I’m an Economist: 2 Reasons I Believe Harris’ Opportunity Economy Would Hurt Retirees

Ron Sachs / CNP for NY Post / Shutterstock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Kamala Harris, the current U.S. vice president and Democratic candidate to be the next president, recently shared her plan to lift up the working people of America.

“I believe in the ambition, the aspirations and the dreams of the American people. And that is why I imagine and have actually a plan to build what I call an opportunity economy,” she said in the Sept. 10 debate with Republican nominee Donald Trump.

While the details of this plan are still a bit vague, it does seem to mostly be targeting working Americans. That said, certain aspects of it could end up hurting retirees, especially those on fixed or limited incomes.

GOBankingRates spoke with Milton Ezrati, chief economist at Vested and the author of “Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live,” to find out how Harris’ “opportunity economy” could hurt retirees.

These are the key aspects of this plan and its potential impact on retirees.

Opportunity Economy: An Overview

Harris has been very outspoken about how she grew up in a middle-class household with a working mother. She has also long been an advocate for helping people — regardless of class or status — gain access to the same opportunities to succeed as everyone else. These same values and goals serve as cornerstones of her campaign for presidency.

As for Harris’ “opportunity economy,” here’s an overview of what it would mean for the average American and retirees:

• Expansion of the child tax credit: Harris intends to restore the child tax credit, which gives working-class households a credit of up to $3,600 per child. She also plans to increase this credit to $6,000 for low- and middle-income households with children under the age of 1. This probably would not have much of an effect on retirees.
• Expanded earned income tax credit: For those with and without kids, Harris plans to expand the earned income tax credit to lower annual taxes by up to $1,500. This could alleviate some of the financial burden these households face, but it’s unlikely to impact retirees.
• Reduced healthcare costs: An aspect of the plan that could help retirees — as well as all working-class Americans — is Harris’ plan to increase access to affordable healthcare through the ACA Marketplace. If successful, this could save households $6,000 a year (or $700 a month) on insurance premiums.
• Lower prescription medication costs: Harris also has discussed the idea of capping the cost of prescription medications (like insulin) for all Americans, regardless of age or income status. The goal here is to “crack down on anti-competitive practices that let big corporations jack up prices and undermine the competition that allows all businesses to thrive while keeping prices low for consumers,” according to her official campaign website.
• Greater support for small businesses: Harris has long called small businesses the backbone of the American economy. As such, she has proposed increasing the number of applications for small businesses to 25 million over the course of her first term as president. For context, under the Biden-Harris Administration, the number of new business applications was closer to 19 million. This likely would impact only retirees who wanted to launch into entrepreneurship.
• Tax credit for small businesses: As part of her “opportunity economy,” Harris also said that she plans to “increase the share of federal contract dollars going to small businesses.” Again, this is likely to impact only retirees who want to start businesses of their own.
• More affordable housing: Mostly geared toward first-time buyers (loosely defined as those who haven’t owned a primary residence in the past three years), Harris’ plan also includes up to $25,000 in down-payment assistance. Retirees who qualify as “first-time” buyers may benefit in this way.

While Harris’ “opportunity economy” doesn’t appear to directly help retirees in that many ways, there are a few areas where it could actually hurt them financially.

Higher Inflation Could Eat Away at the Value of the Dollar

Although most of these proposed changes are geared toward working individuals, they still likely would impact retirees — even if they don’t benefit from them.

“All these programs would add up to quite a government expense,” Ezrati said. “To the extent that they add to budget deficits and feed inflation, retirees would suffer — and disproportionately so, because many are on fixed incomes.

“I know economists have labeled [Donald] Trump as more inflationary. I see no reason to argue that here. Both candidates are buying votes with promises; and, if they keep those promises, it will be inflationary.”

The current average rate of annual inflation is 2.5% for the 12 months ending in August 2024. The average rate of inflation over the past decade has been 2.87% with a cumulative inflation rate of 32.51%. This means that $100 in 2014 would be worth $133 today. Put another way, $133 today would get you about 75% of what it would have 10 years ago.

For retirees, many of whom rely on Social Security as their main source of income, increased inflation could result in a major financial burden.

Retirees May Have To Spend More

As Ezrati pointed out, most of the proposed changes wouldn’t help retirees — or if they did, it wouldn’t be by much.

“Since most of these programs aim at different demographics than retirees and retirees do pay taxes or ultimately bear the burden of debt,” he said, “these aspects of the ‘opportunity economy’ will ask retirees to help support others — new homebuyers, new parents, startups.”

Like almost everyone else, retirees very likely would see an increased cost of living. Depending on just how taxes change based on Harris’ proposal, this could lead to greater financial hardship for those struggling to get by.

Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

Share This Article: