Harris chalked up a win. But her policies escape scrutiny

America had three winners and one loser last week. Federal Reserve chairman Jerome Powell and his policymakers won when inflation fell, clearing the way for an interest rate cut. America’s banks won a long battle to force a regulator to dial back on new controls that he wanted to impose. And Kamala Harris won when she baited Donald Trump into reverting to the undisciplined behaviour he had been warned not to put on display.
The loser was Trump, with some Republicans moaning that he, in effect, lost his run for the White House at 9:15pm, Washington time, on Tuesday, September 10, when Harris challenged his report on the size of his rallies during their televised debate on ABC News.
He was not a loser because Taylor Swift announced her support for Harris — a celebrity, even one with 280 million Instagram followers, is unlikely to swing the election. And it was not because ABC’s interlocutors, says University of Chicago professor emeritus Charles Lipson, “did something they never should have done: they intervened repeatedly to correct one of the candidates … All the interventions were against Trump … They said nothing critical of Harris … Even if Trump lied and Harris didn’t, it is not the job of the moderators to intervene and rebut one candidate.” The reaction of top ABC News executives, long-time fundraisers for Harris, has not been recorded. Trump’s has: he wants ABC’s broadcasting licence revoked.
Most important, Trump damaged himself. Fifteen minutes into the debate, Harris dangled the baited hook, claiming his rallies were so boring that audiences left early, and later said that in 2020 he was “fired by 81 million people”, rattled off a list of his legal troubles, and reminded voters of his multiple bankruptcies.
An angry Trump, ignoring advice to concentrate on his achievements, took the bait. He insisted once again that he had won the 2020 election, and said he would deport millions of illegal immigrants without indicating how he would manage that massive programme. He was undisciplined, disagreeable, backward looking.
That tantrum helped Harris, aided by loving ABC camera shots, to look calm, relaxed, amused at the former president’s behaviour and, well, a plausible tenant for 1600 Pennsylvania Avenue. Which is not good news for America’s version of market capitalism, as many of her policy proposals simply make no economic sense.
She plans to offer a $50,000 (£38,000) tax break for business start-ups, although few such new small companies are so instantly profitable as to bear such a tax liability. Child tax credits are to be increased, with significant benefit for poorer children, but much will be wasted on payments to families with high enough incomes to meet their kids’ needs. There is to be a $25,000 handout to new homebuyers, which economists say will enable them to bid up house prices. Rents are to be controlled, which will reduce investment in new rental units. “Gouging” by food processors and retailers is to be prosecuted, and prices of drugs are to be capped, accelerating insurers’ incentives to exempt those drugs from coverage. Corporate taxes are to be raised, reducing companies’ international competitiveness.
Undecided voters most now decide between two candidates to lead America and the Free World. One has a distressingly ignorant economic programme, but can whip up a nice dinner (Harris is known for being a bit of a foodie), the other has a reasonably good economic and foreign policy record, but is not the sort of person with whom they would like to share an intimate dinner.
In a happier position is Federal Reserve chief Powell. The headline US inflation rate fell for the fifth consecutive month to a three-year low of 2.5 per cent in August, from 2.9 per cent in July. The Fed is expected to decrease its benchmark interest rate later this week, but, with rents still “sticky”, by a quarter-point rather than the half-point for which investors were hoping. Powell’s victory was made the sweeter by the continuing resilience of the economy, and a report that last year inflation-adjusted household incomes returned to pre-pandemic levels.
Inflation falling, rates to follow, no recession. Not bad.
Other winners last week were America’s banks. The Fed’s vice-chair for supervision, Michael Barr, responding to the failure of three large banks, had proposed to require a 19 per cent increase in the industry’s capital cushion. Vigorous lobbying in Washington forced Barr to cut that to 9 per cent, reducing the increase demanded of the six largest banks from $180 billion to $80 billion. Jeremy Kress, professor emeritus at the University of Michigan, told The Wall Street Journal: “On nearly every point of contention, this is a capitulation to the banks.” Bank-bashing senator Elizabeth Warren is decidedly unhappy.
Trump was offered a second debate by the Harris team, but he first declined, then said he might accept “if I got in the right mood”. His initial reaction was because “we had a great night”. If he believes that, his denial of reality should frighten undecided voters. Harris is avoiding the one-on-one media interviews that might force her to explain her policy “evolutions”; Trump is avoiding the one-on-one debate format that would force him to face the Democratic picador who has pierced his thin skin.
As a result, American voters are forced to choose between candidates of whom they know too little.
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Irwin Stelzer is a business adviser