By: Yogesh Prasad, CFA, CAIA
What solutions are they proposing to tackle the economic challenges facing Americans today?
With the 2024 U.S. presidential election fast approaching, many voters are focused on which candidate can best deliver financial relief and economic stability. Vice President Kamala Harris and her running mate, Minnesota Governor Tim Walz, are proposing a range of policies aimed at addressing inflation, supporting working families, and promoting economic growth. Here is a closer look at their economic agenda:
1. How will they address inflation and rising costs?
Key Proposals:
Ban on “price gouging” by corporations: Harris has pledged to lower costs for everyday Americans, beginning with efforts to ban price gouging by food corporations. This aligns with a broader Democratic push on “care economy” issues, which aims to appeal to a wide range of voters.
Expanded paid family leave and tax credits: Drawing from his experience as governor, Walz’s track record includes legislation that guarantees paid family and medical leave and offers hundreds of millions in tax credits to parents. Harris has supported similar proposals, focusing on alleviating financial burdens on middle- and lower-income families.
First-time homebuyer’s credit: Harris’s campaign includes down payment support of approximately $25,000 for qualified first-time homebuyers over four years. This initiative aims to make homeownership more accessible, particularly for lower-income and minority communities, by reducing the upfront financial barrier.
What This Means for You:
If implemented, these policies could help stabilize food prices, making daily essentials more affordable for families.
Paid leave and expanded tax credits aim to provide more financial security to families, which could reduce economic strain and support consumer spending.
2. What is their stance on corporate taxes and fiscal responsibility?
Harris’ Approach:
Corporate tax rate increase: Harris supports raising the corporate tax rate from 21% to 28%. This change, partially reversing the 2017 Tax Cuts and Jobs Act, could generate about $1.1 trillion in revenue over ten years. This move is intended to ensure that corporations contribute a fair share to the economy while funding social programs.
Walz’s Fiscal Strategy:
Progressive taxation in Minnesota: As governor, Walz introduced a budget that combines significant tax cuts with increased spending on public programs. His strategy includes maintaining taxes on high-income households and corporations while reducing taxes for lower-income groups.
Potential Impact:
The Harris-Walz administration’s approach to taxation aims to balance fiscal responsibility with social equity. However, it could face criticism for potentially increasing the federal deficit and its reliance on tax revenues to fund expansive social programs.
3. How do they plan to tackle unemployment and labor issues?
Labor-Centric Agenda:
Union support and worker empowerment: Harris has a strong track record with organized labor dating back to her time as attorney general in California. She has chaired a task force focused on worker empowerment, aiming to reduce barriers to organizing and promote fair labor practices.
Pro-worker policies: Walz’s pro-labor stance is reflected in his support for banning non-compete agreements and mandating paid leave. His policies have garnered support from unions, which see these measures as essential for improving working conditions.
Implications for Workers:
These policies may bolster worker rights, improve job security, and create a fairer labor market environment. However, their success will depend on whether they can attract support from rank-and-file workers, particularly in traditionally conservative regions.
4. What about energy policy and environmental issues?
Harris’ Climate and Energy Goals:
Green energy transition: Harris is committed to promoting clean energy and reducing carbon emissions. Her record includes advocating for environmental justice and pushing for the replacement of lead drinking water pipes through the bipartisan infrastructure law.
Support for vulnerable communities: Harris has emphasized helping Black, Hispanic, and impoverished communities disproportionately affected by pollution. She has been a vocal advocate for environmental justice and green energy initiatives.
Walz’s Mixed Record:
Legislation for a green future: Walz has promoted laws mandating electric utilities to use carbon-free energy by 2040, reflecting his commitment to green energy. However, he also has a history of supporting fossil fuel projects, such as the Keystone XL pipeline, which may raise questions about his consistency on environmental issues.
Impact and Considerations:
The Harris-Walz ticket is likely to push for policies that promote sustainable development and green technology while balancing economic interests. However, they may face opposition from voters concerned about the potential impact of these policies on energy jobs and costs.
5. How do they approach tax policy and financial relief?
Tax Policies for Working Families:
Expanded Earned Income Tax Credit (EITC): Harris plans to expand the EITC to benefit younger and childless workers, offering greater financial relief to low-income households.
No Tax Hikes for Most Americans: The Harris-Walz campaign has pledged not to raise taxes on anyone making less than $400,000 annually. In some instances, they even propose tax cuts, such as ending the federal tax on tips, which could particularly benefit service workers.
Funding Their Agenda:
Progressive Taxation to Support Social Programs: To finance their initiatives, the Harris-Walz administration may look at tax policies that target higher-income groups and multinational corporations. For example, Minnesota’s child tax credit is funded by new taxes on corporations like 3M, and a similar approach could be applied nationally.
What This Means:
While these tax policies may provide relief for working-class Americans, they also open the Harris-Walz administration to criticism from those who argue that progressive tax policies could stifle economic growth.
Overall takeaway
The Harris-Walz ticket offers a mix of progressive and pragmatic policies aimed at addressing the key economic, social, and environmental issues facing the country today. They advocate for a fairer, more inclusive economy while emphasizing fiscal responsibility, labor rights, and social justice. However, their ability to implement these policies will depend on their ability to build consensus among diverse voter groups.
How could these policies impact your investments?
Corporate Taxes and Regulations: Increased taxes and tighter regulations may pressure corporate profits, affecting certain sectors like large-cap stocks. Are your investments prepared to handle this shift?
Opportunities in Growth Sectors: Clean energy, healthcare, and infrastructure could see growth due to proposed government investments. Does your portfolio capitalize on these opportunities?
Inflation and Interest Rates: With heightened government spending, inflation could rise. Are you protected against potential erosion of purchasing power in your retirement accounts?
How should you position your portfolio to maximize benefits?
Diversification: A diversified approach with exposure to growth sectors like green technology and healthcare is essential. Are you adequately diversified to benefit from these policies?
Inflation Protection: Incorporating inflation-protected assets, such as Treasury Inflation-Protected Securities (TIPS), can hedge against rising prices. Does your portfolio have the right balance?
Why is active portfolio management crucial now?
Real-Time Adjustments: Active management allows for timely adjustments to capture opportunities and mitigate risks as the market responds to new policies. Are you relying on a static strategy that may not keep up?
Seizing Opportunities Amid Volatility: Market volatility can create opportunities for skilled managers to enhance returns. Is your current manager capable of identifying and acting on these opportunities?
Why choose Confluent Asset Management?
As new economic policies are shaped by the Harris-Walz administration, how will these changes impact your investment portfolio and retirement accounts? Here’s why Confluent Asset Management is the right choice to help you navigate this uncertain landscape:
Research-Driven Strategies: Our team is constantly analyzing market trends, political shifts, and economic data to make informed investment decisions. Do you want a partner who stays ahead of the curve?
Customized, Active Management: We tailor our approach to your specific goals, ensuring your portfolio is positioned to benefit from new policies and shielded from potential risks. Are you receiving this level of personalized service elsewhere?
Proven Performance: Our flagship large-cap fund is up 40% this year, demonstrating our expertise in capturing market opportunities. Would you prefer to align with a team that has a track record of success?
Act with Confluent Asset Management
Do not leave your financial future to chance. Partner with Confluent Asset Management to navigate these changing times with confidence. Our experience, expertise, and proactive strategies can help you maximize returns and safeguard your wealth against future uncertainties.
Disclosure
The information provided in this article is for informational purposes only and should not be considered as investment advice or a recommendation to buy or sell any particular securities, financial instruments, or strategies. All investments involve risks, including the possible loss of principal. The economic policies discussed are subject to change, and their impact on financial markets and individual investments may vary based on numerous factors.
Confluent Asset Management does not guarantee the accuracy, completeness, or timeliness of the information provided in this article. Past performance is not indicative of future results, and no representation is being made that any investment will or is likely to achieve profits or losses similar to those discussed.
Before making any investment decisions, we encourage you to consult with a qualified financial advisor to assess your individual circumstances and objectives. Confluent Asset Management may hold positions in securities or other instruments mentioned in this article and may engage in transactions that are inconsistent with the views expressed herein.
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