As the front-runner for the Democratic nomination, Kamala Harris will have to run, for better or worse, on the economic record of President Joe Biden. That could be a problem for the vice president, who is seen as the near-certain replacement for Biden on the party ticket. While Biden-Harris can claim a number of accomplishments, their legacy on inflation is what voters, who are generally critical of the administration’s record, will remember most. That will be just one challenge Harris will have to overcome to defeat her Republican opponent, former President Donald Trump. “She has to take some responsibility because she’s working for” the administration, said Greg Valliere, chief U.S. policy strategist at AGF Investments. “It’s going to be hard for her to come up with a new plan, because she could be seen as disloyal. So she’s really stuck in a corner right now.” Despite historically low unemployment and overall growth that has defied long-term expectations of recession, the economy is Biden’s Achilles’ heel. According to recent Reuters/Ipsos polling data, only 37% of Americans approve of the president’s handling of the economy. That number has barely moved in the final years of Biden’s presidency, as consumers have revolted over the high cost of almost everything despite inflation figures falling in recent months. Then there’s the debt and deficit: Federal red ink has surged by about $7.2 trillion under Biden-Harris, up more than 25% as the administration is set to run a budget deficit approaching $2 trillion this year. Those issues pose particular problems for Harris, whose economic views, assuming she is the Democratic nominee, are expected to mirror Biden’s over the past three and a half years. “I don’t see a lot of light between her views on economic policy and the views of the administration,” said Mark Zandi, chief economist at Moody’s Analytics, a Democrat who has advised administrations from both parties. “She was part of the discussion and debate about how these policies were put in place. So they are her policies.” He added that any specificity would be slight. Harris is likely to continue Biden’s efforts on a number of fronts and is expected to lead the charge to end Trump’s 2017 tax cuts when they expire in 2025. “The differences may be in the focus versus the president in how he frames things,” Zandi said. “But in terms of actual policies, in terms of tax policy and policies to address the housing shortage, other cost-of-living issues, consumer protections to antitrust, I don’t see a lot of difference between the two.” Harris will certainly have positives for the economy to campaign on. The unemployment rate, though gradually rising, remains at 4.1%, low by historical standards, with nonfarm payrolls set to rise by more than 1.3 million in 2024 alone. Consumers, who power about two-thirds of the $28.3 trillion U.S. economy, have been resilient, with retail sales up 2.3% over the past year, seasonally adjusted but not inflation-adjusted. But inflation has been a bigger driver of voter discontent. Inflation as measured by the Consumer Price Index was 3% in June, a third of its mid-2022 peak but more than double the 1.4% rate Biden delivered when he took office in 2021. Food costs have risen 21% since Biden and Harris took office, energy costs have risen 33% and the median home price has risen 18.5%. That will be hard for Harris to escape, though she can boast of progress in bringing inflation down to a three-year low. The Harris campaign did not immediately respond to a request for comment. “The fact that there’s not a whole lot of time between now and the election is not going to make it particularly possible to change the economic landscape in any meaningful way,” said Joseph LaVorgna, who served as chief economist on Trump’s National Economic Council while he was in office. “There’s an economic record that she’s running on, and she’ll have some right to it, and I think whatever happens in her administration will be, with maybe a little trimming here or there, essentially a Biden administration,” added LaVorgna, now chief economist at SMBC Nikko Securities. One area of disagreement between Biden and Harris could be a crucial one — the Fed. As a senator in 2018, Harris voted against confirmation when Trump nominated Jerome Powell to be the central bank’s chair. She was one of only 13 senators to do so. “At a time when the American people are deeply concerned about an economy that works for everyone and a fair and transparent financial system, I have serious concerns about Mr. Powell’s commitment to strengthening the rules to protect consumers and ensure the stability of our economy,” Harris said at the time. Biden renominated Powell in 2022, and the Senate confirmed him by an 80-19 vote. Powell’s term as chair ends in 2026, and it’s unclear whether the 71-year-old policymaker wants to serve a third four-year term. Trump has already said he won’t give Powell another term, and Harris may be looking to make a change as well. “The decision not to reappoint Powell will have less to do with the Fed’s independence than with a desire not to inherit the Fed chair from two previous presidents,” institutional advisory firm Beacon Policy Advisors said in a report Sunday. The naming of a new Fed chair may also represent less of a policy shift than a desire to have a fresh face at the helm of the central bank, which is expected to begin cutting interest rates in September. Powell has taken a slightly unusual path to the Fed, with a deep background in financial markets rather than a PhD in economics like most other central bank leaders. “I feel like[Harris’s vote against Powell]was just a political statement. It was very clear that he was going to be appointed and her vote wasn’t going to make a difference either way,” said Zandi, the Moody’s economist. “When she was California’s attorney general, she was very aggressive in going after financial institutions that went off the rails in the run-up to the crisis, and so she has a very skeptical view of people coming from Wall Street.”
Trending
- Two big tests are coming that will determine whether last week's stock market excitement was justified.
- How a 'seriously outstanding tax debt' can lead to your passport being revoked
- Hezbollah fires rockets at Israel in revenge for its supreme leader
- Boeing Starliner Returns Empty, NASA Enlists SpaceX to Transport Astronauts
- Dividend Stocks Are a Hot Pick in the Fall Due to the Fed and Interest Rates
- Biden speaks with Zelensky, announces new military aid to Ukraine
- Meta says WhatsApp accounts linked to Iranian hackers targeted Biden, Trump
- Stocks with the biggest moves in the middle of the day: CAVA, INTU, ROST, WDAY
How Biden's Unpopular Economic Record Could Challenge Kamala Harris
