da New York
The plan to help families that Kamala Harris will present in her speech tonight does not convince everyone. Several analysts have already criticized the Democratic candidate’s economic agenda that includes lowering the cost of food, housing, medicines and reducing taxes, after months of analysis and polls that show the Dems that in November the undecided will also vote looking at who will do more to lower the cost of living.
US Elections, from Kamala Harris and her tan suit to Michelle Obama: all the power looks at the Democratic convention
THE CRITICAL ISSUES
The risk, writes the Economist, is that the choice to fight against prices could push the American economy in a dangerous direction: it could in fact have the opposite effect, stopping growth and raising consumer prices. Harris is not the only one to embrace this populist agenda: Democrats and Republicans have repeatedly supported this approach and Donald Trump himself has announced plans to help the poorest to stop the rise in prices. The former president has blamed Biden for increases but has not yet outlined a plan to intervene.
On housing, Harris promised to build three million new homes in the next four years – the US is estimated to have a shortage of between four and seven million homes – and a $25,000 incentive for a mortgage deposit: the two moves, economists note, could increase the price of homes. Furthermore, it is not certain that Harris, if elected, will be able to build all the planned homes, given that the plan proposes to give money to local governments who will then have to find solutions on their own.
THE INCREASES
Then there is the whole issue of price cuts: he wants to pass the first federal law that prohibits the increase in the cost of food and other consumer goods. During the pandemic, the Democratic left had criticized companies, accusing them of having raised prices to make profits when they noticed a decrease in production. In reality, an analysis by the Federal Reserve highlights the opposite: companies have tried to increase production to try to calm prices while consumers have stopped consuming. As the Washington Post writes, Biden and Harris have faced a very difficult period, with inflation at its highest in the last 40 years due to the pandemic. She, continues the Washington Post, instead of embracing the Fed’s action to control inflation, prefers to attack large companies, pharmaceutical companies, property owners, promising a tough fight, through a recipe that has Trumpian echoes rather than progressive ones. Furthermore, many of the critics have cited Richard Nixon’s failed decision in the 1970s to control prices, which almost seems like a model for Harris. The truth is that it is highly unlikely that a price control bill will pass Congress.
THE TAX RELIEF
There are also a series of tax breaks for less wealthy families, those with children, along with measures to reduce the cost of medicine (partly already implemented by Biden) and to not raise taxes for families earning less than $400,000 a year, 80% of all American families. To do this, however, a lot of money is needed and for now Harris has not revealed the details of how she plans to find it. Without coverage, the candidate’s project should increase the deficit by 1.7 billion over ten years, according to calculations by the Committee for a Responsible Federal Budget, an independent nonprofit. On the cost of medicine, however, the reactions of the main analysts have been positive, given the successes achieved by the Biden administration.
Even in this case, however, there are doubts: Biden’s choice to put a maximum price on the costs of some medicines could increase the costs of insurance for millions of Americans. According to Greg Mankiw, a Harvard economist interviewed by the Economist, if Trump’s proposal is all about autarky, Harris’s could go too far towards anti-globalization positions, even though “it is better than the other candidate’s”. It is certainly not the first time that a politician running for
presidency makes promises that will not be realized: from Donald Trump’s science fiction proposal to create a Space Force, a space army, to the one, remaining on the economy, in which the former president in 2016 announced that during his mandate he would increase the GDP by 4% per year. Joe Biden also launched slogans that have never materialized. One above all, the announcement of making community colleges free, a plan that has not yet been approved.
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