Kamala Harris, as widely previewed, gave her first major economic address today. Two key themes were cutting housing costs and resisting corporate price-gouging of consumers. She also proposed restoring the refundable Child Tax Credit and topping it up to $6,000 a year for new parents in the first year, as a baby bonus. Take that, J.D. Vance.
The toughest of these policy areas is housing. Unless the federal government spends massive sums to increase the supply of affordable housing, the cost of both rental and owner-occupied homes will continue to outstrip incomes.
In the absence of a supply strategy, Harris’s proposal of a $25,000 subsidy for first-time homebuyers, though beneficial, will bid up prices. Her commitment to build three million new affordable units over four years, using a mix of tax incentives and grants to local governments for innovative approaches, is a decent start, but only a start. Two other good housing ideas that chime with her attack on predatory corporations are measures to remove the tax advantage from Wall Street speculators in housing and stopping predatory AI tactics for raising rents.
Harris’s general emphasis on price-gouging is a policy area where government can make a huge constructive difference without spending large sums. It is good economics and smart politics on several counts.
First, it vividly connects with the issue of inflation where ordinary people feel it. Grocery store prices have increased only slightly over the past year, but consumers remember exactly what a quart of milk or a dozen eggs cost before the supply shocks of the pandemic. In addition, supermarket profits are notably higher than before the pandemic, which means that prices should have moderated more.
Second, the plan reframes the issue from whether Biden or Trump was better at containing an abstraction known as inflation to how corporate concentration opportunistically drives price hikes. The right remedy for that ill is not slowing the economy generally, as the Federal Reserve has done, but going after the root cause. This is also a useful shot across the Fed’s bow.
Third, the approach recasts the struggle as ordinary people vs. predatory corporations rather than impersonal forces, with Harris in the role of champion of beleaguered consumers.
Far from being notably to the left of Biden, Harris’s economic program looks much like the one that Biden began.
Is Harris right on the economics? A detailed study by Groundwork Collaborative found that corporate concentration and increased profits accounted for more than half of the inflation felt by consumers in 2022 and 2023.
There has been a lot of chatter about whether Harris is positioning herself to the left of President Biden and whether that is a good idea. Supposedly, by moving left, Harris risks alienating swing voters. But swing voters also buy groceries. The only voters whom Harris risks alienating by championing consumers are large corporations and their allies. They have few votes.
Far from being notably to the left of Biden, Harris’s economic program looks much like the one that Biden began, which was short-circuited only by the lack of a working majority in Congress and some hostile court decisions. If Harris wins big, she will pick up where Biden left off, and that includes court reform. Her housing plan and her proposed restoration and expansion of the Child Tax Credit build on Biden, and go a little bigger. Likewise her proposed expansion of price controls for drugs. It’s all about constraining corporate excess and helping working people—and connecting the two goals.
The turn to pocketbook progressivism by both Biden and Harris has one great thinker and political strategist in common, and that is Sen. Elizabeth Warren. Early in Biden’s administration, Warren was a source of both ideas and people. Some of Biden’s best and most effective appointees were part of Warren-world. They include Rohit Chopra, who heads the Consumer Financial Protection Bureau, which was Warren’s idea, and FTC Chair Lina Khan, who resurrected antitrust. To the extent that there has already been progress against opportunistic price hikes, the CFPB and the FTC get a lot of the credit.
Former Warren senior staffer Bharat Ramamurti, formerly part of Biden’s National Economic Council, has now joined Harris’s economic team as a senior economic adviser. So Warren’s influence will continue, not because she is a crafty inside player, but because these ideas have political legs and because the people she recruits to top jobs are superb in their own right.
As for Harris’s commitment to go after opportunistic price-gouging by corporations using concentrated market power, that is also pure Warren. As Warren likes to say, she has a plan for that—her Price Gouging Prevention Act of 2024. Warren’s bill would authorize the Federal Trade Commission (FTC) and state attorneys general to investigate and enforce a federal ban against grossly excessive price increases in times of exceptional market stress (think the pandemic). It would also require disclosure to the SEC of changes in a corporation’s pricing strategy.
IF SHE WINS, KAMALA HARRIS WILL HAVE MORE FREEDOM to define her own politics and her own program than any president in recent memory, because she doesn’t really owe anybody. She abruptly became the Democratic nominee without having to cut messy deals to win primaries, and she quickly enjoyed near-universal support. Her financial backing is also broad. So the usual interest groups have no IOUs to call in.
So if she does bring Congress with her, Harris could be a great progressive president. Given the massive tilt of the American economy to corporate elites in recent decades and the cost to ordinary people, progressivism is overdue economics and smart politics.
One other noteworthy aspect of Harris’s emerging progressivism is its paradoxical connection to race and gender. Barack Obama, as the first Black president, was uneasy about triggering the “angry Black man” trope. Faced with the most severe economic crisis since the Great Depression, Obama pulled his punches, did not attack Wall Street, and brought back the team whose policies of “anything goes” had caused the collapse.
Harris flips that script. The more she champions the defense of working people against corporate predation, the more the spotlight is on her policies and the less on her race and gender. We need Harris, not to be the first Black woman president, but the next great progressive.
