Kamala Harris’s economic plans leave economists scratching their heads

Today’s top stories

• Four bodies have been recovered by divers searching the wreckage of Mike Lynch’s superyacht Bayesian.

• Barack Obama has warned Democrats of the ‘tight race’ to defeat Donald Trump in November.

• France’s caretaker government has said it plans to freeze state spending as it outlines the contours of a 2025 budget.

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Good evening.

Spirits have been running high at the glittering Democratic National Convention this week, but behind the pageantry an increasing number of economists and business leaders are scratching their heads at presidential candidate Kamala Harris’s economic plans.

Since President Joe Biden “passed the torch” to Harris in July, policy analysts have been trying to decipher what an administration with the vice-president at the helm would look like. 

Bidenomics, which has provided billions of dollars in subsidies for cleantech and semiconductor supply chains, and brought hundreds of thousands of manufacturing jobs to former US industrial heartlands, has proved deeply contentious. In yesterday’s FT, Janan Ganesh suggested “Kamala Harris should distance herself from Bidenomics”. Only three weeks earlier, Rana Foroohar said the vice-president should reaffirm her commitment to the programme.

The majority of the US public are resolute. Sixty per cent of them want her to junk Biden’s economic platform or change it in a big way. Harris appears to have been listening, having announced a spate of economic pledges aimed at appealing to the average American voter over recent days.

The new measures include a federal ban on price-gouging in the food sector, more tax breaks for families and first-time homebuyers, ratcheting up the corporation tax rate from 21 per cent to 28 per cent and a proposal to make tips exempt from taxes — a policy lifted straight from Donald Trump’s agenda. Critics have decried the plans as populist, market-distorting and perhaps a forewarning of further government regulation in the economy. The programme also threatens to buttress the Republican attack line that hers is the “most extreme ticket in history”.

But “not all of Harris’s policies are bad”, wrote the FT’s editorial board yesterday. She is making welcome noises on housebuilding, for example, where short supply has put upward pressure on rents. And, it acknowledges, “the messaging may win over some households in swing states”.

On other economic challenges facing the country she has been much more opaque. And as she has not given a single formal press conference or interview since her campaign started, many voters are still trying to fill in the gaps.

Where does Harris stand on industrial policy, for example, or sanctions on Iran — or on co-operation with China, given that she has never visited? Perhaps, analysts hope, some answers will materialise in her closing speech in Chicago tomorrow.

Need to know: UK and Europe economy

The European Commission plans to hit Tesla cars imported into the EU from China with tariffs of 19 per cent, a lower rate than those for Chinese electric-vehicle makers.

The UK government borrowed more than expected in July, according to official data, underscoring the budget challenges facing the new Labour chancellor Rachel Reeves.

Labour should seek private funding to help build new transport projects that are needed to address the “deep and growing productivity gap” across the country, an independent policy review has recommended.

Need to know: Global economy

China has launched an anti-dumping investigation into imported European dairy products, a day after the European Commission published a series of additional levies on Chinese EV imports.

US district judge Ada Brown has blocked the Federal Trade Commission’s ban on non-compete agreements, writing yesterday that the ban “is arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation”.

Investors have piled back into gold as they ready for US interest rate cuts this year, helping to drive prices to record highs this week.

Israel’s central bank governor has called on Benjamin Netanyahu to push forward with plans for a 2025 budget, including “permanent” changes to the state finances, as the country faces a growing budget deficit due to the impact of the war in Gaza.

Need to know: business

Shares in Target have rebounded from a year-long slump, after the retail chain posted growing sales and issued a brighter profit outlook.

BlackRock’s support for shareholder proposals on ESG hit a new low in the 2023-24 proxy season, having supported just 20 of the 493 environmental and social proposals put forward by shareholders in the 12 months to June.

CrowdStrike’s president today hit out at “shady” efforts by its cyber security rivals to scare its customers and steal market share in the month since its botched software update sparked a global IT outage.

Ford is cancelling plans to manufacture a three-row electric sport utility vehicle, due to a crowded market segment and mainstream consumers’ reluctance to pay higher prices for EVs. The decision could cost the company up to $1.9bn.

The World of Work

Isabel Berwick explores why holiday work is a failure of management — and can cost employees their good health.

The UK government is committed to introducing a “right to disconnect” as part of a broader package of reforms to workers’ rights, which, the FT’s editorial board argues, would be a mistake.

Some good news

Babirusa pig Beth, denizen of London Zoo, welcomed two piglets last month, in a conservation success for the vulnerable species that has been blighted by deforestation and disease in the wild. The Indonesian animals have been given the unfortunate moniker “world’s ugliest pigs” thanks to their hairless bodies. But the zoo’s devoted babirusa keepers could not disagree more.