Kamala Harris's Economic Tightrope: Navigating Challenges as Presidential Contender

Friday 16 August 2024 - 16:00

As Kamala Harris gains momentum in the United States presidential race, surpassing Republican opponent Donald Trump in polls across five crucial swing states, economic experts are raising concerns about the potential hurdles she may encounter in implementing her fiscal agenda.

The year 2025 looms as a critical period for economic policy, with several key pieces of legislation set to expire. These include individual tax cuts under the Tax Cuts and Jobs Act and the reinstatement of the nation's debt limit, which was suspended the previous year. Harris's ability to navigate these challenges will largely depend on the outcome of the concurrent Congressional elections, where voters will determine the composition of both the House of Representatives and a third of the Senate.

Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told Al Jazeera, "The House is up for grabs, but if the Senate is Republican, a likely outcome, Harris will face significant obstacles in passing legislation."

One of the most pressing issues will be the expiration of individual provisions under the Tax Cuts and Jobs Act. This 2017 law, signed by Donald Trump, provided substantial tax breaks to corporations and reduced income taxes across all income levels, with the wealthiest receiving the most significant benefits. Harris's ability to extend or modify these provisions, particularly to favor lower-income individuals, will require extensive negotiations with the Senate.

Bernard Yaros, lead US economist at Oxford Economics, highlights additional challenges, including negotiations on the US government's debt limit and the perennial risk of government shutdowns. He suggests that if Democrats achieve a full sweep in the elections, Harris is likely to pursue a platform of continuity, focusing on implementing unfinished aspects of the Build Back Better agenda, such as caregiving and family support policies.

Regarding Harris's economic views, experts note that her current stance may differ from her positions during the 2020 Democratic presidential primaries. Yaros explains, "Now she's in a general election, so she has to appeal to moderates in swing states." This shift may include moderating previous proposals, such as raising the corporate tax rate to 35 percent.

Inflation remains a critical concern for Harris's campaign. Despite recent improvements in the consumer price index, which now stands at 2.9 percent, the lingering effects of past inflation could impact voter perceptions. Yaros notes, "The Democrats and she will still carry that baggage. But now that people are starting to know her more, if her approval rating is on the rise, voters may not penalize her for what happened under the Biden presidency in terms of inflation."

Harris's limited record in the economic sphere could provide her with flexibility to maneuver. Potential strategies might include efforts to lower gasoline prices, cap rent increases, and address issues like corporate pricing practices. The campaign has already announced plans to create 3 million new housing units and introduce tax incentives for builders constructing properties for first-time homebuyers.

In contrast to her opponent, Harris is expected to maintain a more moderate stance on trade policies. While Trump has proposed significant tariff increases, including a 10 percent across-the-board tariff on imports and up to 60 percent on Chinese goods, Harris is likely to continue the current administration's more targeted approach.

However, external factors such as an expanded conflict in the Middle East could pose significant challenges to Harris's economic agenda, potentially reigniting inflationary pressures and complicating her path to the presidency.

As the campaign unfolds, Harris's ability to articulate a clear economic vision while addressing voter concerns about inflation, housing affordability, and fiscal responsibility will be crucial in determining her success at the ballot box and beyond.