Harris’s economic platform: Good policy or good politics?

Happy DNC week and welcome to the US election countdown! Today let’s talk about:

• Harris and the economy

• The vice-president’s global affairs guru

• How CEOs are navigating the race

Kamala Harris has fired off her first economic policy proposals in recent days, as she tries to ease voter concerns over the cost of living, rather than reimagining the entire economy à la Joe Biden (industrial sector) or Barack Obama (healthcare).  

She is keeping her pitches in line with the Biden administration’s broad agenda, but repackaging them into her own populist offerings that she will hope to wield against Donald Trump [free to read]. 

Harris has proposed:

• An increase on the corporate tax rate to 28 per cent from 21 per cent

• A federal ban on price gouging on food and groceries

• Tax breaks for housebuilders constructing starter homes, with a goal of creating 3mn new housing units in four years

• Tax breaks for first-time buyers and families with children

The vice-president has corporate America in her sights, aiming to bring relief to the middle class by having big business pay for fanning high inflation.

But her plans are raising eyebrows, especially among economists, and have even put Democrats on the defensive. 

David Wessel, a senior fellow in economic studies at the Brookings Institution, a Washington think-tank, told the Financial Times:

This plan was obviously not designed to appeal to economists. This plan sounded to me like a response to focus groups. You can tell what the voters are worried about, and after all, the first job that Kamala Harris has is to win the election.

Harris will be positioning her economic approach in stark contrast to Trump’s, whose own plan involves widespread tax cuts, raising import tariffs and curbing immigration — proposals that have also invited criticism from economists worried about inflation.

​​Michael Strain, director of economic policy studies at the centre-right American Enterprise Institute, said for Harris a lot will hinge on the details — which are lacking right now — of her price gouging proposal:

I can understand the appeal of trying to create a policy that is in line with where the voters are on that issue, but I think that by rolling out something that’s this half baked, and that, at least in the judgment of most economists, is this unserious, they do damage to themselves.

Campaign clips: the latest election headlines

• Joe Biden defended his legacy last night in a lengthy valedictory speech to the Democratic convention as he passed the torch to Harris.

• US intelligence officials said Iran was behind the recent hacking of the Trump campaign and had tried to compromise the Biden-Harris campaign too.

• Trump is courting the union vote as the Teamsters — one of the most powerful US labour groups — holds off on endorsing Harris.

• The DNC is parading through hundreds of influencers to pitch Harris to their followers as her campaign bets on their power to persuade. (Bloomberg)

• Despite the unity on display at the convention, the war in Gaza still bitterly divides the party. (NYT) 

• Harris has the momentum and polling lead, but now she needs to jump over bigger hurdles. [Free to read] 

Behind the scenes

Meet Philip Gordon, the foreign policy pragmatist who has Harris’s ear and could play a central role in her administration should she win in November.

Previously Barack Obama’s top Middle East policymaker, he is part of a small national security team advising the Democratic nominee during a period of major tumult in international politics. During Harris’s vice-presidency, Gordon has been her most important aide on global affairs.

While he is an Atlanticist, he’s also viewed as more likely to deal in realpolitik than many in the party’s establishment. There’s a lack of ideological framework shaping his thinking, which frustrates some in the foreign policy space. Former Council on Foreign Relations president Richard Haass told the FT’s Felicia Schwartz that Gordon “is judicious, careful, moderate, whatever the opposite of ideological is”.

And though he’s close to Harris, his views are often tagged as Obama-esque: sceptical of the ability of US power to shape events, willing to negotiate with autocratic regimes, suspicious of idealism in foreign policy.

Emily Haber, a former German ambassador to Washington, added:

“He takes the world as it is and tries to figure out how to move forward and achieve American interests; I have seen [other] American operators focusing on the premise of what the world should be.”

Check FT.com tomorrow to read Felicia’s full story.

Datapoint

Since Harris entered the White House contest, some C-suite executives have been taking a second look at the presidential race. This comes after many spent the year publicly ducking questions about it, even though they were privately torn.

Though Harris set her sights on prescription drug and grocery prices, her long-standing ties to Wall Street and Silicon Valley have some executives hoping she might retool some of Biden’s tough stances on competition, labour and financial services policy.

This means the stark choice between stability and a pro-business agenda that the Biden-Trump match-up provided is no longer on offer. (Chief executives liked Trump’s focus on rolling back regulation and corporate taxes, but feared his tariffs and penchant for picking fights; with Biden, they appreciated his predictability but found his administration to be anti-business.)

As Republican consultant Ken Spain, who advises business leaders, put it to the FT’s Brooke Masters, Stephen Foley and Alex Rogers:

In a matter of weeks, the business community has gone from readying itself for a Republican-run Washington to scenario planning for a wide range of outcomes.

Many are hedging their bets given the volatility of the political environment.

Historically, top US executives have overwhelmingly favoured Republicans, but Trump never managed that level of support. So far this year, chief executives have been reluctant to open their wallets to either party — only five members of the 221 members of the Business Roundtable, the most prominent CEO lobbying group, had donated, according to Federal Election Commission data.

With donations made to Harris becoming public starting today, we’ll be watching to see if chief executives come off the fence.

Viewpoints

• Edward Luce took a trip to Pennsylvania and found the crucial swing state is slipping from Trump’s grasp.

• Harris’s flirtation with leftwing economic populism is concerning, notes Chris Giles.

• The FT’s self-described clothing pedant Robert Armstrong breaks down “the art of sidekick style”, looking at Tim Walz and JD Vance.  

• Harris has the opportunity to reject Big Tech — and use it to her campaign’s advantage, writes Marietje Schaake.

• Michael Boskin, an economics professor at Stanford University, thinks Harris’s economic proposals would bring slower growth and more inflation. (WSJ)