Harris unveils plan for more government control of economy with price caps, subsidies

Vice President Kamala Harris unveiled the key tenets of her economic agenda Friday, vowing to lower costs by implementing price controls and granting tax subsidies for homebuyers.

Ms. Harris’ economic platform is largely an extension of several of President Biden’s but includes a more expansive role for the federal government.

“Look, the bills add up: food, rent, gas, back-to-school clothes, prescription medication,” Ms. Harris said at an event in Raleigh, North Carolina. “After all that, for many families, there’s not much left at the end of the month.”

The proposals Ms. Harris rolled out in her first major policy speech since suddenly becoming the Democratic presidential nominee included unprecedented price controls on food and groceries. She said the first-of-its-kind proposal is necessary because corporations are price-gouging Americans.

Under her plan, the Federal Trade Commission and state attorneys general would have the authority to impose harsh penalties on companies they say are setting prices too high.

“So believe me, as president, I will go after the bad actors,” Ms. Harris told the crowd. “I will work to pass the first-ever federal ban on price gouging on food. My plan will include new penalties for opportunistic companies that exploit crises and break the rules.” 

Former President Donald Trump’s camp said Ms. Harris’ plans to reduce the cost of food and housing are temporary fixes that will ultimately increase inflation and hurt consumers.

Trump campaign advisers said the proposal “is an unprecedented expansion of government controls of the American economy” and will ultimately increase prices and create food shortages.

“They are doubling down on the types of policies of the Biden administration that ignited inflation,” said Kevin Hassett, a former senior advisor and chairman to the Council of Economic Advisers in the Trump administration. “It is clear that they don’t understand supply and demand and how that works.”

Conservative economists also slammed the idea. 

“Can someone give us a lesson on what happens to an economy/county when the incentives to create and produce are destroyed,” said Ryan Walker, an economist with The Heritage Foundation, on X. “The catch for the left is that they will still expect food to be produced and shelves to be fully stocked after they destroy the industry.” 

Jared Walczak, vice president of state projects at the Tax Foundation, noted that supermarkets have a 1.2% profit margin while other industries average a 7.6% profit margin.

Ms. Harris is doubling down and expanding President Biden’s explanation that corporate greed is responsible for soaring inflation, but economists have pointed the finger at massive government spending by the administration.

Inflation has eased somewhat since hitting a peak of 9% in 2022. The Labor Department on Wednesday said the consumer price index, a measure of how much everyday goods such as gasoline, groceries and rent cost, rose 0.2% in July from the previous month. Prices were also up 2.9% from July 2023, the lowest level of inflation since March 2021.

Mr. Biden has approved several massive spending bills, causing the national debt to jump by $6.25 trillion in his first three years in office. His fiscal 2025 budget proposes $3 trillion more in expenditures and tax cuts as part of an overall $7.3 trillion spending spree.

Ms. Harris also proposed offering $25,000 of taxpayer money as down payment support for first-time homebuyers. The funds will be available to working families that have paid their rent on time for two years. More generous support will be available for first-generation homeowners. 

Mr. Hasset said the proposal for a $25,000 subsidy for new homebuyers also ignores the need for more housing supply and will lead to “more inflation, not more housing.”

Trump policy adviser Stephen Moore said the proposal is based on the flawed idea that there is a lot of price gouging going on when food stores are often working on small profit margins.

“If you put price controls on these stores, many of them will go out of business,” Mr. Moore said. “So this could cause food instability for many, many millions of families if these price controls were to take place.”

Ms. Harris also called for the construction of 3 million housing units to end the housing supply shortage. 

“I know what homeownership means. It’s more than a financial transaction,” she said. “It’s more than a house, homeownership, and what that means, it’s a symbol of pride that comes with hard work. It’s financial security.”

Housing costs were again the main driver of inflation last month, according to the Labor Department. Rents rose 0.3% and up 5.1% from the same time last year.

The economic plan will also call for raising the minimum wage and ending taxes on tips, an idea first proposed by Mr. Trump.

Ms. Harris’ proposals also include protecting Social Security and Medicare by expanding on Biden-era proposals such as lowering the cost of prescription drugs by capping the cost of insulin at $35 and out-of-pocket expenses for drugs at $2,000 for everyone, not just older Americans.

Ms. Harris called for restoring the American Rescue Plan’s expanding child tax credit and she will propose a new $6,000 child tax credit for “families with children in the first year of life.”

Efforts to expand the child tax credit went nowhere under Mr. Biden, who pushed a number of times to get it through Congress without any success after his initial tax credit expired at the end of  2021.