The economic agenda of Kamala Harris is beginning to come into focus as she proposes a cost-of-living plan, removing taxes on tips, and a corporate tax rate hike.
How will these ideas impact the national debt, which just passed $35 trillion?
Budget hawks are still crunching the numbers — and are still waiting on additional plans — but a picture is beginning to emerge of Harris getting on board with not just expensive new programs but, indeed, some plans to pay for them as well.
"She's very early in the policy formation process," said Marc Goldwein of the Committee for a Responsible Federal Budget (CRFB) in an interview, adding, "They say they want to pay for everything, but saying it and doing it are two different things."
Harris is promising more plans in the weeks ahead on issues like education, childcare, and long-term care that could significantly drive up the cost of her agenda.
A campaign spokesman said the mix for the vice president remains one focused on "creating an opportunity economy for the middle class that advances their economic security" but doing so in "a fiscally responsible way."
Read more: How to protect your savings against inflation
Yet no matter who wins in November, the US faces a challenging fiscal path. The current trillion-dollar deficits are likely to continue and likely to get worse in the years ahead.
And former President Donald Trump has his own set of expensive ideas, though he has offered less concrete detail about how he would pay for them. He often references increased oil drilling — "liquid gold" as he calls it — as a way to pay for programs and also pay off the national debt.
Here is a closer look at the impact of Harris’s plans:
Three new proposals
Harris has announced three new proposals in recent weeks. The biggest ticket item by far is a cost-of-living plan that focuses on housing costs and grocery prices. It includes, among other provisions, a new first-time homebuyer credit of $25,000 and a federal ban on price gouging in food.
Read more: Kamala Harris proposes tax credit for first-time home buyers. What about Trump?
The CRFB estimates that this full suite of ideas would increase deficits by $1.7 trillion over the coming decade. The most expensive item is a $1.2 trillion expansion of the child tax credit while another piece of the plan to lower prescription drug costs could actually save the government $250 billion.
Harris has also proposed exempting tip income from federal income taxes and raising the federal minimum wage. Those ideas, according to the CRFB, could add at least $100 billion to $200 billion in red ink over the next decade if enacted.
Trump has also proposed a no-taxes-on-tips plan and often notes that he proposed it first, calling the vice president "Copycat Kamala" in response.
To pay for her new plans, or at least some of them, Harris is also on board with raising the corporate income tax rate to 28%, her campaign said. Big businesses currently pay a federal rate of 21%.
President Joe Biden had first proposed the higher 28% level, while Trump is interested in pushing it lower.
A 28% rate would, once again, according to the CRFB, bring in an estimated $1 trillion over the coming decade to federal coffers.
Longer-term financial issues
The Harris campaign has also sent signals about longer-term fiscal priorities.
A campaign aide has said that Harris supports the array of other revenue-raising ideas presented in the 2025 Biden-Harris budget.
Many of those proposals are centered around tax increases on the richest Americans and are deeply controversial.
One piece would raise the top individual income tax rate from 37% to 39.6%. Another could increase corporate taxes further by changing the rules around what are known as corporate book minimums.
And perhaps the most controversial idea that the Biden-Harris budget would establish is a 25% tax on the unrealized capital gains of billionaires. It's a version of a so-called "wealth tax" that is often slammed by Republicans and dismissed by many economists as unworkable.
But the potential savings from that suite of ideas could be massive: in the neighborhood of $4 trillion over the coming decade.
Enacting them is another matter. The ideas are deeply partisan and would face fierce resistance from Republicans sure to block them during a Harris presidency if they are able — as they've done successfully during Biden’s presidency.
A potential Harris presidency also includes another giant potential cost at the end of 2025 in the tax arena. That's when the expiration of a wide swath of the 2017 Trump-era tax cuts, formally called the Tax Cuts and Jobs Act, is set to take place.
Harris has maintained a signature Biden pledge to not raise taxes on anyone making less than $400,000 a year. But she hasn’t spelled out exactly how she’ll approach a debate over these tax expirations if she wins.
A Harris-Walz campaign spokesman didn't respond to a request for more information on this front.
But if Harris moved to simply extend the tax cuts for everyone making under $400,000, as Biden had aimed to do, that could add over $3 trillion to deficits.
Goldwein also pointed out that other expensive tax provisions will also be under debate in 2025, including enhanced Affordable Care Act subsidies that were put in place during the COVID-19 pandemic but are also set to expire at the end of 2025.
So far in her public remarks, Harris has avoided getting into the weeds of the fiscal balancing act she would face if she wins, instead offering broad strokes and promising more details in the weeks ahead.
Pressed this past weekend by reporters about how she would pay for her cost-of-living plan, Harris mainly offered that increases in home ownership and in strengthened communities would represent a return on investment.
"Everybody benefits and it pays for itself in that way," she said.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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