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‘Flawed Economics’: Expert Breaks Down Harris Agenda

August 19, 2024

Vice President Kamala Harris announced her economic agenda at a Friday speech in Raleigh, N.C., largely confirming the preview of her agenda released last week, while not offering “any more details about how the proposal will work.” The announcement is her “campaign’s first attempt at a policy platform,” noted National Review, “unless you count her advisers’ telling the press she does not believe the things she said she believed in 2019 when running for president, or in 2020 when serving as a U.S. senator.”

As expected, Harris discussed a ban on “corporate price-gouging” that would impose “new penalties for opportunistic companies that exploit crises.”

“We know price controls do not work,” responded Heritage Foundation research fellow Joel Griffith on Friday’s “Washington Watch.” “This has been tried in the past, but it’s been a very long time. Here in the United States … you have to go all the way back to the Nixon era.”

“When you put an artificial cap on the cost of a good or service, what you end up with are fewer of those goods and services,” Griffith explained. “When you see Vice President Harris blaming the high cost of food on gouging, that’s an outright lie. … The prices that producers pay for their inputs have actually been rising even more rapidly than the prices that we pay.”

Harris also promised to expand the Biden administration’s price controls on prescription drug prices. “We’ve had a number of warnings in the past from pharmaceutical companies that putting in place these caps is going to result in less research and development going forward. In fact, a number of possible cancer medications have already been put on ice,” Griffith declared. “That’s because the vast majority of drugs that are researched by these big companies (90% plus) never come to market because they just actually aren’t feasible. So, these companies rely on the small percentage of successful drugs to basically finance the R&D.”

“If we continue to see administrations put in place these price controls on drugs, they might reap political rewards,” he said. But “there are going to be fewer lifesaving medications available for our loved ones as we get older.”

Harris called for the construction of three million more homes over four years and promised $25,000 in down payment assistance for first-time homebuyers. “If we go ahead and cut everybody $25,000 checks for a home … that’s going to drive up the cost of those homes by roughly the same amount,” and starter homes will see their prices rise the most, Griffith protested. “And it’s going to add to inflation, because we’re going to be borrowing and printing [money for] all of those $25,000 checks.”

This is yet “another example of flawed economics,” where the Biden-Harris administration continues to “put the emphasis on demand rather than supply,” continued Griffith. “The focus should be … how do we increase the supply of homes? And we know how that’s done, because we see that being done in parts of the country that have better zoning restrictions, that don’t have in place such onerous requirements on these environmental [restrictions], and lot sizes, and everything else.”

Nowhere in her speech did Harris put daylight between herself and the Biden administration’s policy, Griffith noted. “Vice President Harris can’t separate herself from Bidenomics,” he argued. “If you look at some of the proposals that she’s rolling out this week, it would actually double down on those Biden-Harris policies and make matters even worse.”

“Harris clearly thinks Biden’s approach has been the right one,” concluded the National Review editors. “But she also seems to think that the U.S. economy is terrible. And rather than propose anything substantially different, she is running on Bidenomics, but even more so.”

Whether Harris thinks the economy is terrible or not, “polling data show that American families [are] very sour” on it, Griffith observed. “We know from data that … prices have increased by well over 20% over the past few years. And that indeed has outpaced the growth in income; we’ve seen a real income cut, per family, of more than $4,000 per year.”

“That’s not even including the rising costs of credit card debt. We know that families have added, on average, $4,000 worth of credit card debt over the past few years,” he added. “If you look at the rise in interest rates on the debt, which have gone from 11% to 21%, the typical family is spending an additional $1,000 per year on revolving debt costs.”

“So, add that together,” Griffith continued. “A $4,000-a-year real wage cut, plus $1,000-a-year more of borrowing costs. And then, if you factor in the rising cost of home ownership, which actually isn’t factored in, really, in the CPI numbers, you see most families are actually suffering from closer to a $10,000 decline in real income.”

Family Research Council Action President Jody Hice, guest host of “Washington Watch,” responded, “Reality is reality, and people are living in reality.”

Joshua Arnold is a senior writer at The Washington Stand.