Minnesota's Economic Policy: A Guide for Progressives

• Minnesota serves as a leading location for implementing various liberal policies and social security measures, several of which Vice President Kamala Harris has advocated for in her economic policy plan in opposition to Donald Trump.
• Minnesota has achieved its fast-paced progressive policy sweep through a combination of a Democratic governing trifecta, a budget surplus, and internal party unity.
• Minnesota has made significant investments in affordable housing development, enacted universal paid family and medical leave, increased corporate interest rates, strengthened union bargaining protections, and increased child care subsidies since 2022.

The economic vision of the Harris-Walz presidential ticket can be understood by examining Minnesota.

"Minnesota AFL-CIO President Bernie Burnham stated in a CNBC interview that he has heard about certain topics discussed on the ticket, which he believes are indicative of what is occurring locally."

Minnesota has enacted numerous progressive policies under Democratic Gov. Tim Walz, including expanding union protections, approving over $1 billion in housing resources, enacting universal paid family and medical leave, funding free school lunches, and hiking corporate taxes.

Minnesota serves as a testing ground for progressive policies that have faced resistance at the national level.

The Minnesota playbook is gaining national attention with Kamala Harris as Vice President and Walz as her running mate.

Amy Koch, a Republican strategist and former Minnesota state senator, confirmed to CNBC that it's a roadmap.

Several of the economic priorities of the Harris campaign align with the policies that Walz advocated for in Minnesota.

The vice president has suggested enacting stronger worker protections, constructing three million new homes, offering a $25,000 subsidy for first-time homebuyers, increasing the Child Tax Credit, Earned Income Tax Credit, and other tax programs, and supporting a corporate tax increase.

President Joe Biden's speeches often focus on corporate greed and big business monopolies, but Harris has softened some of the language used to describe these issues.

Some corporate leaders believe that if Harris becomes president, she may provide them with more influence than her predecessor.

If Walz's approach in Minnesota is being followed by Harris, that hope may be just a fantasy.

'Caution to the wind'

In the first months of his second term, Walz's progressive policy agenda was swiftly passed by Minnesota's legislature, with the majority of it becoming law.

This was possible due to a rare confluence of factors that favored Democrats.

In November 2022, Walz was reelected as Minnesota's governor, and the DFL won a governing trifecta with razor-thin majorities in the Senate and House.

DFL former Minnesota state senator Jeff Hayden was taken aback when he said, "It was a bit of a surprise," to CNBC. "We all kind of gasped," he added.

One month later, the new DFL majority got more good news.

The largest single-year budget surplus in Minnesota history, worth $17.6 billion, was reported by the state's management and budget office. This surplus resulted from high tax-collection rates and lower-than-expected spending levels.

The DFL had both the necessary voting majorities and the required funds to pass its agenda.

Minnesota Democrats also understood how fragile their trifecta was.

Minnesota, often referred to as the Land of 10,000 Lakes, is known for its reliably blue hue in presidential elections. However, at the state level, it is significantly less partisan. In the 2012 election cycle, Minnesota Democrats achieved a trifecta by winning both chambers of the legislature and the governor's office. Unfortunately, they lost this trifecta in the following election cycle.

The 2014 loss was still fresh in the minds of Minnesota Democrats, and they knew they had limited time to pass their priorities into law.

Hayden stated that people were careless and disregarded caution.

During his second term, Walz enacted several significant laws, including a $2.3 billion education budget, legislation protecting abortion access and transgender rights, legalizing marijuana, increasing housing subsidies and child care tax credits, enhancing worker bargaining rights, providing free school lunches, and banning corporate "junk fees."

Industry pushback

The law for universal paid family and medical leave in Minnesota was mainly pushed for by unions and progressive advocacy groups.

"Elianne Farhat, the executive director of TakeAction Minnesota, stated that they had a significant seat at the table. According to her, it was an excellent model of collaborative governance between the community and elected officials."

Minnesota's significant business community, including Fortune 500 companies like 3M and General Mills, put pressure on Walz to consider their interests.

The push for paid leave was fiercely opposed by corporate trade groups, who argued against it on the grounds that it would be funded through a significant increase in payroll taxes.

"Minnesota Chamber of Commerce President Doug Loon stated that the policy making is not very smart and that it is essentially creating a new mandate on businesses with a new entitlement that will be costly for the state of Minnesota."

Loon stated that although his concerns were heard in meetings with Walz and DFL legislators, there was little final action taken on the things he was requesting: "We saw very little final action on the things that we were asking for," he said to CNBC.

When union leaders opposed a bill, lawmakers made the requested change.

The Harris campaign evaded the question about whether the Harris-Walz ticket would replicate Minnesota's approach, stating that there is no need to speculate about what she supports, according to campaign spokesman Charles Lutvak, who spoke to CNBC.

He mentioned CNBC's yearly list of top U.S. states for business, where Minnesota ranks sixth.

A personal approach

Walz, a former high school teacher and union member with no stock holdings, has little financial or career ties to the private sector. He has a personal interest in people's welfare, which he has demonstrated on the campaign trail, and this is a significant aspect of his political brand.

During his first term as governor in 2018, Walz visited Minnesota's homeless camps and spoke with unhoused residents about their issues.

"Anne Mavity, the executive director of the nonprofit Minnesota Housing Partnership, informed CNBC that they spent that evening without any media presence, learning about the challenges faced by some individuals. "It was a higher level of attention, commitment, and emphasis than we had previously witnessed," she stated."

Since then, Walz has set aside $1 billion for affordable housing construction and additional millions to safeguard the state's existing public housing. Moreover, he signed a tenants' rights bill that made it harder for landlords to terminate leases.