UWCSEA Political Review
As analysts and strategists continue their post-mortem of the 2024 election, the economic policies of both parties might have proven to be a deciding factor in how the pendulum ultimately swung. This article examines what could have been if the Democratic Party had received the mandate to set its economic agenda into action.
The Democrats have introduced countless new economic proposals that were thought to have the potential to change America with a plethora of innovative policies to reduce inflation and income inequality. The left for this election is targeted at the middle class, which resulted in a projected 2.3T gap between the Democrats' and Republicans’ plans. Although many of the proposed economic policies garnered support, there are a few controversial proposals that split economists in two.
Harris's housing policy, which has the biggest widespread appeal, focuses on constructing 3 million new housing units over four years to alleviate the housing shortage in the United States. This initiative includes a $40 billion innovation fund to support affordable rental housing development along with tax incentives for builders of starter homes aimed at first-time homebuyers. The democrats proposed a downpayment assistance of $25000 for first-generation home buyers; this theoretically could reduce the burden of the ever-growing housing prices by increasing supply of homes. This will certainly be convincing and gain popularity for the working class who are no longer able to afford homes. However, some economists believe that the down payment would not increase supply but rather demand. The supply of houses has not been a problem in markets. But rather, it is the price of those houses that has restricted buyers from purchasing their first homes. Increasing the down payment could very likely increase the cost of houses by $25000 if no further policies are implemented - resulting in more debt for first-time buyers. Harris has yet personally addressed the countermeasures with very few public appearances. Thus sparking questions from the republicans surrounding her competency as a president and losing popularity in undecided voters. However, the down payment policy is only one of the many proposed policies to make housing more affordable. Several other policies have been proposed to mitigate the risks associated with the downpayment assistance and they should be factored when addressing the housing crisis as a whole. We cannot predict for sure the result of Harris’ housing policies unless they have been introduced and run nationally.
The democrats further advocate for allowing Medicare and federal programs to negotiate drug prices, aiming to lower costs by 40% to 80% starting in 2026. Harris also supports increasing transparency in pharmaceutical pricing and plans to cancel $7 billion in medical debt for up to 3 million Americans - leading to an increase in healthcare affordability for countless Americans. Enabling negotiations could lead to lower prices and more access to necessary medications However, this raises objections from pharmaceutical companies that argue this could stifle innovation and investment in new drug development. Harris’ team would have to find ways to balance cost reduction with advancement to garner support from both large corporations and households. Harris’ refusal to accept many interviews from right-leaning media or neutral media to answer the concerns economists and the general public has voiced is certainly a step-down from the frequent interviews Trump has conducted with media ranging from all ends of the political spectrum. This, however, does not mean her policies have no merit. Depending on how the democratic party would have offsetted the negatives associated with their proposals, these policies could definitely be beneficial to the US.
Kamala Harris has further proposed raising the corporate tax rate from 21% to 28% as part of her broader economic policy initiatives to fund more social programs aimed at supporting low- and middle-income households without having to borrow excess money that would increase the $35 trillion gross federal debt. Raising the corporate tax rate is projected to generate approximately $1.1 trillion over ten years, potentially offsetting the expanded Earned Income Tax Credit. A 7% increase in corporate tax also addresses disparities to promote fairness in the tax system. However, there are growing concerns from economists who are worried companies would pass the tax on workers that leads to less wages and less job opportunities with an estimated elimination of approximately 786,000 jobs and reduced wages by about 1.2% across the economy. Corporations could also respond to tax increases by raising prices for goods and services, which would negatively impact consumers. The biggest concern with higher corporate taxes is that it might make U.S. companies less competitive compared to firms in countries with lower tax rates - leading to capital flight and further impacting domestic employment and economic growth. This is completely the opposite of Trump’s policy of decreasing the interest rate for more competition, sparking controversy in large firms who do not want their revenue to be cut even further. This is no doubt one of the reasons Elon Musk, owner of Tesla and X, decided to openly endorse Trump and move his operations away from California to Texas. Other companies might also follow suit and lose Harris countless votes and endorsements. The democratic party certainly needs to consider this and establish a policy that helps the nation as a whole.
Harris failed to be elected as the president in 2024. Hence, we will never be sure if the policies are beneficial to the US. The next four years will definitely see a change in the way America is runned, be it for better or worse.
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