Kamala Harris’s Economic Challenges as a US Presidential Contender

As Kamala Harris positions herself as a potential US presidential candidate, what are the major economic challenges she may face? Explore the key issues and concerns that could shape her campaign.

Experts caution that if Kamala Harris, the Democratic presidential nominee, wins over her Republican opponent Donald Trump in key swing states and becomes the next US President as per current opinion polls; she will face a challenging path to pass economic legislations.

In 2025, numerous crucial economic laws will expire and trigger political discussions. These include tax cuts for individuals under the Tax Cuts and Jobs Act and reinstitution of the nation’s debt limit that was suspended in the prior year.

In November, voters will elect members of both houses of the US Congress – all representatives in the lower House and one-third of senators. Therefore, Harris’s success in passing legislation will hinge on the performance of Democrats during those elections.

Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, informed Al Jazeera that while The House may be up for grabs, if Republicans take control of The Senate (which is likely), Harris will face significant challenges trying to pass any legislation.

The Tax Cuts and Jobs Act comprise significant legislative measures, including particular directives that will expire by the end of next year. This expiration implies a return to 2016 law provisions.

In 2017, Donald Trump signed into law a bill that granted significant tax reductions to American corporations. Meanwhile, households across all income brackets experienced decreased income taxes beginning in the year 2018, with those at higher income levels reaping the greatest rewards.

According to Hufbauer, in case Harris intends to prolong or improve any of the measures that benefit individuals and particularly those with lower income, she will face a significant bargaining process with the Senate.

According to Bernard Yaros, who is the chief economist for Oxford Economics in the US, talks regarding the country’s debt ceiling will transpire and there will be customary hurdles that must be overcome to prevent a shutdown of government operations.

Should the unlikely event of a full Democratic sweep occur, it is not anticipated that Harris will alter her economic agenda. According to Yaros in an interview with Al Jazeera, she intends to continue on her platform and prioritize implementing any unfulfilled sections of Build Back Better such as caregiving and family support policies. The difference between Biden’s policies and hers appears negligible; therefore, completion of their objectives remains paramount for both parties.

“Shift focus towards the center.”

Harris’s stance on economics and her corresponding policies remain largely obscure. Despite Trump attempting to capitalize on Harris’ earlier left-leaning positions during the 2020 Democratic presidential primaries, which sought to secure her party nomination, these statements have been widely disregarded by economists.

Yaros explained to Al Jazeera that Harris’s current campaign in the general election differs from her 2020 campaign due to changing circumstances. In order to appeal to moderates in swing states who may not support a 35 percent tax rate, such as increasing corporate tax rates (currently at 21 percent), she must pivot towards the center.

The Trump campaign has used Medicare for All to undermine Harris’ credibility as a presidential candidate, but economists are not concerned. Yaros stated that such claims should not be taken seriously and that Harris must shift her focus towards the center of politics.

Inflation remains a key risk to her prospects. Despite the consumer price index now hovering close at 2.9 percent, nearing the US Federal Reserve’s desired goal of 2 percent and down from its peak high of 9.1% in June last year, real prices continue to remain significantly elevated compared to pre-pandemic levels.

“Being burdened by the effects of inflation.”

According to Yaros, the correlation between her approval rating and Biden’s on inflation has been strong. In 2022, when high inflation hit, both of their ratings fell together. As a result, she and Democrats will still face this issue as baggage in voters’ minds. However, with more exposure leading to greater familiarity, she is now taking a more prominent role. Therefore if her popularity increases among voters who may not hold her responsible for the effects of Biden’s presidency on inflation rates.

According to Hufbauer, Democrats would struggle with inflation and immigration as they are challenging topics. He also believes that Harris wouldn’t be exempt from them.

According to Hufbauer, Harris benefits from her lack of economic experience as it grants her flexibility to pursue various actions. Some potential political moves may entail reducing gas prices prior to elections by utilizing US reserves, setting a limit on rent increases at 5 percent and criticizing corporate greed – a common gripe for many people.

According to Hufbauer, the increase in house prices of 30-40 percent has made young people dissatisfied since it exceeds their wages. He acknowledged that Harris cannot substantially lower these prices but suggested that she express empathy and focus on solutions like rent control and tax deductions for new families entering the homebuying market. Such initiatives would demonstrate her commitment to addressing this issue positively said Hufabuer.

According to a report by Reuters on Thursday, Harris is set to declare the construction of 3 million fresh housing units in her upcoming speech on Friday. Moreover, she will also propose novel tax benefits for developers who erect houses particularly catering to first-time home purchasers.

Another significant economic concern is trade.

An idea widely criticized by economists, Trump’s proposal entails enforcing a 10 percent blanket tariff on every imported commodity alongside imposing levies of over 60 percent specifically targeting Chinese imports. Hufbauer cautioned that implementing such measures would undoubtedly upset the global system. As for Biden, he has maintained many of Trump’s tariffs and implemented additional ones aimed at specific targets.

Customers often bear the brunt of increased tariffs imposed by businesses, resulting in higher prices. This could potentially impact business choices related to investments and their locations.

Harris could be severely impacted if a war in the Middle East expands, as it has potential to fuel inflation and result in significant price increases.

Hufbauer warned that the United States risked inflation if it became more oriented towards war efforts.