Kamala Harris struggles to grasp fundamental economic concepts
Kamala Harris has proposed a plan to address the inflation crisis that she is being blamed for.
During the Trump administration, inflation averaged 1.9%, but it shot up to 9.1% within 18 months of Joe Biden and Harris taking office, largely due to a $5 trillion spending spree funded by debt and money printing.
One key element of Harris’ plan is to enforce federal price controls on corporations she deems greedy and engaging in price gouging. This plan includes restrictions on rent increases for landlords.
Even The Washington Post has criticized the plan, cautioning Harris about proposing price controls when opponents are labeling her a communist.
Code red
Kamala Harris’ American-style communism plan involves a $1.7 trillion giveaway, despite the current $1.9 trillion budget deficit and $35 trillion national debt. Various proposals within the plan are rated on a scale of 1-5 hammer and sickles:
PRICE CONTROLS
Pitch: A federal ban on price gouging.
What’s wrong with it: Lack of clarity on what constitutes gouging, potential backfire due to demand surges.
Cost: Black markets, hoarding, decreased competition, and higher inflation.
Rating:
CHILD TAX CREDIT
Pitch: Restoration and increase of the child tax credit.
What’s wrong with it: High cost, potential work disincentives, and contribution to inflation.
Cost: $1.2 trillion
Rating:
HOUSING GIVEAWAY
Thesis: Down-payment assistance for first-time homebuyers.
Critique: Likely to fuel inflation by driving up home prices.
Cost: $100 billion
Rating:
BUILDER TAX BREAKS
Thesis: Innovation fund to incentivize housing construction.
Critique: Distrust of market mechanisms, unlikely to result in affordable housing.
Cost: $100 billion
Rating:
Studies have shown that businesses are merely passing on higher costs to consumers to cope with increased producer prices. The San Francisco Federal Reserve has also found stability in aggregate markup post-pandemic recovery.
Harris’ economic plan lacks strategies for growth and prosperity, focusing instead on government expansion through initiatives like child tax credit restoration and enhancements.
Key points of Kamala Harris’ economic plan
- Measures to reduce grocery costs by imposing bans on excessive pricing.
- Commitment to building three million new homes to address housing shortage.
- Expansion of the child tax credit to provide tax breaks for families with newborns.
- Proposals to alleviate medical debt and cap costs of essentials like insulin and prescription drugs.
Expanding the child tax credit would create additional costs, adding to the budget deficit with uncertain funding sources. This spending approach is likely to fuel further inflation.
History shows that price controls, like Nixon’s attempt in 1971, are ineffective and often exacerbate inflation issues, resulting in shortages and adverse consumer impacts. Cliff Winston’s research highlights the benefits of free market competition over control measures in various industries.
Reagan’s decision to lift oil and gas price controls in the 1980s marked an end to an energy crisis, emphasizing the importance of market mechanisms.
Harris’ economic proposals lack a coherent growth strategy, relying heavily on increased spending without clear funding sources, likely perpetuating inflation trends.
Price controls have consistently proven unsuccessful in combatting inflation and have historically led to adverse consequences for consumers.
Kamala Harris’ economic plan overlooks fundamental economic principles, resulting in a failing grade in an economics assessment.
Stephen Moore is co-founder of Unleash Prosperity and serves as a visiting fellow in economics at the Heritage Foundation.
