Happy Monday! As the Democratic National Convention starts today, Vice President Kamala Harris is calling for an increase in the corporate tax rate from the current 21% to 28%, NBC News reports. A Harris campaign spokesman called it “a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.”
Harris’s proposal is her first major plan for raising hundreds of billions of dollars in revenue to cover the cost of other elements of her economic agenda. Harris last week issued an economic plan that analysts say would cost roughly $2 trillion over a decade. The corporate tax hike also contrasts with former President Donald Trump’s promise to pursue lower taxes, including on businesses. Trump’s 2017 tax law slashed the corporate rate from 35% to 21%.
Here’s what else we’re watching.
Democrats Set to Celebrate Biden, Pivot to Harris
The first night of the Democratic National Convention in Chicago is slated to feature speeches from former Secretary of State Hillary Clinton, First Lady Jill Biden, and a slew of elected officials, all leading up to Monday’s keynote from President Joe Biden, who dropped out of the presidential race less than a month ago.
Biden’s career and time in office is expected to be celebrated throughout the night, but Anita Dunn, a former senior adviser to the president who left the White House recently to work for a super PAC helping Harris, said Monday that the speech will be focused more on making the case for Harris than on burnishing his own legacy. “This is not a time for legacy,” Dunn told CNN. “This is a time for arguing why Kamala Harris is the best candidate.”
Biden was asked Monday whether he was ready to pass the torch to Harris. “I am,” he reportedly responded.
Dems adopt a Biden platform: Democrats may have a different candidate than they did a month ago, but their platform has not been revised to reflect the change. The 91-page policy platform that delegates are set to approve still includes nearly 300 references to Biden, his accomplishments and what he would do in a second term. “The platform calls for restoring abortion rights nationwide, continuing to advance green energy initiatives that can create jobs and help slow climate change, capping low-income families’ child care costs and urging Congress to approve a pathway to U.S. citizenship for ‘long-term’ people in the country illegally,” the Associated Press reports.
Trump tries to stay in the spotlight: Republican presidential nominee Donald Trump, meanwhile, will be looking to counterprogram the Democratic convention with a series of events in battleground states, starting with a stop in York, Pennsylvania on Monday, where Trump again spoke about the economy and attacked Harris.
Trump is scheduled to talk about crime at an event in Michigan on Tuesday, national security in North Carolina on Wednesday, immigration in Arizona on Thursday and his “No Tax on Tips” plan in Nevada on Friday.
Numbers of the Day
48%: As the Democratic National Convention gets underway, a new poll from The Associated Press-NORC Center for Public Affairs Research finds that 48% of U.S. adults say they have a very or somewhat favorable view of Vice President Harris. That’s up sharply from 36% as of January 2023 and 39% as recently as June. It also compares favorably with the 41% who say they have a favorable view of Donald Trump.
20%: Seeing signs of continued strength in the U.S. economy, analysts at Goldman Sachs have lowered their odds of a U.S. recession within the next year to 20%.
The analysts raised their recession odds from 15% to 25% earlier this month, following the release of labor market data from July that suggested the economy could be entering a slowdown. But more recent data, including retail sales and jobless claims, “shows no sign of recession,” the Goldman team said in a note to clients. If the labor market data for August looks “reasonably good,” then Goldman will likely cut its recession odds again, back to 15%, the analysts said. The next jobs report is scheduled to be released on September 6.
The early reviews are in for the economic plan Vice President Kamala Harris released Friday, and while the soon-to-be-Democratic-nominee has received praise for elements of her agenda, such as plans to boost housing supply and an expansion of key tax credits for families, she has also been widely criticized for her proposal to ban price gouging.
As a reminder, the Harris plan would raise the Child Tax Credit to $3,600 per child and provide $6,000 for middle-income and low-income families with newborns. It also would expand the Earned Income Tax Credit, provide for the cancellation of medical debt, expand the cap on prescription drug costs and create a $25,000 subsidy for first-time homebuyers.
Republican presidential nominee Donald Trump has used the idea of a ban on price gouging in particular as fodder for continued attacks labeling Harris a radical and “communist.” Many analysts and pundits, meanwhile, have suggested that the idea plays better politically than economically.
Here’s a roundup of some selected commentary on the Harris plan.
Harris has outlined a clear vision: “In Raleigh on Friday, Harris began to put her own stamp on the brand of progressive economics that has come to dominate Democratic politics over the last decade,” Jim Tankersley writes at The New York Times. “That economic thinking embraces the idea that the federal government must act aggressively to foster competition and correct distortions in private markets. … [T]he main thrust of Ms. Harris’s vision is clear: a mixture of government intervention and government assistance, all meant to help Americans climb their way into the middle class.”
She has provided a clear contrast with Trump: University of Michigan economist Justin Wolfers told CNN that there really is no comparison between the speeches on economic policy Trump and Harris made last week. Trump’s speech devolved into a rant about immigrants and tampons, and some data points he provided were false, including the claim that bacon prices have risen by 400% to 500%. As for policies, Trump also said he would ask his cabinet secretaries to give him their best ideas about how to fight inflation. "That's not a policy, that's a process," Wolfers said.
By contrast, Harris referred to actual facts (i.e., bread prices are up by about 50% in the wake of the pandemic) and provided a series of concrete steps she proposed to take to address inflation and high prices. “There are pluses and minuses” to Harris’s plan, Wolfers said, but least “we can all have a look at it and debate it.”
The Harris team has also been hammering Trump’s plans, joining economists in warning that they would send inflation soaring. “As they pledge to give more tax giveaways to the richest Americans and big corporations, their economic agenda will increase costs on everyday items, groceries, prescription drugs, housing, and health care for everyone else,” Brian Nelson, Harris’s senior policy adviser, said in a statement cited by The Hill.
And she’s no communist: “Well, let’s be clear, I know Kamala Harris believes in the free market,” Democratic Sen. Chris Coons of Delaware told Fox News on Sunday. “I don’t think there’s anything communist about wanting to make housing more affordable and prescription drugs more affordable.”
Voters may really like her price-gouging ban: The substance of her platform “likely won’t appeal to many people who actually know about economics. But it’s hard for me to argue with the politics,” Josh Barro says at The Atlantic. “Harris is trying to win a presidential election, and to win elections, you run on popular ideas. And the voters, in their infinite wisdom, strongly favor laws against ‘price gouging.’”
But these are not serious policy ideas: “Unfortunately, instead of delivering a substantial plan, she squandered the moment on populist gimmicks,” says The Washington Post’s editorial board. “Whether the Harris proposal wins over voters remains to be seen, but if sound economic analysis still matters, it won’t.”
The Harris housing plan “is built on a slightly firmer foundation” in seeking to address insufficient supply, though her proposal for $25,000 in down payment assistance threatens to raise prices. Economic pandering may be nothing new in political campaigns, but Harris’s economic speech was a disappointment nonetheless.
Fiscal News Roundup
- Harris Proposes Raising the Corporate Tax Rate to 28%, Rolling Back a Trump Law – NBC News
- Economists Pan Harris-nomics – Axios
- Dems Defend Harris’ Economic Policy but Don’t Go All In on Price-Gouging – Politico
- Democrats Confronted With Criticism of Kamala Harris' New Economic Plan – Newsweek
- What Business Wants to Learn About Harris – New York Times
- What Is ‘Price Gouging’ and Why Is VP Harris Proposing to Ban It? – Associated Press
- Harris Team: Trump Economic Plan Would ‘Bring Chaos,’ ‘Send Inflation Skyrocketing’ – The Hill
- Harris Isn’t Pushing Medicare for All Anymore. Progressives Say That’s OK – Politico
- Trump to Counter Harris With Competing Economic Agenda Rollout – CNBC
- Trump Allies Brush Off Concerns Trump Isn't Focusing Enough on Policy – CNN
- Amid Medicaid ‘Unwinding,’ Many States Wind Up Expanding – KFF Health News
- Departing GOP Leader Dominates Senate Earmark Rankings – Roll Call
Views and Analysis
- The Times Demand Serious Economic Ideas. Harris Supplies Gimmicks. – Washington Post Editorial Board
- Is Kamalanomics a Winning Strategy? – Heather Long, Washington Post
- Harris’s Plan Is Economically Dumb but Politically Smart – Josh Barro, The Atlantic
- Populist Economics Is the Antidote to Corporate Avarice – Betsey Stevenson, Bloomberg
- The Harris Economic Agenda Has Two Gems Worth Mining – Robert Burgess, Bloomberg
- Harris Can Sell Bidenomics Better Than Biden Did – Matthew Yglesias, Bloomberg
- Harris and Trump Both Hate Inflation. Their Economic Proposals Could Cause Prices to Go Higher – Alicia Wallace, CNN
- The $3 Trillion Cash-for-Kids Bidding War – Wall Street Journal Editorial Board
- Harris Makes a Big Mistake by Embracing Price Controls – Noah Smith, Noahpinion
- What a "No Taxes on Tips" Policy Could Mean for U.S. Tipping Culture – Emily Peck, Axios
- Vice President Harris’s Tax Policy Ideas: Details and Analysis – William McBride, Erica York, Garrett Watson and Alex Muresianu, Tax Foundation
- How the Treasury Is More Powerful Than the Fed – Allison Schrager, Bloomberg
- In Defense of Bidenomics – Ryan Cooper, American Prospect
- The Populist Mantle Is Harris’s for the Taking – Tyler Austin Harper, The Atlantic
- Why Free School Lunches for All May Become a Campaign Issue – Greg Iacurci, CNBC
- A $6 Billion Breakthrough or a Drop in the Bucket? – Aaron E. Carroll, New York Times