With her program, Kamala Harris doesn't win any economic trophy
Kamala Harris will become President of the USA. In record time, the Vice President of Joe Biden now has to prove herself and show what she stands for. How much of Harris is there in Bidenomics? Is economic policy her open flank, is she here a "lame duck," as critics say, or can she set accents? ntv.de asks economist Bastian Hepperle from Hauck Aufhauser Lampe.
ntv.de: In Washington, D.C., the Financial Times is urging that Kamala Harris as a potential US President will step into Joe Biden's economic footsteps and continue Bidenomics, or not. Does Kamala Harris have her own economic agenda?
Bastian Hepperle: Through economic competence, Harris has not distinguished herself in the past few years. Of course, that was difficult as Vice President because she stood deep in the shadow of President Biden and could not position herself prominently. She still has approximately 100 days until the Presidential election. She must use this time to quickly gain a profile. With the issues she has distinguished herself with so far - abortion, social aspects, economic opportunities - she cannot win a major trophy. She should therefore first refer to Biden's successes. Highlight what the Biden Administration has achieved through state funding measures, for example, in battery manufacturing, the semiconductor industry, or the expansion of the infrastructure program.
Was was she involved in these measures as Vice President?
Officially yes, concretely not. She should bring up other things, for example, stopping migration. Therefore, she must make Biden's successes her own. Point to what the Biden Administration has achieved through state funding measures, such as investments in important key industries, for example, in battery manufacturing, the semiconductor industry, or the expansion of the infrastructure program.
Biden's most important economic program was the Inflation Reduction Act (IRA). As the name suggests, it is a program for inflation reduction, in fact a large subsidy package for industry to create jobs and advance climate protection. Is it good or bad if a US President Kamala Harris continues this program as Kamalanomics?
There are two sides to the medal: The program is designed over many years. Harris will not immediately change the course, but will clearly continue the IRA. In fact, it is about promoting environmentally friendly technologies. Harris has already made it clear that she will strongly advocate for a strong climate policy, so it fits. The government can also present successes. That's good for Harris. The downside is that the state budget is therefore naturally heavily burdened.
Under Bidenomics, tariffs, especially on Chinese products, have also been imposed. However, tariffs on aluminum and steel have also been lifted. The EU has taken similar measures ...
She is likely to continue this course. Harris is largely against free trade. She has also spoken out against the free trade agreement with Canada. One should not hope for tax reductions. Perhaps there will be even stricter regulations, for example, regarding the export of high-technology products, goods, and semiconductors. Of course, with a focus on China. One can certainly expect a hard and through and through protectionist course in US foreign trade policy under a President Harris.
Bidenomics was good for the American economy from a growth perspective. What is Harris' benchmark?
The U.S. Gross Domestic Product for the second quarter, recently published and showing strong growth, highlights the success story of the Biden Administration. In general, the economic bar is set high, especially when compared to the Eurozone or China. The employment engine in the U.S. is running strong, and the economy continues to develop robustly. However, there is an issue: Many voters and voters feel that growth, due to high inflation, is not a success. Many private households are only noticing that they are spending more on gas or the hairdresser than they were a few months ago.
Harris is known as the Attorney General for small businesses. Her motto or approach "Freedom to Thrive," is also referred to as Kamala-nomics. She has supported businesses owned by minorities. She wants to strengthen labor rights and ensure that the economy respects these rights. What about Big Business, are the large US corporations behind her?
Social political aspects and economic opportunities with a focus on the middle and lower income brackets top her agenda. Tax cuts, expanding healthcare, and ensuring regulatory safety are her themes. As Attorney General, she had no fear of taking on big corporations - especially the mineral oil industry. I think she will not shrink from this in the future and may want to regulate even more. This is of course a major concern for many companies, especially small and medium-sized ones, as regulation is already a burden for them. This is not good for the economy.
Harris is also a known opponent of fracking. This could potentially cause conflicts.
Harris spoke out in favor of a fracking ban in 2019. In the context of her climate policy, she has called for a CO2 tax and a stop to subsidies for the fossil fuel industry. This could become a problem in the ongoing election campaign. There are states where the oil industry is strongly represented. Winning over votes in these states with such positions will be difficult. And at the end of the day, it may be a close race, where every vote could decide whether Harris becomes President or not. We will have to wait and see how she positions herself strategically in the campaign.
Harris’ Agenda could be expensive. We are already - thanks to Trump's tax gifts - at a level where the U.S. Central Bank is not daring to lower interest rates. Who is worse, Trump or Harris? Will America's debt mountain grow under Harris?
There is nothing good to expect here. The U.S. debt situation is dramatic. Investor trust in the U.S. dollar is still there, but that is not written in stone. This trust could tip over and put at least short-term pressure on the currency. However, there are no currency alternatives. Implementing climate protection measures costs money, which means that the public budget remains tense. We can only hope that the U.S. will experience a growth boom to finance these measures. Realistically, that's not very likely. It can be expected that the debt will continue to grow, as there is no will for consolidation, which is urgently needed. However, Democrats and Republicans differ little in this regard. The tense public budget situation will be the major issue in the coming months.
How big do you estimate Harris' room for maneuver? Will we rather see major changes or nuances?
Can Harris Really Implement Her Agenda One-to-One, That's the Big Question?
If Harris can really win the Presidency, that's the big question. First, she needs to win the presidency. And then, the government is heavily reliant on the support of the US Congress in many economic policy measures, especially when it comes to funding the budget. Tax cuts or strengthening the middle class cost a lot of money. If Harris really wins, I assume that the previous direction in general will remain the same. I see skepticism towards large impulses or comprehensive measures that cost a lot of money. Anything that doesn't cost money and can be implemented without Congressional approval is, of course, possible for a president or president alone. Tariffs, for example, can be raised independently - at least for a limited time. In general, I assume a continuation of the previous policy with some new accents.
Is Kamalanomics a Risk for Financial Markets?
Of course, the financial markets are naturally interested in the financial and economic strengthening of the US economy. If there are doubts about long-term growth prospects or public debt, this can lead to massive market corrections. This risk is certainly there. Naturally, the central bank will intervene and quickly lower interest rates. But if inflation surprises negatively, it would of course go in the other direction. When looking at the US stock markets, a win for the former President Trump is assumed. He promises a pro-business course, which has buoyed the markets. If Harris implements economically damaging measures here and there, then this could cause corresponding setbacks.
Interview with Bastian Hepperle by Diana Dittmer
- Should Kamala Harris become the US President after the 2024 election, the Financial Times suggests that she should continue Joe Biden's economic policies, known as Bidenomics.
- As Vice President, Kamala Harris has not had the opportunity to distinguish herself economically, but in the lead-up to the 2024 election, she must quickly establish her own profile and show her economic stance.
- Oil companies may face challenges under a Kamala Harris presidency, as she has been an opponent of fracking and has advocated for stronger climate policies.
- If Kamala Harris is elected US President in 2024, the country's already-tense debt crisis may worsen due to the potential cost of her proposed policies and the lack of fiscal consolidation.
