For better or worse, Kamala Harris, the front-runner for the Democratic nomination, will have to rely on President Joe Biden’s economic record to run the election. This could be tricky for the vice president, who is seen as Biden’s almost certain successor on the party’s shortlist. Though Biden and Harris can claim a number of accomplishments, tackling inflation is what voters remember most, and they have generally panned the administration’s record. This is just one of the challenges Harris must overcome to defeat her Republican opponent, former President Donald Trump. “Being in the administration, she has to take some responsibility,” 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 perceived as disloyal. So now she’s really in a bind.” The economy is Biden’s weak spot, despite historically low unemployment and macroeconomic growth that has defied years of recessionary expectations. According to recent Reuters/Ipsos polling data, only 37% of Americans approve of the president’s handling of the economy. That figure has barely changed in the second half of Biden’s presidency, and consumers are pushing back against almost every price hike, even though inflation has eased in recent months. There’s also the issue of debt and the budget deficit. The federal deficit has soared by about $7.2 trillion under a Biden-Harris administration, and the administration is on track to have a nearly $2 trillion budget shortfall this year, an increase of more than 25%. These issues are particularly problematic for Harris. Assuming Harris becomes the Democratic nominee, we can expect her economic philosophy to mirror what Biden has done over the past three and a half years. “I don’t think there’s a big gap between Harris’ views on economic policy and the administration’s views,” said Mark Zandi, a Democrat and chief economist at Moody’s Analytics who has advised administrations of both parties. “Harris has participated in the discussions and debates around policy development, so it’s her policy.” Pros and Cons The differences are slight, he added. Harris will likely continue Biden’s work in many ways, spearheading efforts to end Trump’s 2017 tax cuts, which expire in 2025. “There may be a difference in the emphasis on how to frame things compared to the president,” Zandi said. “But I don’t see a lot of difference between the two in terms of actual policy, how to address tax, housing shortages, other cost-of-living issues, consumer protection to antitrust issues.” Harris certainly has some positives for the economy to campaign on. The unemployment rate is rising slowly but remains historically low at 4.1%, and nonfarm payrolls are expected to add more than 1.3 million in 2024 alone. Consumers, who drive about two-thirds of the $28.3 trillion U.S. economy, have been resilient, with retail sales up 2.3% over the past year, according to seasonally adjusted and inflation-adjusted figures. But it’s inflation that’s causing the biggest frustration for voters. Inflation, as measured by the Consumer Price Index, was 3% in June, one-third of its mid-2022 peak, but more than double the 1.4% Biden was given when he took office in 2021. Food costs have risen 21%, energy prices have soared 33% and median home prices have soared 18.5% since Biden and Harris took office. It will be hard for Harris to escape that, but she can boast about the progress she’s made in bringing inflation down to a three-year low. Harris’ campaign did not immediately respond to a request for comment. “With so little time until the election, it’s especially unrealistic to make significant changes to the economic blueprint,” said Joseph LaVorgna, who served as chief economist for the National Economic Council under President Trump. “Harris will have some economic credentials to campaign on, and whatever happens with her administration, it will essentially be President Biden’s administration, with maybe some cuts here and there,” added Lavorgna, who is now chief economist at SMBC Nikko Securities. Possible changes at the Fed One difference between Biden and Harris could be in the all-important area of the Federal Reserve. As a senator in 2018, Harris voted against President Trump’s nomination of Jerome Powell to chair the central bank. 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 all and a fair and transparent financial system, I have serious concerns about Powell’s commitment to strengthening rules to protect consumers and ensure economic stability,” Harris said at the time. Biden re-nominated Powell for 2022, and the Senate confirmed him by a vote of 80-19. Powell’s term ends in 2026, and it’s unclear whether the 71-year-old policymaker will want to serve a third four-year term. President Trump has already said he won’t give Powell another term, and Harris may consider a change. “The decision not to reappoint Powell is not necessarily related to the Fed’s independence, but rather to a desire not to take over as Fed chair from two previous presidents,” Beacon Policy Advisors, an institutional investor consulting firm, said in a report on Sunday. That means nominating a different Fed chair may not signal a difference in policy, but rather a desire for a new face at the head of the central bank, which is expected to start cutting interest rates in September. Powell took a somewhat unusual path to becoming Fed chair, with a deep knowledge of financial markets, not a PhD in economics, as most other central bank leaders have done. “My sense is that [Harris’ vote against Powell] “It was just a political statement. It was clear he was going to be appointed and her vote wasn’t going to make a difference one way or the other,” said Zandi, the Moody’s economist. “When she was attorney general of California, she was very aggressive in going after financial institutions that went off the rails right before the presidential election.” [financial] “She’s never been through a crisis and is very skeptical of people who come from Wall Street,” he added.
