By Jeff Stein
(c) 2024 , The Washington Post
Vice President Kamala Harris’s proposal last week to ban price gouging in certain sectors has spurred backlash from some Democratic economists, provoked consternation among business groups and emerged quickly as a focus of Donald Trump’s on the campaign trail.
Harris’s allies, however, are arguing both publicly and privately that her plans have been taken out of context, and that the idea is a targeted expansion of existing state powers rather than new government “price controls” that would transform the U.S. economy.
In a statement released last week, the Harris campaign called for the “first-ever” ban on price gouging in the grocery and food industries. The campaign provided few details about how such a prohibition would work in practice, but said it would enable the Federal Trade Commission to impose large fines on “excessive” price hikes.
The plan faced criticism immediately from some liberal policymakers, including economic advisers in the Clinton and Obama administrations, who argued that government restrictions on price increases would backfire by leading to shortages of goods. Trump released an advertisement and said Harris had endorsed “SOVIET Style Price Controls,” and members of the business community asked Harris advisers about what they saw as a surprisingly left-wing idea, according to two people with knowledge of the matter, who spoke on the condition of anonymity to reflect private conversations.
In the days since, advisers to Harris and several Democratic lawmakers have sought to mollify the criticism by seeking to downplay the radicalism of an idea they say is already in effect in states across the country. They have stressed that most states already have rules that make price hikes illegal in certain contexts, such as in the aftermath of a natural disaster or other calamity. They pointed out that Trump had used the Defense Production Act during the pandemic to crack down on price gouging of critical medical supplies, and that Harris, as California’s attorney general, had already pursued charges against prescription drug companies and firms that had conspired to keep the prices of electronics high.
“Most of the criticism is from well-intentioned but poorly informed people who are interpreting the elevation of state laws to the federal level as price determination, but part of it is just malicious attacks from the other side trying to characterize her as a socialist,” said Ben Harris, who served as a senior official in the Treasury Department under President Joe Biden.
The dueling interpretations of the plan reflect the pressures facing Harris as she tries to rapidly solidify her election message against Trump. Majorities of voters want tough action against corporate greed, which they blame for inflation at the grocery store and in many other industries. But many economists are skeptical that greed is really responsible for the price spikes seen during the Biden administration, particularly given that grocery prices have already been largely flat over the last year.
The Harris campaign’s initial statement suggests the plan would be aimed at specific markets, emphasizing price spikes in the meat industry as one example. Some Harris advisers have also tried assuring business executives that the plan is intended to signal a desire to respond to voter unrest over inflation, rather than impose a sweeping new governmental regulatory regime, people familiar with the matter said.
Democratic lawmakers have also emphasized the history of anti-price-gouging measures. Asked by CNN about Harris’s proposals, Gov. JB Pritzker (D-Ill.) said the Democratic nominee was pushing at a federal level what “states have already done.” Gov. Gretchen Whitmer (D-Mich.) also downplayed the scope of the Harris plans, telling NBC: “People are reading too much into what has been put out there.”
But conservatives have seen these comments as an attempt to do damage control for a policy that Harris should not have endorsed. Price fixing, a criminal conspiracy of businesses to manipulate prices, is not the same as price gouging, or sharply increasing prices in certain contexts.
“There have always been state-level laws on the books on price gouging during extraordinary circumstances, but Harris proposed – both in writing and speaking – a broad, national price control that would apply to all groceries at all times” said Brian Riedl, senior fellow at the Manhattan Institute, a center-right think tank. “If she would like to clarify and restrict her proposal, that would be welcome to a lot of voters. People keep saying, ‘She’s not going to do all that.’ But that’s what she proposed.”
Defenders of the policy, however, say it is important to signal to businesses that they cannot get away with manipulating market imbalances to take advantage of consumers. Lindsay Owens, executive director of the Groundwork Collaborative, a left-leaning think tank, said there were numerous such cases during the pandemic and its aftermath, on products from baby formula to eggs.
“This is not a price control – this tool would allow you to look at a particular product and say that these prices were grossly excessive. There are abnormal market disruptions in food quite frequently that this could be used for,” Owens said. “It makes perfect sense for her to be adding a common-sense proposal with a proven track record to her repertoire.”