A Glimpse at "Kamalanomics"
Things to watch for at the DNC in Chicago
Last Friday in North Carolina, VP Kamala Harris gave her first economic policy speech of the campaign. It wasn’t a detailed state of the union kitchen sink kind of speech but it had some interesting components.
Expectations for the speech were a little off the charts. The New York TImes economics reporters wrote an advance story on Wednesday with the headline “Kamala Harris is set to lay out economic message light on detail”. Perhaps the reporters were too enamored with the “vibes campaign”.
During an economy-focused speech on Friday in Raleigh, N.C., Ms. Harris will outline a sort of reboot of the administration’s economic agenda, according to four people familiar with Ms. Harris’s plans.
She will lay out an approach relatively light on details, they said. It will shift emphasis from Mr. Biden’s focus on job creation and made-in-America manufacturing, and toward efforts to rein in the cost of living. But it will rarely break from Mr. Biden on substance.
To be fair to them, they may have been sandbagged by campaign staff. After all, too much early detail would lead to lots of stories about why the proposals had no chance, especially given a potentially divided congress.
Their follow-up story on Saturday included more details and a contrast with Trump’s Bedminster press conference on Thursday (that David Lurie of Public Notice called the Folgers Coffee™ Conference1). This story carried the headline, “Harris lays out her economic vision, casting Trump’s as backward-looking.”
Ms. Harris emphasized the cost of housing as a barrier to economic prosperity. She proposed giving first-time home buyers up to $25,000 in down payment assistance and called for the construction of three million housing units that would be affordable for the middle class.
But she also emphasized the importance of being able to pursue homeownership.
“It’s more than a financial transaction,” she said. “It’s so much more than that. It’s more than a house. Homeownership and what that means, it’s a symbol of the pride that comes with hard work. It’s financial security. It represents what you will be able to do for your children.”
Trump and his allies picked up her proposal to support a federal ban on price gouging on food to be a giant step toward Communism, even though there are due process protections in her proposal (not one of Stalin’s favorites). Also, a number of states outlaw price gouging but there is not federal statute to that effect.
Harris has also called for returning to the child tax credit in effect during the pandemic, an expanded earned income tax credit, and proposed a $6,000 grant for the first year of an infant’s life.2
If the economics reporters were covering her proposals carefully, the political reporters were less so. This morning, the Times’s campaign embed had a story headlined Harris’s early campaign: “Heavy on Buzz, Light on Policy”.
On policy, she has essentially cherry-picked the parts of the Biden agenda that voters like most while discarding elements like his “Bidenomics” branding on the economy. She has emphasized what allies call the “care economy”: child care, health care and drug prices, which directly affect voters’ lives.
The distinction between economics and political reporters is significant. Last week, Harris gave a brief press gaggle on the tarmac. All of the questions asked her about things Trump said, about debate negotiations, or polls.
Yesterday, the Washington Post’s Perry Bacon offered his own advice to Harris: talk to the policy wonks. He wrote:
Yes, many of the questions asked at the White House briefings and on the campaign trail aren’t particularly sharp. That’s because most news outlets have generalists or reporters who specialize in elections or politics on those beats. But those exchanges often do result in new revelations. And they are an important form of accountability. A politician knows if they lie, say something crazy or take an extreme position, they will be challenged by journalists.
Yesterday, Harris was asked a standard question by a reporter. He may have been more into economics that politics, but the question was still the same as it’s always been “how will you pay for this?”. It’s important to get her answer in full, so I did my best to transcribe exactly what she said.
Reporter: On your economic policy last week. can you give us a sense of how you’re going to pay for those and what other policies you want to unveil [unintelligible].
Harris: Sure, you just look at it terms of what we are talking, for example, around children and the child tax credit and the EITC (earned income tax credit). That, and the $6,000 for the first year of a child’s life. The return on that investment, in terms of what that will do and what will pay for will be tremendous. We’ve seen it when we did it the first year of our administration. It reduced child poverty by over 50%. So that’s a lot of the work. And then what we’re doing in terms of the tax credit -- we know that there’s a great return on investment. When we increase home ownership in America, what that means in terms of increasing the tax base -- not to mention the property tax base – what that does to public schools. Again, return on investment. The mistake for any person who talks about public policy [is] to not critically evaluate how you measure the return on investment. When you are strengthening neighborhoods, strengthening communities, and in particular the economies of those communities, and invest in a broad-based economy, everybody benefits. And it pays for itself in that way.
This return on investment approach stands in stark contrast to business as usual in Washington. What we normally see (e.g., the 2017 tax cut) is a policy proposal squeezed into a ten year window that will fool the CBO into arguing that it won’t add to the deficit. But these policies never sunset, as we can see in the current discussion about whether the tax cuts should end as the legislation said they would.
Harris is suggesting an approach that uses government policy levers to improve the economic well being of struggling citizens. The argument is that doing so will save the government money in the long run as other indicators improve. Walz’s school lunch policy is a great example. Some funding now reduces health issues, improves academic performance and potentially lessens criminal behavior over the long run.
I’m reminded of a post I wrote in early 2023. I had just read about Modern Monetary Policy. While Kamalanomics doesn’t go that far, this paragraph I wrote is still appropriate.
If tax revenue isn’t the funding source, what should guide our Fiscal Policy decisions? It's often said that budgets are moral documents. You can tell where priorities are by where we spend our money. Kelton affirms this point enthusiastically. If we have under-resourced care for the elderly, inner city poverty, a shift toward a cleaner climate, or the creation of jobs that will support a living wage, it's not because we didn't have the money but because we chose not to.
Lurie noted that the props at the press conference included a Wheaties box with Billie Jean King on the front. I don’t know if Wheaties have an expiration date, but I sure wouldn’t eat them.
JD Vance out to like this but he won’t