Jacquelyn Martin/AP Photo
Supporters listen as Democratic presidential nominee Vice President Kamala Harris speaks during a campaign stop at the Throwback Brewery, in North Hampton, New Hampshire, September 4, 2024.
Kamala Harris and Donald Trump each devoted a day last week to rolling out new economic policies. I was thinking about ending the previous sentence with the words “for better or worse,” but on balance, I think the worse outweighed the better.
“Worse,” of course, is the default setting for Trump’s ideas, economic policy very much included. His headline-grabber was an announcement that Elon Musk would be the guiding spirit of a government efficiency commission should Trump retake the White House. “Much worse” describes Trump’s further comments that this commission could not only recommend cuts to programs but also to government regulations. Programmatic cuts, presumably, would at least have to be authorized by Congress, but presidents and their appointees have freer rein when it comes to regulations. Musk, of course, owns a host of regulated companies and volubly pines for the day when such governmental constraints on his businesses (actually, when any constraints on his businesses and his conduct from anyone) are lifted.
Besides, Musk’s record as a cutter is demonstrably atrocious. Once he purchased Twitter, he quickly fired roughly three-fourths of its employees, which has led to the halving of the company’s revenues. Worse still, he eliminated virtually every employee engaged in actual content oversight and moderation, so that his own increasingly bigoted musings and those of his fellow fabulists would go unchecked. That’s precisely the kind of cutting that Donald Trump wants: eliminating the empiricists while keeping the conspiracists (more likely, hiring the conspiracists). Such criteria do not augur well for scientists at the Environmental Protection Agency or physicians at the National Institutes of Health.
But Musk-ification was only one element of the economic pronouncements that Trump unveiled in a characteristically meandering talk to New York businessmen last Thursday. He also called for reducing the corporate income tax to 15 percent, though only for corporations that confine production to the United States. While all of Trump’s proposals for the corporate tax rate are egregiously too low (as president, he got the Republican-controlled Congress to reduce it from 35 percent to its current 21 percent), I actually think that rewarding corporations for discretionary policies that benefit American workers is a good idea. The problem with the 15 percent rate is that whatever good it does by keeping or restoring production in the United States, it’s so low that it forces ordinary taxpayers to take up the slack and requires major cuts to the kinds of programs on which ordinary Americans rely.
Of course, if Trump wants to open the door to variable corporate tax rates based on corporate conduct, I’ll raise the bet by proposing for the umpteenth time to raise the corporate tax rate progressively on corporations whose ratio between CEO and median worker pay exceeds 100-to-1.
Harris has chiefly been targeting the middle class in both her taxing and spending policies.
Trump also estimated that across-the-board tariffs of up to 20 percent on all imports would end deficits and leave “trillions” left over for benefits like child care. This requires exceedingly creative accounting even before you get to the fact that it translates to higher prices and perhaps shortages, since Trump has effectively proposed nothing that would actually increase domestic production (unlike, say, the tax breaks in Biden’s Inflation Reduction Act, which have led to a boom in new factory construction). Moreover, domestic manufacturers dependent on imported parts also subjected to tariffs would have to raise their prices, too.
The most wondrous proposal that Trump trotted out last Thursday was to create a sovereign wealth fund, wherein the government invests a chunk of its money in strategically important ventures. It’s something that governments with a lot of cash on hand—Norway, some of the Gulf nations and emirates, and the state of Alaska (all from oil money)—regularly do. I only say “wondrous” because I can imagine how Trump would invest the public’s funds. Country clubs? Trump steaks? The mind reels.
By comparison, Kamala Harris’s new proposals, laid out in a speech she delivered in New Hampshire last week, are rather staid, which, under the circumstances, is not a criticism. Strategically, she’s chiefly been targeting the middle class in both her taxing and spending policies. As to spending, her proposals for increasing the Child Tax Credit (a spending policy in the form of a taxing policy) and making child care affordable speak to the material needs of every American family with kids for which these costs are a burden—that is, all but the rich. So, too, her policy to provide $25,000 for first-time homebuyers and her series of policies to increase home construction. Last week, she also proposed a series of tax breaks to small-business startups.
At the same time, however, she also proposed raising the tax on capital gains for the wealthy from its current 20 percent to 28 percent, which is substantially lower than President Biden’s proposal to raise it to 39.6 percent, the same as the top marginal income tax rate. (Both Biden and Harris would tack onto that a 5 percent surcharge for Medicare.) She made clear she still adheres to Biden’s policies of raising no taxes on those making less than $400,000 a year, and of applying the capital gains tax to funds that are inherited. But by bringing down the extent of the increase to taxes on investment, she reinforces the impression that she’d be friendlier to at least some of the Silicon Valley gazillionaires who’ve been backing her since her initial San Francisco electoral campaigns.
I have a theory of the crime, here, if crime it be. And I emphasize that it’s just a theory, not buttressed by any leaks from anyone who’s really in the know. The theory is that some of Harris’s longtime big-money backers—most prominently LinkedIn co-founder Reid Hoffman—have very publicly (and very privately) asked her to free them of some meddlesome regulators who’ve had the nerve to clamp down on their monopolistic practices. In particular, they want to be rid of Federal Trade Commission chair Lina Khan.
Precisely because Hoffman and media mogul Barry Diller publicly called for Harris to present them with Khan’s head, she cannot possibly do that without showing herself to be Silicon Valley’s stooge, at once infuriating the Democratic base and undercutting her image as a conscientious public servant. But in a war with Trump over Silicon Valley’s (and more generally, big money’s) campaign contributions, she likely felt she had to deliver something. Hence, goes my utterly unconfirmed theory, the smaller-than-expected increase to the capital gains tax—which nonetheless pales alongside the tax increases to the rich and big business that she still supports.
Does that make Kamala a sellout? In the real world of American politics, no. The bulk of her economic proposals would still fund much-needed public programs with tax revenues drawn heavily from those who can afford to pay them: the rich and corporations. Still, I think there are some gaps in her economic proposals that she needs to close.
As of now, her proposals to make child-rearing more affordable and to give a boost to new small businesses have a particularly positive impact on some large but distinct subsets of the electorate: young women and aspiring small-business proprietors (a group in which Latinos and Asian Americans are very well represented). She needs a more direct economic appeal to the male working class, which at this point is the section of the electorate that’s the most challenging for Democrats to win over.
To which end, I’ll restate something I wrote last month: Alongside her promotion of the care economy, she needs to promote what I call the build economy. It’s not enough for her to have proposed a group of policies that would lead to the construction of three million new homes over the next decade. She needs to propose creating a new federal agency, somewhat like those that funded employment during the New Deal, that will devote federal funds to boost private-sector home construction that meets certain criteria (like affordability), that will increase hiring in the sector, and that will promote the construction apprenticeship programs run by the building trades unions. This program would be equally open to women as it would be to men, of course, but for now, politically, this could be the kind of “guy program” her campaign needs, not to mention the kind of housing construction program that the nation needs as well.
She might even raise this during tomorrow night’s debate. Couldn’t hurt.
