From Bidenomics to Kamalafare

July 23, 2024

The Presidential Election & the Economy

An economy reeling from inflation, slow growth, and increasing unemployment now faces further instability as the Democrats select a new presidential nominee. Kamala Harris, the presumed candidate, has a record of policies that are even further to the left of Biden. The country could move from inflation-inducing Bidenomics to even more government spending under Kamalafare. The effects of which could be hazardous to retirement savings.

Taxes

The former California senator is known for pushing higher taxes. She said, “Frankly, this economy is not working for working people. For too long the rules have been written in the favor of the people who have the most and not in favor of the people who work the most.”¹

Harris argued against Trump’s 2017 tax cuts as a giveaway to the rich. She is to the left of Biden on the soon-to-expire tax cuts. Biden wanted to leave them in place for people making under $400,000. Kamala proposed replacing them with a $500 tax credit for those earning less than $100,000. She also proposed increasing estate taxes and corporate taxes more than Biden. She wanted a 35% corporate tax rate compared to Biden’s 28%.²

Bidenomics and Beyond

Harris strongly supported and promoted Bidenomics. She has a history of advocating for greater government spending. She once declared “We are dropping trillions of dollars on the streets of America”. That kind of spending fueled the highest inflation in decades. ³

Prior to being Vice President, Senator Harris was an original cosponsor of the Green New Deal. That bill calls for nationalizing not just the healthcare industry but also the entire energy industry, or nearly 30% of the US economy. The plan was estimated to cost between $52 billion and $93 trillion. Her vision of universal health care would cost $3 trillion a year. All of which would be paid for with higher business taxes according to her. ^4,5

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As Vice President, she strongly supported the multi-trillion-dollar American Rescue Plan and the Inflation Reduction Act of 2022. These laws played a significant role in creating today’s unrelenting inflation. ⁷

Not Business Friendly

Kamala’s record shows she is not a friend to business. Acting as California Attorney General, she threatened Uber with legal action. She also pulled California out of a national settlement with big banks after the 2008 financial crisis. Instead, she prosecuted banks such as JPMorgan Chase, Bank of America and Citigroup as well as major credit ratings firms like Standard & Poor’s.

Harris also supports a government solution to the housing issue. She once wanted the government to subsidize housing with her Rental Relief Act. Harris now favors the idea compelling corporate landlords to cap rent increases. Jason Furman, an Obama economist, said that would “make our housing supply problems worse, not better.”⁸

There are other actions that are cause for concern among economists. She supported a federal minimum wage that was higher than the median wage in some states. Harris also wanted the elimination of right-to-work laws. And she opposed the Trans-Pacific Partnership and the North American Free Trade Agreement. Kamala again went to the left of Biden when she voted against the US-Mexico-Canada Agreement he supported.

Kamala and Gold

While analysts think she might not have a good effect on the country, a President Kamala could give gold a boost for several reasons.

The withdrawal of President Biden from the election has deepened political uncertainty. This uncertainty tends to boost safe-haven assets like gold. This “flight to safety” is spurred by Harris’ ambiguous foreign policy stances. Heightened tensions with China, Russia, or in the Middle East can further increase gold’s safe-haven appeal.

Economists say any new progressive policies may cause inflation to rise through government spending and regulatory changes. As inflation rises, so typically does the price of gold as people try to hedge against it.

There are concerns that a potential Harris presidency could weaken the US Dollar in the long term due to expectations of potential tax increases and lower borrowing costs. A weaker dollar generally supports higher gold prices, as it makes gold more attractive to investors holding other currencies.

Conclusion

The impact of today’s political uncertainty may pale in comparison to that of the potential presidency of Kamala Harris. She is anticipated to usher in a wave of progressive policies that could significantly alter the economic landscape. Increased government spending and higher taxes are likely to worsen inflation and stifle economic growth. Considering these projections, many Americans are taking action to safeguard their financial futures. One effective strategy is with physical gold held in a Gold IRA. This approach not only provides a hedge against inflation but also ensures the preservation of the value of savings amidst the anticipated economic challenges. Contact us today at 800-462-0071 to learn more.