By David Ditch / The Heritage Foundation
To say Americans are dissatisfied with the state of the economy is an understatement. Polls since late 2021 have consistently shown majority disapproval on the economy, usually citing the related problems of high prices and inflation.
The surge of inflation that has hammered household budgets since 2021 was not random. It’s largely the result of policy choices made or promoted by the Biden-Harris administration.
It’s clear, from the details Vice President Kamala Harris has released about her proposed economic platform, that she has no intention of reversing the disastrous legacy of Bidenomics. Indeed, she has even more dangerous plans waiting in the wings.
In 2021 and 2022, President Biden approved trillions of dollars’ worth of inflationary spending and tax credits, with Harris twice casting tie-breaking votes in the Senate.
The bills included enormous slush funds for state governments, welfare expansions that reduced the labor supply and weakened supply chains, and costly subsidies for “green” energy and electric vehicles.
Not content with the legislative spending spree, Biden caused another $700 billion in deficit increases through administrative changes.
The most notable of these has been the repeated (and repeatedly unlawful) attempt to erase student loan debts, which transfers the obligation to taxpayers. Unsurprisingly, Harris has been a strong supporter of this scheme.
Not only have families struggled to deal with rising prices, but they face an additional burden: higher interest rates imposed by the combination of federal deficits and Federal Reserve actions to fight inflation. The median monthly payment on a new home mortgage has more than doubled since 2021.
When it comes to addressing high prices and costly housing, Harris has announced plans that would be not just ineffective, but counterproductive.
For example, giving $25,000 of taxpayer money toward the down payment on a new home would inject more demand into the market and escalate bidding wars, leading to higher prices.
The proposal to impose federal limits on rental housing — which Biden originally put forward — would cause property owners to pull some units off the market and reduce incentives to build. That would reduce the supply of housing and drive prices higher still.
Similarly, the Harris push to stop “price gouging” at grocery stores would wreak havoc on an industry with an average profit margin of just over 1 percent.
One aspect of the Biden agenda that has (thankfully) not come to pass is an array of tax hikes proposed in his annual budgets.
Yet even here, Harris wants to carry the torch of Bidenomics forward.
If she follows the Biden plan in full, the total tax bill would be an eye-watering $5 trillion. Not only would that mean shrinking the private sector for the sake of increasing Washington’s control over the economy, but the taxes in question would be especially destructive.
Raising the corporate tax from 21 percent to 28 percent would place U.S. companies at a competitive disadvantage against those based in most of the developed world. This picture is even worse when you factor in state-level corporate taxes; bringing the true corporate tax range in the U.S. to between 25.8 percent and 32.3 percet, depending on the state.
The nations of the European Union, hardly a low-tax haven, have an average corporate tax of 21 percent. Even communist China only levies a 25 percent tax on businesses.
Boosting taxes on capital gains to 44.6 percent would dramatically reduce the incentive to invest in new and growing businesses, leading to less job creation and slower wage growth.
Most troubling of all is the push for taxing “wealth.”
Not only would this be flatly unconstitutional, but it would also ignore worldwide evidence that such taxes cause tremendous economic damage for the sake of relatively little revenue. Most developed countries that have imposed such a tax have since repealed them as a result.
The legacy of Bidenomics is higher prices, corrupt handouts to political allies, and driving the federal government towards bankruptcy.
Kamalanomics appears to be more of the same, along with the potential of tax increases that would cripple economic growth.
Is that really the path Americans want to take?
David Ditch is a senior policy analyst at The Heritage Foundation’s Hermann Center for the Federal Budget. The views expressed in this article are the author’s own and do not reflect any institutional position for Heritage or its Board of Trustees. ©2024 Tribune Content Agency, LLC.
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