With polls suggesting that Kamala Harris has at least a 50% chance of winning next month's US presidential election, questions about her economic-policy agenda have come to the fore. Of course, much will also depend on down-ballot outcomes. If the Democrats were to win the White House and both houses of Congress, they could implement fiscal policies with a simple majority (through the so-called budget-reconciliation process). Otherwise, a Harris administration obviously would be more constrained.

When Harris (briefly) ran for president in 2019, her economic proposals were well to the left of the Democratic Party. Among other things, she supported universal state-funded health care, decriminalization of illegal border crossings, a $10 trillion "Green New Deal" to address climate change, and a ban on fracking.

Now she is running on a more centrist platform that includes support for the Affordable Care Act (Obamacare), albeit with some new twists such as a price cap on insulin and an expansion of government authority to negotiate drug prices for Medicare and Medicaid. She also favors the recent bipartisan deal to crack down on illegal immigration, which her opponent, Donald Trump, convinced Republicans to scuttle for electoral reasons, accepts fracking, and backs the more limited ($1 trillion) green spending in the Inflation Reduction Act. (Indeed, she has made little mention of climate change in her speeches.)

Although many of Harris's other proposals remain vague, she would seem to represent a continuation of President Joe Biden's economic policies. She would support efforts to reshore manufacturing and create an "opportunity economy" with more inclusive growth. She would not shy away from state intervention, especially industrial policies to support the economic sectors and technologies of the future. And she would attempt to rein in the power of large oligopolistic firms through regulation.

In terms of fiscal policy, Harris proposes capping the cost of childcare at 7% of household income (implying a subsidy), reviving the child tax credit, and giving a $25,000 tax credit to first-time homebuyers. Since these measures might increase demand and prices, she also has plans to increase the supply of affordable housing. She would introduce some new tax credits for small businesses, and extend the Trump tax cuts for households earning less than $400,000 per year.

To pay for these policies, she would raise the corporate tax rate from 21% to 28%, raise taxes on the very wealthy (those currently with a top marginal rate of 39%), and explore the possibility of a tax on unrealized capital gains. Finally, she has no plans to reform entitlement programs such as Social Security and Medicare. All told, the Committee for a Responsible Federal Budget estimates that Harris's proposals would cost $3.5 trillion over a decade, whereas Trump's would cost $7.5 trillion unless other taxes (such as tariffs) are introduced.

As for Harris's trade policies, they would be quite similar to Biden's, even if she has spoken very little about China on the campaign trail. There would be continued "de-risking" - but not decoupling - in strategic sectors such as critical metals, rare earths, green tech, and high tech, as well as sanctions and export restrictions on semiconductors and other inputs relating to artificial intelligence.

The Biden administration has described its approach as creating a small yard with a high fence, and Harris would probably expand the yard. Thus, tariffs - like the 100% levy on Chinese-made electric vehicles - would be maintained, restrictions on inward and outward foreign direct investment with China would be tightened, and many of the proposals from the House Select Committee on China would be taken up.

Unlike Trump, though, Harris would not slap tariffs on friends and allies or pursue across-the-board tariffs on all Chinese goods. She would pursue a managed strategic competition with China, rather than full containment or decoupling. She would nudge NATO allies to spend at least 2% of their GDP on defense (in fact, 23 out of 32 already are doing so), and she would support alliances, multilateral security pacts like the Quad and AUKUS, and bilateral relations with important partners like India and the Philippines. She would keep America in the Paris climate agreement and try to strengthen its efforts to reduce emissions and accelerate the green transition.

However, like Biden, Harris would not try to join the successor to the Trans-Pacific Partnership, even though many strategists believe that the "pivot to Asia" needs an economic leg to stand on. While maintaining America's flexible exchange-rate policy, she may lean more on the threat of branding some countries as currency manipulators. By the same token, she would continue to allow the US dollar to be used a weapon of national security (through primary and secondary sanctions). But, presumably, she would also be prudent enough to pursue policies designed to retain the greenback's status as the major global reserve currency.

Thus, Harris's fiscal, trade, climate, immigration, currency, and China policies would be quite different from her opponent's. Trump's agenda is much more likely to cause inflation, reduce economic growth (through tariffs, a currency depreciation, and immigration restrictions), and blow up the budget. But markets have not priced in the damage that Trump would do to the economy and markets. Perhaps a divided government would constrain him. Perhaps his more moderate policy advisers or market discipline would dilute his most radical policy positions. Nonetheless, the choice at the top of the ballot is very clear.

From Project Syndicate