Key Components:
1. Housing: Harris proposes constructing three million new homes to address the housing supply crunch, which is more ambitious than Biden's two-million-home plan. She also advocates for a $40 billion "innovation fund" to encourage local governments to find solutions to housing shortages and make it harder for investment companies to buy up large numbers of rental properties, which has driven up rent prices. (See: Comments to the CalPERS Board of Administration, July 15, 2024 on Housing and Environmental Investing.)
2. Healthcare: Expanding on Biden's policies, Harris plans to cap the cost of insulin for all Americans, not just seniors. This move is part of a broader strategy to reduce healthcare costs, which remains a significant burden for many families.
3. Child Tax Credit: Harris aims to restore and expand the child tax credit, increasing it to $6,000 for eligible families, nearly double the amount provided during Biden's administration. This is intended to offer more substantial financial relief to families, particularly those with young children.
4. Corporate Regulation: One of the most aggressive aspects of her plan is the crackdown on corporate mergers, especially in the food industry. Harris argues that extreme consolidation has led to higher grocery prices, and she proposes a federal ban on price gouging to prevent corporations from unfairly inflating prices.
Economic Impact and Analysis:
Harris's plan, if fully implemented, could have a significant impact on the U.S. economy, particularly by reducing the cost of living for middle- and lower-income Americans. The construction of three million new homes could help alleviate the housing crisis, potentially reducing housing costs and making homeownership more accessible. The expansion of healthcare caps and the child tax credit would directly increase disposable income for millions of families, stimulating consumer spending.
Job Creation Impact
Housing Construction:
The plan to build three million new homes is likely to be a major driver of job creation. According to estimates by the National Association of Home Builders, constructing 1,000 single-family homes creates approximately 2,900 full-time jobs in construction and related industries. Extrapolating this to Harris's proposal, the construction of three million homes could potentially create around 8.7 million jobs over the duration of the plan.
Infrastructure and Innovation Fund:
The $40 billion innovation fund aimed at boosting local government efforts to solve housing shortages could also stimulate job creation, especially in construction, urban planning, and related sectors. Additionally, investments in healthcare infrastructure and potential expansions of the child tax credit would likely lead to increased consumer spending, further boosting job creation in retail, service, and healthcare sectors.
Corporate Regulation and Industry Impact:
The crackdown on corporate mergers, particularly in the food industry, could have mixed effects on job creation. While it may protect existing jobs by preserving competition, there is also a risk that aggressive regulatory measures could lead to job losses if corporations respond by cutting costs, including labor.
Overall Job Creation Estimate:
Combining these factors, Harris’s economic plan could lead to the creation of several million jobs over the next decade. Estimates vary, but depending on the effectiveness and scope of implementation, it is possible that the plan could support the creation of approximately 10 to 12 million jobs across various sectors over the long term.
Positive Impacts on GDP:
Increased Consumer Spending: The expansion of the child tax credit and healthcare cost caps are expected to increase disposable income for middle- and lower-income families. This boost in consumer spending would likely lead to higher demand for goods and services, directly contributing to GDP growth. Historically, similar policies have shown a multiplier effect, where each dollar spent by consumers can generate more than a dollar in economic output.
Housing and Infrastructure Investments: The construction of three million new homes and the $40 billion innovation fund are significant investments that will likely stimulate economic activity. The construction sector would see immediate benefits, leading to job creation and increased demand for construction materials and related services, which are substantial contributors to GDP.
Support for Innovation and Small Businesses: The focus on cracking down on corporate consolidation could foster a more competitive environment, potentially leading to greater innovation and productivity gains. If successful, these efforts could lead to higher business investment and an increase in entrepreneurial activity, further contributing to GDP growth.
Potential Risks to GDP Growth:
Inflationary Pressures: While the plan includes measures to control inflation, such as regulating corporate mergers and banning price gouging, there is a risk that increased consumer spending and large-scale housing construction could initially exacerbate inflation. If inflation rises too quickly, it could erode purchasing power and slow down real GDP growth, counteracting some of the positive impacts.
Implementation Challenges: Much of Harris's plan requires congressional approval, which could delay or dilute its impact. If key components of the plan, particularly those related to housing and tax credits, are not fully realized, the anticipated boost to GDP might fall short.
Overall GDP Impact Estimate:
Given the scale of the proposed investments and policies, Harris's plan could potentially add a significant amount to the GDP over the next decade. The plan could contribute an additional 1-2% to annual GDP growth during its peak implementation years, assuming full implementation and favorable economic conditions. Over a ten-year period, this could translate to $4 to $5 trillion in added economic output, primarily driven by increased consumer spending, housing construction, and a more dynamic business environment.
The plan faces significant hurdles. Much of it requires congressional approval, challenging to secure if Republicans remain obstructionist. The success of the plan will depend heavily on the administration's ability to navigate these political and economic challenges.
Overall, Harris's economic plan represents a bold attempt to address persistent economic inequities. Its impact will ultimately hinge on its implementation and the broader political environment.