Kamala Harris unveils populist policy agenda, with $6,000 credit for newborns
The vice president endorses government action on housing, groceries, medical debt, drugs and other issues.
9 min
Vice President Kamala Harris and Minnesota Gov. Tim Walz on Aug. 9, in Glendale, Ariz. (Melina Mara/The Washington Post)
By
Jeff Stein
and
Dan Diamond
August 16, 2024 at 7:07 a.m. EDT
Vice President
Kamala Harris on Friday unveiled an aggressively populist economic agenda, providing the most detailed vision yet of her governing priorities since becoming the Democratic Party’s presidential nominee.
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Ahead of Harris’s speech in North Carolina, her campaign announced her support for more than a dozen economic policies aimed at “lowering costs for American families,” including some that went beyond what President
Joe Biden had promised.
The most striking proposals were for the elimination of medical debt for millions of Americans; the “first-ever” ban on price gouging for groceries and food; a cap on prescription drug costs; a $25,000 subsidy for first-time home buyers; and a child tax credit that would provide $6,000 per child to families for the first year of a baby’s life.
The last item followed a suggestion earlier this month from JD Vance, the GOP vice-presidential nominee, that the credit be raised from $2,000 per child to $5,000. Harris is also calling for restoring the Biden administration’s child tax credit that expired at the end of 2021, which
raised the benefit for most families from $2,000 per child to $3,000.
The flurry of policy positions — just days before the Democratic National Convention in Chicago — represented the clearest articulation yet of how Harris, who has only had a relatively brief time on the national stage, would handle economic policy if elected this fall. Harris has thus far surrounded herself with many former aides to Biden, and her team had made some overtures to business leaders that they hoped reflected a more centrist approach. But the policy positions she embraced Friday suggest she will continue, if not deepen, the party’s transformation under Biden, who pushed for more aggressive government intervention in the economy on industrial, labor and antitrust policies.
In the weeks leading up to this announcement, at least two outside advisers privately suggested to the Harris campaign that she signal a move to the center by backing income tax cuts for middle-class households or a tax break for small businesses, according to the people aware of the matter, who spoke on the condition of anonymity to describe the private conversations. Those suggestions were not included in the final package, although they may be released at a later date. The plan also alludes to cutting “red tape” and lowering the deficit but provided no specifics.
“Harris has made a set of policy choices over the last several weeks that make it clear that the Democratic Party is committed to a pro working-family agenda. The days of ‘What’s good for free enterprise is good for America’ are over,” said Felicia Wong, president of Roosevelt Forward, a left-leaning think tank.
The costs of the proposals were not immediately clear. Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, said restoring the original Biden tax credit — which provided $3,000 for most children — would cost roughly $1.1 trillion over 10 years, relative to current policy. Harris’s call for an additional $6,000 credit for newborns would probably cost an additional $100 billion over a decade, Goldwein said.
Harris’s policy push was not without its detractors. Policy experts in the Democratic Party lamented her
recent endorsement of Trump’s plan to eliminate taxes on tips, as well as her promises not to raise taxes on Americans earning under $400,000 per year — positions they see as incompatible with Democrats’ ambitions to approve major new expansions of the nation’s safety net. Business leaders who had hoped for a warmer relationship under Harris also balked at being blamed for higher prices in her push against corporate price gouging.
And yet despite these drawbacks, Democrats have become increasingly convinced that embracing populist economics is key to beating Trump — the top priority for the party through November. Concerns about the economy and inflation have ranked as among voters’ top issues in the 2024 presidential election, and polling has consistently showed that attacking corporate price gouging is popular.
“Vice President Harris faces a dilemma: On the one hand, America is on a fiscally unsustainable path, and if we’re going to embark on some of the more ambitious programs she’d like to pursue we need more revenue,” said Daniel Hemel, a tax policy expert at the New York University School of Law. “On the other hand, democracy is in peril, and that crisis feels — and is — more imminent than the fiscal crisis, and I think she’s made the correct calculus that sacrificing on fiscal policy for a few hundred thousand middle-class voters in the battleground states is worth it.”
Perhaps Harris’s most surprising policy announcement was
her plan to ban “price gouging” in grocery and food prices. While details were sparse, the measure would include authorizing the Federal Trade Commission to impose large fines on grocery stores that impose “excessive” price hikes on customers, her campaign said. Grocery prices remain a top concern for voters: Even though the rate of increase leveled off this year, grocery prices have jumped 26 percent since 2019, according to Elizabeth Pancotti, director of special initiatives at the Roosevelt Institute.
Still, even some Democratic economists balked at that idea and expressed hope that it reflected little more than political messaging. Economists typically say mandatory price-setting creates shortages, by reducing incentives for firms to produce supply, and is the kind of measure far less likely to have been backed under the Clinton or Obama administrations. Biden aides have argued some markets have become distorted by consolidation and require government intervention to be rebalanced on behalf of consumers.
“The good case scenario is price gouging is a message, not a reality, and the bad case scenario is that this is a real proposal,” said Jason Furman, who served as President Barack Obama’s top economist. “You’ll end up with bigger shortages, less supply and ultimately risk higher prices and worse outcomes for consumers if you try to enforce this in a real way, which I don’t know if they would or wouldn’t do.”
On housing, Harris did less to break with the Biden administration but still opted for a more active set of federal proposals than those thus far endorsed by the White House. Harris endorsed a slew of measures to expand housing supply — including an expansion of tax credits to incentivize housing construction — but also a new $25,000 in federal down-payment assistance to more than 1 million first-time home buyers. (Biden had previously proposed a more limited measure only for first-generation home buyers.) Critics say this plan would probably bid up housing prices, which have already soared since the pandemic.
Harris also pledged to work with states to cancel medical debt for millions of Americans, building on
one of her signature policy issues as vice president. That effort could involve using federal funds to buy and forgive outstanding medical debt from health providers. Harris’s office also
recently worked with the state of North Carolina on a first-of-its-kind initiative to forgive the medical debt of 2 million state residents by creating financial incentives for hospitals to relieve medical debt or prevent it from accumulating in the first place. That initiative received federal approval last month, and all 99 eligible hospitals in North Carolina
have since committed to participate — a potential model for other states.
The vice president has been
steering federal efforts to combat medical debt, by trying to reduce the burden of unpaid medical debt on credit reports. Prompted by those efforts, credit reporting agencies have already removed medical bills from the credit reports of about 30 million Americans.
Some researchers have
concluded that eliminating medical debt may have little effect — noting that many Americans rarely repay long-lasting medical debt — and called for policymakers to tackle the root causes of medical debt, including high health-care prices and insufficient health coverage.
Harris’s health-care proposals also lean into liberal efforts to take on the pharmaceutical industry, building on ideas popularized by Sen. Bernie Sanders (I-Vt.) and adopted by Biden. The vice president is pledging to expand several provisions contained in the 2022 Inflation Reduction Act, including capping the out-of-pocket cost of insulin at $35 per month, and capping Americans’ annual out-of-pocket spending on prescription drugs at $2,000. Those two provisions are currently in effect for Medicare beneficiaries. Extending them to all Americans could face resistance from the pharmaceutical industry and Republicans.
Harris also wants to ramp up Medicare’s negotiations with drug companies over their most expensive drugs, although her campaign offered no new details. She and Biden celebrated the results of the first year of Medicare negotiations
at an event Thursday, where Democrats said that the initiative had cut list prices on 10 pricey drugs and effectively saved $6 billion for taxpayers.
Harris and Biden hail Medicare drug price cuts
1:43
Vice President Kamala Harris and President Joe Biden celebrated price cuts to top prescription drugs used by Medicare on Aug. 16 in Largo, Md. (Video: Reuters)
Harris also pledged to target pharmaceutical companies that block competition and “abusive practices” by pharmaceutical middlemen. While her fact sheet offered no new details, the pledges could signal support for ongoing work by the Federal Trade Commission, which has been challenging “junk” drug patents and has been probing pharmacy benefit managers — efforts hailed by the populist wing of the party.
Harris’s plan to expand the child tax credit follows years of fighting between Democrats and Republicans over that policy. GOP lawmakers in Congress uniformly resisted extending Biden’s more generous benefit, which some analysts estimated cut child poverty in half. Harris would change the credit so even the poorest families would receive it. Currently, families need to earn above a certain annual income to receive the child benefit in full. The benefit for newborns is aimed at the high costs families face directly after childbirth: Women who have birth on average pay an additional $3,000 relative to women of the same age who do not, according to the Peterson Center on Healthcare and KFF, a nonprofit organization focused on health care.
Other policies endorsed by Harris in her five-page policy document included expanding the Earned Income Tax Credit for lower-wage workers by up to $1,500, as well as extending subsidies for Americans on the Affordable Care Act exchanges.
“The days of pivoting to the center to win on economics are over, even though there are good economic reasons to do so, especially on fiscal policy,” said Bill Galston, a former Clinton policy aide.