Kamala Harris will soon reveal her economic plan. It’s about time.
The fill-in-the-blanks Democratic nominee for president has come a long way on so-called “vibes” and the fact that she isn’t Joe Biden. But eventually voters will want to know what the vice president wants to do with the economy, their number one issue.
Expect Harris, bride-like, to bring something old, something new, something borrowed and something blue.
The “old” part is the trickiest. When asked recently how Harris is scrambling to distance herself from unpopular Bidenomics, White House spokesperson Karine Jean-Pierre sarcastically reminded the press corps, “You do know that it is the Biden–Harris administration, right?” and that “Kamala Harris is the Vice President?”
The new part? Even more giveaways of taxpayer dollars to social programs. We could soon see something like Babysitting for All as a means to reduce the high cost of child care.
What’s borrowed? In her ambition to put the government in charge of an ever-bigger slice of the economic pie, Harris could look to her father, described by The Economist as a “Marxist” economist. Or maybe she is under the spell of her running mate, progressive Minnesota Gov. Tim Walz, who is much loved by the Democratic Socialists of America.
Weirdly, she has also borrowed from Donald Trump, lifting his new “No Taxes on Tips” pledge without batting an eye, right there in toss-up Nevada, where the former president first introduced the idea.
She has also taken a leaf from Biden’s playbook, vowing to attack inflation (voters’ biggest peeve) by imposing a national ban on “corporate price gouging,” which she blames for driving prices higher.
Harris must know, or at least her advisers must know, that prices are now up more than 20 percent under her watch. This is not because unscrupulous business owners have been swindling the public. The San Francisco Federal Reserve did a study on that very issue, and concluded: “Overall, our analysis suggests that fluctuations in markups were not a main driver of the post-pandemic surge in inflation, nor of the recent disinflation that started in mid-2022.”
Harris’s accusation of price gouging is borrowed directly from Biden, who, on more than one occasion, blamed greedy companies for hiking prices indiscriminately just to fatten margins. He even set up a “Strike Force on Unfair and Illegal Pricing” to investigate the situation, which held its first virtual meeting at the beginning of this month. The task force includes the FTC, led by the ferocious but mercifully inept Lina Khan, and the Justice Department.
Thankfully, someone in the White House decided that maybe they should actually study the issue before throwing CEOs in jail. So the Fed took a hard look at company costs and prices. But, instead of confirming Biden’s whining about “shrinkflation” —remember his cringe-worthy Super Bowl ad about getting less ice cream for the same price? — the Fed economists reported that “the aggregate markup across all sectors of the economy…has stayed essentially flat during the post-pandemic recovery.”
Did companies raise prices? Sure. They had to pay more for materials, for rents and for labor, and they passed those extra costs along to their customers. Food prices, as measured by the Consumer Price Index, are up over 20 percent since Biden and Harris entered the White House. One year in, Americans were shelling out 11.2 percent of their disposable income on food, the highest percentage in three decades. But despite that cost inflation, major U.S. food companies have not seen their margins — that is,the difference between their costs and expenses — increase.
Several months ago, I looked at the results for Kraft-Heinz, Pepsi, General Mills, Campbell Soup and Coca-Cola; grocers like Albertsons, Walmart and Kroger; and meat producers like Hormel and Conagra. In each case, the companies’ gross profit margins shrank after Biden became president because of rising costs. In time, these businesses raised prices to recover their profit margin and pay for their extra expenses.
By the end of 2023, most companies had restored most (but not all) of their profitability. Not one of these firms showed the kind of margin expansion that would justify accusations of price-gouging.
Even though this is a fake charge, it is one that will probably score some points with low-information voters who are angry that they are struggling to feed their families and want someone to blame.
The “someone” voters should blame is the team in the White House —Harris and Biden —who refused to let a crisis go to waste and instead threw trillions of excess and unnecessary dollars into the economy when supplies were constrained. This is a fact, confirmed by the San Francisco Fed.
“To support households and businesses during the pandemic,” the San Francisco Fed noted, “the federal government provided large fiscal transfers and increased unemployment benefits. These policies boosted demand for goods and services, especially as the economy recovered from the depth of the pandemic. The increase in overall demand, combined with supply shortages, boosted the costs of production, contributing to the surge in inflation during the post-pandemic recovery.”
In short, excess federal spending combined with supply chain issues caused inflation. Of course, neither Harris nor Biden will admit this.
What is Harris’s “something blue”? Her economic plan is pure blue Democrat: higher taxes, bigger government, price controls —all favored leftist nostrums.
But what is really blue is the average consumer, who has struggled to make ends meet, whose real disposable income has gone down under Biden-Harris and whose optimism about the future has gone down with it.
Liz Peekis a former partner of major bracket Wall Street firm Wertheim and Company.
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