One analyst believes Harris-Walz is 'the most progressive ticket' in generations
Vice President and 2024 Democratic presidential candidate Kamala Harris has so far offered few details on her economic vision for the country. That’s expected to change this week.
Vice President Kamala Harris has surged in the polls since entering the presidential race two weeks ago, and now leads former President Donald Trump nationally, according to polling aggregators.
The California Democrat, however, has more work to do to win over swing-state voters, who are historically more conservative than the median American, as she prepares for next week's Democratic National Convention in Chicago.
Conventionally, presidential candidates seek to gain the support of undecided voters by moderating their economic positions, but Harris' best strategy could be to avoid offering detailed proposals at all, according to Chris Meekins, Washington policy analyst at Raymond James.
"Their goal is going to be to talk about moving forward, criticize Trump's policy proposals, but really avoid laying out a broad based agenda that Republicans could then work to undermine," Meekins told MarketWatch.
The Harris campaign told MarketWatch that the vice president has abandoned policy proposals she adopted in 2019, when she was vying for the Democratic nomination before ending the campaign that December. The proposals included banning private health insurance under Medicare for All, a ban on fracking and a federal jobs guarantee.
The vice president told reporters on Saturday that she would roll out her policy platform this week, and that it will be focused on "what we need to do to bring down costs and also strengthen the economy."
The Harris campaign will also attempt to sour the public on Trump's economic record and his plan to institute a broad tax on goods Americans import from abroad.
"What middle-class families need is steady economic stewardship, not chaotic ranting lies," Harris-Walz spokesperson Ammar Moussa told MarketWatch.
"Donald Trump had the worst jobs record of any modern president, and oversaw some of the worst days in the stock market in history while spending his presidency lining the pockets of his wealthy friends who shipped American jobs overseas," Moussa added. "Economic experts agree: His plans would raise costs on working families by $2,500 a year and 'supercharge inflation.'"
The Trump campaign has argued that its economic plans will leave Americans with more, not less, money to spend. Last month at the Republican National Convention in Milwaukee, hedge-fund manager Scott Bessent told MarketWatch it was "absurd" to think that Trump's policies would be inflationary. Bessent is viewed as in the running to become Treasury secretary should Trump win in November.
Tax policy
Meekins would like to see Harris move to the center on tax policy, but doesn't expect her to abandon her party's recent calls for significant new taxes on investment income.
If Democrats win full control of Washington in November, "I think you probably look at what she has supported over the last decade-plus in public life and assume that's probably the direction she's going to go," he said. "This is by far the most progressive Democratic ticket that we've seen in generations."
One idea that Harris did float over the weekend was ending taxes on tips for service and hospitality workers, adopting a proposal Trump had laid out weeks before, but one that economists have widely panned.
"Kamala Harris has flip flopped on virtually every policy she has supported and lived by for her entire career, from the Border to Tips," Trump said Monday on Truth Social. "She sounds more like Trump than Trump, copying almost everything."
There are a host of other policies proposed in President Joe Biden's budget earlier this year that have drawn the ire of the business community.
The Biden budget called for between $3 trillion and $4 trillion in new taxes on wealthy Americans, corporations and business owners - including a controversial idea to tax unrealized capital gains as income for families making more than $100 million annually.
The budget also emphasized that Democrats would not pass a law that increased taxes on families making less than $400,000 per year.
A Harris campaign official told MarketWatch that investors should look to the recent budget, and not stances taken by Harris prior to her time as vice president, as a guide for her policy preferences.
That budget calls for raising the top corporate tax rate from 21% to 28%. It had been 35% prior to the 2017 reform, and the shift was a major boon for large corporations.
The median effective tax rate for S&P 500 SPX companies fell from 31.2% in 2017 to just 20% in 2018, according to John Butters, senior earnings analyst at FactSet.
In the first quarter that the new tax law was effective, the changes saved S&P 500 companies $12.8 billion in taxes, according to a 2018 Bloomberg analysis.
Critics observed that companies plowed the lion's share of their tax savings into share buybacks, not, as hoped, into expanding their businesses and hiring new workers.
Meanwhile, some corporate leaders have argued that higher taxes could be a small price to pay for steady leadership, noting that the stock market and economy have performed well under Biden.
The view from Congress
Henrietta Treyz, an economic-policy analyst at Veda Partners and a former Senate Budget Committee staffer, told MarketWatch that investors should pay less attention to what Harris has publicly backed in the past and more attention to what Congress is willing to accept once negotiations over extending the 2017 tax cuts take place next year.
Treyz said that investors should look to a deal struck in 2021 in the Democrat-controlled House Ways and Means Committee as evidence of what tax increases Democrats in Congress will accept.
The legislation would have raised the top corporate tax rate to 26.5% from 21% and the top individual rate from 37% to 39.6%; increased capital-gains taxes for those making more than $500,000; and added a 3% surcharge tax for earnings above $5 million.
It would have used that revenue to invest in paid child and family leave for all U.S. workers, an expanded child tax credit, and investments in child and elder care workers and facilities.
"This is a framework Democrats worked on for years, and there was little pushback against in the House," Treyz said. "That's going to be the Democratic starting position if they win the majority."
Polling data back up this strategy, with a March poll by Bloomberg of registered swing-state voters showing 69% in favor of raising taxes on those making more than $400,000.
Repairing ties with business
The populist mood of many American voters is why investors shouldn't expect Harris to cater to them by publicly disavowing policies like a quintupled buyback tax or a tax of billionaires' unrealized capital gains, according to Tobin Marcus, head of U.S. policy for Wolfe research, and former aide to then-Vice President Joe Biden.
"I don't see much incentive for her to walk away from the various different investment tax policy proposals that Biden put forward, which won't pass Congress anyway," Marcus told MarketWatch.
"They're not really an election issue. I don't think that a lot of voters are going around being like, 'I'm worried Harris is going to impose taxes on unrealized capital gains or increase the corporate rate,'" he added.
Marcus argued that the Harris campaign will use surrogates in an attempt to reassure the business community that her regulators would be more accommodating to business and solicitous of business leaders' opinions.
He pointed to a recent interview with Maryland Gov. Wes Moore, a Harris ally.
Moore, a Democrat, told CNBC last week that a future Harris administration must and will take a different approach to regulatory matters like antitrust enforcement, a major point of disagreement between the business community and the Biden administration.
While Harris may not move to immediately fire enforcers like Federal Trade Commission Chair Lina Khan or the Justice Department's Jonathan Kanter, Moore said a Harris administration would approach antitrust with a "different set of visions and a different lens" than the Biden administration.
These mild overtures may be all the business community can expect during a political moment where corporate America is viewed skeptically by many Democrats and Republicans, according to Meekins of Raymond James.
"I think neither party is going to be worried about whether the business community is happy with them in this particular campaign," he said. "And it's going to be hard to get answers on what exactly Harris wants to do."
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