President Joe Biden withdrew from the 2024 presidential race Sunday, and immediately threw his support behind Vice President Kamala Harris.
Investors should expect a potential Harris administration to defend the economic policies that Biden instituted during his term, including the Inflation Reduction Act’s subsidies for electric cars and green-energy projects, increased IRS funding to pursue wealthy tax evaders, excise taxes on stock buybacks, and a 15% corporate minimum tax for large corporations.
“A Harris presidency would be, for all intents and purposes, a continuation of the Biden administration,” Isaac Boltansky, director of policy research at BTIG, told MarketWatch.
“From a Democratic perspective, I think that’s a feature, not a bug,” he said, adding that concerns over a Biden-led ticket were “not because of his policies but because of his health and capacity.”
Even in the event of a Harris victory over Donald Trump in November, analysts say that it’s likely Republicans will take back the Senate, limiting Harris’ ability to sign partisan legislation.
She would immediately be faced with the need to negotiate over the extension of the 2017 tax cuts, which temporarily lowered individual income-tax rates and increased the child tax credit.
Biden has promised to extend those cuts for families making less than $400,000 per year, and analysts say Harris will likely adopt the same position.
A scenario where there’s a Democrat in the White House while Republicans control at least one chamber of Congress would be one in which investors should expect a bit more fiscal restraint than if Trump wins or there’s a Democratic sweep, according to Henrietta Treyz, director of economic policy at Veda Partners.
“There is no serious fiscal restraint or deficit reduction conversation happening on Capitol Hill and we see none emerging unless Biden wins reelection and Republicans revert back to their 2011-era fiscal conservative mantra,” she wrote in a recent client note.
Such a scenario could lead to brinksmanship over the deficit and debt ceiling that characterized negotiations between the White House and Congress during the Obama administration, she added.
Negotiations over the extension of the Bush tax cuts took several years, saw serious threats that Congress would not raise the debt ceiling, a record-long government shutdown and led to credit-rating agency S&P to downgrade U.S. debt securities BX:TMUBMUSD10Y.
To be sure, it’s not a lock that Democrats will anoint Harris as their nominee at their convention next month, and the decision will be up to the more than 4,000 delegates who are responsible for formally nominating a candidate next month.
“The minute [Joe Biden] is not a candidate, they are officially uncommitted,” Elaine Kamarck, an expert on conventions and a member of the Democratic National Committee’s rules panel told Politico.
Nevertheless, Harris is seen by analysts as the overwhelming favorite to clinch the nomination.
“Due to time and logistical constraints, it will be difficult for any Democrat [besides Harris] to organize a campaign and raise money,” said Brian Gardner, chief Washington strategist at Stifel, in an email.
“Ms. Harris could inherit the Biden campaign infrastructure including campaign’s funds,” he added. “Furthermore, we expect that the Congressional Black Caucus will back Vice President Harris…other Democrats will struggle to match these advantages.”
Harris doesn’t have a long track record on economic policy, as most of her public life has been spent as a prosecutor, but her brief time as a senator and 2020 presidential candidate could provide some insight into her views.
During her stint as California attorney general, she helped secure a $25 billion settlement for homeowners who had been wrongfully foreclosed upon in the aftermath of the financial crisis after bowing out of national talks that netted residents of other states less money.
She also championed “homeowners bill of rights” legislation in California, two moves that cemented her status as a consumer advocate in the lead up to her 2020 run.
Harris focused on the struggles of low-income and middle-class home renters as well, proposing during her presidential run a tax credit for families that spend more than 30% of their income on rent and utilities that would come in the form of a monthly check.
Another important factor in Harris’ biography is her long ties to big tech firms. As a San Francisco-based politician, she has cultivated close connections to large technology firms like Meta and Google parent Alphabet, a fact that was seen as a liability in the 2020 Democratic primary, but which could be good news for tech investors if she wins the presidency.
Harris struggled to find a consistent message on healthcare IYH policy during that campaign as well. As a freshman senator, she embraced Sen. Bernie Sanders’ “Medicare for All” platform, but backed away from that position as she sought the nomination, arguing instead to allow Americans to keep their private health insurance, but also to sign up for a publicly provided insurance alternative if they chose.
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