Building up middle class will be a goal. How she may do it

“Building up the middle class will be a defining goal of my presidency,” Vice President Kamala Harris said at a political event in Atlanta on Tuesday evening.

“When our middle class is strong, America is strong,” the de facto Democratic presidential nominee said to the crowd of more than 10,000 supporters.

“And to keep our middle class strong, families need relief from the high cost of living so that they have a chance, not to just to get by, but to get ahead,” she added.

Here’s a look at how Harris may make that happen, based on the policies she advocated for during her first presidential bid in 2020 and as a senator.

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One of Harris’ signature proposals as senator — the LIFT the Middle Class Act, or Livable Incomes for Families Today — would have provided an annual tax credit of up to $3,000 per person (or $6,000 per couple) for lower- and middle-income workers, on top of the benefits they already receive.

The size of the credit would have amounted to “significant tax relief,” according to the Committee for a Responsible Federal Budget.

The Harris campaign did not immediately respond to CNBC’s request for comment. 

Since the LIFT Act was first proposed in 2018, the cost of living has only skyrocketed, hitting working-class Americans especially hard.

For these households, “real incomes have declined or remained flat due to inflation,” Tomas Philipson, former chair of the White House Council of Economic Advisers, told CNBC. That makes many workers feel less confident about their financial standing — and less satisfied with President Joe Biden’s handling of the economy.

At the same time, the rise of artificial intelligence has stoked fears about long-term job security.

In that context, “there’s a good rationale” for refloating a tax credit for those making under a certain income threshold, according to Laura Veldkamp, a professor of finance and economics at Columbia University Business School.

“A lot of people are asking the question, ‘Will AI take my job?’ There are people whose hard-earned skills could be obsolete,” she said. “One way to deal with that is to have more social insurance.”

But a tax credit like LIFT would also be extremely costly, according to Tax Policy Center estimates from 2018 and 2019.

To help cover the tab for the additional financial support, Harris at the time proposed repealing provisions of the Tax Cuts and Jobs Act for taxpayers earning more than $100,000.

However, funding such a tax credit now could be tough amid growing concerns over the federal budget deficit. Harris will also need to address trillions of expiring…