Harris Allies Push Back on Critics of Price Gouging Proposal

Harris Allies Push Back on Critics of Price Gouging Proposal

Harris spoke briefly on the first night of the DNC.
USA Today Network
By Yuval Rosenberg and Michael Rainey
Tuesday, August 20, 2024

Good evening! President Joe Biden is vacationing in the Santa Ynez Valley in Santa Barbara County, California, today after delivering his emotional Democratic National Convention speech late last night and passing the torch to Vice President Kamala Harris. “I gave my best to you,” Biden told the crowd and the country.

Tonight’s DNC program is slated to feature speeches by Sen. Bernie Sanders, Senate Majority Leader Chuck Schumer, second gentleman Doug Emhoff and former President Barack Obama and first lady Michelle Obama. Several anti-Trump Republicans will also take the stage. But Harris and her running mate, Minnesota Gov. Tim Walz, will start the evening with a rally at the Fiserv Forum in Milwaukee, the site of last month’s Republican National Convention.

Donald Trump, the Republican presidential nominee, made a campaign stop Tuesday in Michigan, where he based an appeal to suburban women on a promise to be tough on crime, resurrecting his vision of American carnage. “When I return to the White House we will stop the plunder, rape, slaughter and destruction of our American suburbs, our cities and towns,” Trump said.

Here's what else is happening.

Harris Allies Defend Her Plan to Stop Price Gouging

The economic platform Vice President Kamala Harris outlined last week includes a proposal to limit price increases for consumer basics including food. In the wake of the inflationary surge that drove prices higher during the pandemic, Harris pledged to “advance the first-ever federal ban on price gouging on food and groceries,” as well as providing federal standards defining “excess profits” and beefing up antitrust efforts in an industry that has become increasingly concentrated.

The response to Harris’s proposal, which was extremely short on details, was swift and severe, with both conservative and liberal critics clamoring to condemn it. The New York Post denounced what it called “KAMUNISM,” while Donald Trump predicted on social media that “SOVIET Style Price Controls” would ruin the economy. Meanwhile, Washington Post Columnist Catherine Rampell accused Harris of spouting “economic gibberish,” and warned the Democratic nominee that she was only helping her adversaries: “If your opponent claims you’re a ‘communist,’ maybe don’t start with an economic agenda that can (accurately) be labeled as federal price controls,” Rampell wrote.

The Harris campaign, along with a handful of less excitable economists, say the critics are getting it all wrong. As The Washington Post’s Jeff Stein reports, Harris allies, including Illinois Gov. JB Pritzker, have pointed out that numerous states already have laws in place to limit price increases on essentials in the event of a disaster.

Additionally, there are laws that empower the president to limit price gouging on certain goods in short supply during an emergency — a power that former President Donald Trump himself used to crack down on price gouging on medical supplies during the pandemic, which began while he was in the White House.

A standard “center-left agenda”? Economist and New York Times Columnist Paul Krugman defended Harris’s economic platform, saying it is anything but radical, even if detractors insist it is. “The usual suspects are claiming that Harris revealed herself to be an extreme leftist,” he wrote. “Even some middle-of-the-road economic commentators have been hyperventilating, saying that she’s essentially calling for price controls, which is odd, because she didn’t say anything like that.”

Krugman argues that Harris is calling for legislation that bans price gouging on groceries in some circumstances, not a Soviet-style price-fixing board. Although Harris has provided only a bare outline, making the whole debate more difficult than it would be otherwise, Krugman says a bill introduced this year by Democratic Sen. Elizabeth Warren provides a possible template. The “surprisingly mild” legislation would ban price gouging on food during emergencies and is similar to laws on the books in several states. “For example, Texas (yes, Texas) prohibits many businesses from ‘demanding an exorbitant or excessive price’ on things including food and fuel during disasters,” Krugman writes.

Axios’s Emily Peck notes that 38 states have passed similar laws, including California and New York. The laws take effect only during emergencies, at which time price hikes are limited to something like 10%, and typically apply only to large retailers such as grocery store chains. “If banning price gouging is communist, then the U.S. went Marxist long ago,” Peck says.

Peck also notes that economists and their acolytes in the media usually hate these kinds of laws, since they interfere with market price signals. “Still, most Americans intuitively understand the rationale behind them, and Harris is trying to appeal to voters — not academics or newspaper columnists,” Peck says.

Would a price-gouging ban apply now? The debate raises the question of whether Harris’s plan would make any difference in grocery prices today. After all, the pandemic is over, so a law governing price increases during an emergency would likely have no effect. It could be that, as some critics have suggested, the Harris proposal is more about signaling to voters that she is on their side than actually reducing prices here and now.

Still, high food prices remain a problem for many Americans, with prices more than 20% higher than they were before the pandemic. Economist Ernie Tedeschi, formerly with President Joe Biden’s Council of Economic Advisers, told The Wall Street Journal that the profit margins at food retailers rose during the pandemic, and remain elevated (see the chart below).

Are higher margins at food retailers a sign of ongoing price gouging? The higher margins could reflect new consumer demand for more profitable goods, Tedeschi told the Journal. At the same time, “economists need to be curious about this and figure out what is going on.”

The bottom line: Until we see the details of Harris’s proposal, it’s impossible to say whether her plan would help reduce grocery prices moving forward or only apply during some future emergency. But there is little reason to think that Harris is mulling a Soviet-style revolution at the supermarket, even if that’s what her critics seem pleased to imagine.

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Schumer Eyes an End to SALT Deduction Limit After 2025

Senate Majority Leader Chuck Schumer told reporters Tuesday that he backs the pledge by President Joe Biden and Vice President Kamala Harris not to raise taxes on people earning less than $400,000 a year — and he insisted that he won’t allow the $10,000 cap on state and local tax deductibility to be renewed after its scheduled expiration at the end of next year.

That $10,000 limit has been a point of contention for residents and representatives of high-tax states including New York, New Jersey and California since it was first introduced to help offset the cost of the of the 2017 Republican tax cuts.

Schumer was reportedly asked Tuesday about Democrats’ chances of winning key races on Long Island, the New York City suburbs that helped Republicans take control of the House in 2022.

“One of the issues that people care about on Long Island is state and local deductibility,” Schumer said, according to The Hill. “We Democrats, as long as I’m leader, when state and local deductibility expires, it will be gone.”

Schumer reportedly also said he’s looking to end some of the other 2017 tax cuts and partially reverse the GOP’s lowering of the corporate tax rate from 35% to 21%. “To deal with our fiscal problems, we want to undo some of the Trump tax cuts, which went to the very wealthy,” Schumer said.

The bottom line: The 2024 elections will help determine how the 2025 tax policy fight plays out.

Number of the Day: 3,596,017

Just under 3.6 million births were registered in the United States last year, according to data published Tuesday by the Centers for Disease Control and Prevention. That represents a 2% decline from 2022 and 2021. The general fertility rate fell 3% last year to a historic low of 54.5 births per 1,000 women aged 15 to 44, down from 56 in 2022. “Since the most recent high in 2007, the number of births has declined 17%, and the general fertility rate has declined 21%,” the CDC says.

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