Harris unveils plan to fight inflation: Price controls

The Harris for President campaign took aim at lingering inflation this past week, with the campaign announcing that the presumptive Democratic nominee, if elected, would propose the “first-ever federal ban on price gouging on food and groceries.”

Harris says ongoing inflation in food prices is due to corporate price manipulation rather than conservative claims that the cause has been rampant government spending, especially following the pandemic, driving demand and debt to record highs.

Harris says it is corporate greed, and last week she said she would also seek to authorize the Federal Trade Commission and state attorneys general to aggressively pursue corporations that ignore the government’s “rules of the road.”

“When I am President, it will be a day one priority to bring down prices,” Harris said. “I’ll take on big corporations that engage in illegal price gouging and corporate landlords that unfairly raise rents on working families.”

Harris said her administration would particularly focus on the meat industry and what she termed its anti-competitive practices. Harsh penalties await those corporations that don’t play ball and end price-fixing, the Democratic nominee said.

“In her first 100 days, Vice President Harris will work to enact a plan to bring down Americans' grocery costs and keep inflation in check," the campaign said. “… There’s a big difference between good business that’s responsive to markets and excessive prices that are unrelated to the costs of doing business.” 

Harris knows that rising food prices remain a top concern for American families, the campaign continued. 

“Many big grocery chains that have seen production costs level off have nevertheless kept prices high and have seen their highest profits in two decades,” the statement said. “While some food companies have passed along these savings, others still have not.”

Conservatives react

Republican presidential candidate Donald Trump and other Republicans blasted the idea, saying run-away federal spending was the inflation culprit and that price controls would effectively socialize the food industry and lead to short-term shortages and, in the long-term, even higher prices.

Trump compared the plan to Venezuela.

“We call it the [Venezuelan president Nicolas] ‘Maduro plan,’ like something straight out of Venezuela or the Soviet Union,” Trump said. “[Harris’s plan] is an admission that her economic policies have totally failed and caused really a catastrophe for our country, and beyond that, a catastrophe in the world.”

Though the latest inflation numbers show a cooling of price growth, with the CPI rising 2.9 percent on a yearly basis, its lowest yearly growth rate since March of 2021. However, that still leaves prices up more than 21 percent from that year. 

“You don’t have to imagine what a Kamala Harris presidency would be because you are living through that nightmare right now,” Trump said.

Republican Florida Sen. Rick Scott, who is seeking to replace the retiring Kentucky Sen. Mitch McConnell as minority leader (and majority leader, if the GOP takes the House), said the idea was a ludicrous one coming from a person with no business experience or knowledge. 

“Vice President Harris, a person who has never built a business, doesn’t understand profit and loss, has never met payrolls, and who has never competed in a consumer market, is going to propose federal price controls,” Scott said. “That should terrify every American. She claims that Congress needs to ban ‘price gouging,’ which is already widely illegal and not the cause of high prices.”

The skyrocketing prices created by the Biden-Harris administration aren’t price-gouging, it’s inflation, Scott said on X. 

“Her solution to the Harris price hikes she caused is big government on steroids—where Washington bureaucrats stick their hands into American businesses and say what they can and can’t sell a product for,” he said. “It never works because it causes companies to make much less of something—destroying supply and causing a mass shortage of goods. One day in a middle school economics class would teach her those basic principles. Unfortunately, it’s not surprising to see such a dangerous and clearly flawed proposal come from a career politician who has never run a business.”

Getting inflation under control will happen when the federal government stops recklessly spending money it doesn’t have and end the destructive war the Biden-Harris administration has waged on U.S. energy, Scott said.

Scott pointed to a recent report by Christopher J. Neely, an economist and senior economic policy advisor at the St. Louis Fed, which asserted that price controls have had a very long but not very successful history. 

“Although economists accept that there are certain limited circumstances in which price controls can improve outcomes, economic theory and analysis of history show that broad price controls would be costly and of limited effectiveness,” Neely wrote. “Appropriate fiscal and monetary policies can reduce inflation without the costs imposed by price controls.”

As inflation rises, Neely’s report asserted, some have called on the government to impose price controls, but such controls have significant costs that increase with their duration and breadth. 

“Prices allocate scarce resources,” the report’s key take-away asserted. “Price controls distort those signals, leading to the inefficient allocation of goods and services. Appropriate fiscal and monetary policies can reduce inflation without the costs imposed by price controls.”

Even Mitch McConnell has blasted the Biden-Harris economic record, saying Harris owns the administration’s failures.

“Her fingerprints are all over the past four years,” McConnell said. “She’s cast tie-breaking votes for radical judicial nominees, for soft-on-crime prosecutors, and for the reckless spending her party’s top economists actually condemned. She’s flouted her responsibilities as the administration’s ‘border czar,’ and presided over the worst border crisis in American history. The American people cannot afford four more years of open borders, violent crime, or historic inflation.” 

Meanwhile, the vice president of the Tax Foundation, Jared Walczak, pointed out on X that grocer profit margins are razor-thin and price controls could put many groceries out of business, further exacerbating the problem.

“When Kamala Harris cites price gouging by grocers, these are the industry profit margins she’s railing against,” Walczak wrote, attaching a chart that showed grocers with only a 1.2 percent profit margin last year compared to 8.5 percent over all industries. 

Also on X, Utah Republican Sen. Mike Lee said government-imposed price controls create scarcity and a vicious cycle of poverty and dependence on government. 

“So naturally, Kamala Harris likes them,” Lee said. “Prices are high because government spends too much money, printing more money to cover shortfalls. But printing more money reduces the purchasing power of every dollar.”

Lee said excessive federal regulations—federal laws written by unelected bureaucrats—also contribute to higher prices. 

“These regulations make everything you buy a little more expensive, to the tune of trillions of dollars every year,” he said. “The bottom line is that the federal government is entirely responsible for higher prices. That means that the federal government could, by spending and regulating less, control inflation.”

The fact that it chooses not to—because Congress and the White House prefer to keep spending too much and granting federal bureaucrats the power to make law—keeps prices high, Lee said.

Samuel Gregg of the American Institute for Economic Research pointed out that price controls have been tried before—by Republicans—and he said they didn’t work then, either.

“Price controls truly are Voodoo-economics,” Gregg wrote on X. “They didn’t work when tried by a Republican (Nixon) and they won’t work under a Democrat, however strong the ‘vibes.’ They only cause shortages and misery. Will no fiscally responsible Democrat call out this irresponsibility?”

While full details were not released by press time, Harris apparently plans to achieve what Democratic Sen. Elizabeth Warren and other Democrats tried to do but failed with legislation introduced in 2022. That bill would have required that companies only raise prices equal to an increase in the cost of production or face stiff penalties.

Just this past May, Warren and U.S. Rep. James McGovern (D-Mass.) were the lead signatories on a letter to President Joe Biden urging him to do exactly what Harris is poised to propose, through executive order.

“The federal government should use every possible tool to lower food prices,” McGovern and Warren wrote. “We believe you can exercise your executive authority to take additional action to address rising food prices without congressional action.”

Americans are facing sky-high food prices, caused by excessive price gouging by food and grocery giants, they wrote. 

According to Warren and McGovern, four grocery retailers account for over a third of national grocery sales and four food companies control more than 60 percent of sales in most grocery categories. As a result, they stated, consumers are spending more of their income on food than they have in the past 30 years.

“These companies have raked in record profits in recent years, with CEOs bragging on earnings calls about how their price hikes exceed inflation,” they wrote. “Between 2020 and 2021, researchers found that corporate profits accounted for more than 50 percent of food price increases, whereas they accounted for only 11 percent of increases in the four decades prior.” 

While some corporations may point to rising inflation, grocery price increases have outpaced inflation, with families paying 25 percent more for groceries as compared to before the pandemic, Warren and McGovern wrote. 

“These higher prices hit low-income families the hardest: in 2022, the bottom fifth of the income spectrum spent 25 percent of their income on groceries, compared to less than 3.5 percent for the highest fifth,” they wrote.