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“Kamala Harris outlined proposals to cut taxes for most Americans, ban ‘price gouging’ by grocers and build more affordable housing on Friday as part of the ‘opportunity economy’ she plans to pursue if she wins the White House…
“In her first major economy-focused speech as the Democratic presidential nominee, Harris pledged to introduce a new child tax credit of as much as $6,000 for families with infants, cut taxes for families with kids and lower prescription drug costs. The vice president also called for the construction of 3 million new housing units over four years and a tax incentive for home builders who build homes for first-time buyers…
“As president, she would direct the Federal Trade Commission to impose ‘harsh penalties’ on companies that break new limits on price gouging, campaign officials said. ‘I know most businesses are creating jobs, contributing to our economy and playing by the rules,’ Harris said. ‘But some are not, and that's just not right. And we need to take action when that is the case.’” Reuters
The left is divided about the plans.
“Harris wants to provide as much as $25,000 to those buying a home for the first time… It sounds great in theory but potentially disastrous in practice. It’s likely that the unintended effect would be making housing less affordable by pushing up prices. That’s because the real problem with the housing market right now is not so much demand but rather supply…
“By some estimates, the US is short around three million homes to satisfy demand… Here is where the Harris campaign gets it right. It is calling for the construction of three million new housing units over the next four years. To reach that goal, Harris wants to offer tax incentives (she didn’t say how much) to builders to construct ‘starter’ homes. Along with that, she wants to ‘cut red tape and needless bureaucracy’ facing builders.”
Robert Burgess, Bloomberg
Regarding price gouging, some note that “combined wholesale and retail margins have increased by 25 percent from pre-pandemic times. Food and beverage retailers’ profit margins have risen by 29 percent from the pre-pandemic norm… Immediately before the pandemic, corporate profits were 9.7 percent of the total gross domestic product. From 2020 to 2023, they spiked to an average 11.2 percent…
“Procter & Gamble CFO Andre Schulten bragged during a 2023 earnings call that even though their input costs to make diapers had decreased, they were still keeping consumer prices high… A Kroger supermarket chain executive crowed that ‘a little bit of inflation is always good for our business.’”
Nick Hanauer, New Republic
“A survey on X [showed] voters’ opinions on various proposals to fight inflation. The two most popular ideas for disinflation—lower interest rates and lower taxes—are in fact inflationary. The third most popular idea, and the most popular idea that wouldn’t tend to push prices up, is to ‘prosecute companies for price-gouging and price-fixing.’… Harris is trying to win a presidential election, and to win elections, you run on popular ideas.”
Josh Barro, The Atlantic
Others argue, “It’s hard to exaggerate how bad this policy is… At best, this would lead to shortages, black markets and hoarding, among other distortions seen previous times countries tried to limit price growth by fiat… At worst, it might accidentally raise prices…
“That’s because, among other things, the legislation would ban companies from offering lower prices to a big customer such as Costco than to Joe’s Corner Store, which means quantity discounts are in trouble. Worse, it would require public companies to publish detailed internal data about costs, margins, contracts and their future pricing strategies…
“Posting cost and pricing plans publicly is a fantastic way for companies to collude to keep prices higher — all facilitated by the government.”
Catherine Rampell, Washington Post
The right is critical of the plans, arguing that they are economically unsound.
The right is critical of the plans, arguing that they are economically unsound.
“Are grocery stores and 7-Elevens and Walmart guilty of price gouging? No. It turns out… producer prices have risen by 19.5%, which is almost exactly the same pace as consumer prices. In other words, to stay afloat, businesses are simply passing on their higher costs to consumers. The San Francisco Fed found the exact same thing a few months ago: ‘Aggregate markup across all sectors of the economy… has stayed essentially flat during the post-pandemic recovery.’…
“Price controls have never worked anywhere, at any time. Instead, they almost invariably cause shortages, which lead to higher prices, which make consumers worse off. This was the conclusion of a landmark study by Cliff Winston of the Brookings Institution. He found that in industries as wide-ranging as oil and gas, banking, trucking and airlines, it was the cessation of price controls and the return to the free market that led to on average a 30% reduction in prices thanks to the power of free market competition.”
Stephen Moore, New York Post
“Food prices are higher than they were before the Biden Presidency, but that is because of inflation. Retail grocery prices have risen roughly in tandem with wholesale prices. Supermarkets also have narrow margins on sales—roughly 2%, compared to 8% on average for other businesses. Fixing prices is a recipe for shortages, as controls would discourage grocery suppliers. Voilà, empty store shelves. Price controls have led to shortages everywhere they’ve been tried, from Moscow to Caracas…
“Ms. Harris’s other ideas aren’t much better… Ms. Harris wants $25,000 in down-payment assistance for ‘first-time’ home buyers. But this would merely drive home prices higher… Ms. Harris has endorsed the Biden plan to condition tax breaks for developers on rent caps, which will discourage new housing investment. No state has spent more on housing than her native California, yet it has the nation’s highest home prices… We could go on.”
Editorial Board, Wall Street Journal
“Far be it from me to downplay Kamala Harris’s radicalism — which is real — but it seems pretty obvious to me that, despite her insistence to the contrary, Harris is not genuinely interested in ‘a federal ban on corporate price gouging on groceries.’ Instead, she’s interested in whitewashing the record of the Biden-Harris administration in which she serves as vice president…
“The plan is not designed to be passed — or even to be advanced intellectually. Rather, the plan is designed to (a) get the disgracefully compliant media to repeat the premise — that the disastrous Biden-era inflation has been the fault of greedy corporations, and not of reckless fiscal policy, and (b) to get Republicans to oppose it as the terrible notion that it is so that Harris can insist to indignant cheers that she wants to bring grocery prices down while her opponents want to protect Big Meat.”
Charles C.W. Cooke, National Review
