end tax rates while doling out more exemptions for favorite causes, has been shown on the state level to be the worst way to spur macroeconomic health. As Daniel Erspamer of Louisiana’s Pelican Institute think tank recently noted, states that adopt lower, flatter rates, with fewer special exemptions, do much better than states with high rates and multiple abatements. He reported, “States with a flat or zero tax rate comprise 13 of the top 15 states in U.S. News and World Report’s ranking of the country’s best economies.”
High corporate taxes not only hurt workers and consumers but mostly “enrich insiders” who kowtow to the Left’s ideological goals.
All of this, and so much more that is wrong with Harris’s plan, comes atop the utter economic illiteracy evident in big-ticket proposals that earned widespread scorn. Her $25,000 “down-payment assistance” for first-time homebuyers would prompt sellers to jack up prices by nearly that same amount, costing taxpayers $100 billion or more. Her earlier threat to “control” grocery prices, even though now modified a bit in her written plan, is absurd in an economy in which grocers already operate at an astonishingly low profit margin of between 1% and 3%, lower than almost every other retail sector in the nation.
The Biden-Harris administration’s call for taxing unrealized capital gains, even if supposedly limited to the very wealthy, is one of the most inane ideas in the history of economics. Consider what happens if someone buys stock or even real property for $1 million and then, in an economic boom, its value temporarily rises to $1.5 million. At a 20% rate on the putative profit, the investor would be required to pay the government $100,000 in taxes.
But what happens if the economy later slows down or the company gets overtaken by new technology and its stock price craters? Suddenly the investor may have stock worth only, say, $600,000, a $400,000 loss, but already will have paid the government $100,000 in taxes for “profits” that never reached his or her bank account. The old expression for an absurdity is “nonsense on stilts,” but this unrealized gains tax proposal is idiocy on a rocket.
Finally, it is risible to see Harris’s written plan promise again never to raise taxes on anybody making under $400,000 annually after her current administration repeatedly fudged that promise, along with Democrats’ false promise not to have the IRS audit people making below that amount, or to see her plan vaguely promise 11 times to “cut red tape” while pushing “permitting reforms” despite serving in an administration that actually undid wise permitting reforms while adding red tape costing the economy a record $1.7 trillion.
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Meanwhile, Harris’s commitment to “end the sub-minimum wage for … people with disabilities” actually is a suck-up to union bosses that would be a sickeningly cruel measure taking jobs away from special-needs people. It also would undermine a jobs-for-disabled program first created by President Franklin D. Roosevelt.
All of which is to say that a Harris administration would be an economic catastrophe eager to happen. We would be better off unburdened by what a Harris future would bring.