Harris’s Argument on Inflation
The Key Points
- Post-pandemic inflation hit the entire world. The Biden-Harris administration passed the Inflation Reduction Act and inflation has dropped from 8.3 percent to 2.5 percent
- Prices are, however, still too high and Harris has plans to control prices while Trump’s plans would make prices higher
- Harris has specific proposals to address housing, food and health prices while cutting taxes for the middle class
- Trump’s tariff tax would raise prices for everyone and hit middle- and low-income taxpayers the hardest
- Trump’s recent tax cut proposals for tips and overtime are tiny compared to the tariffs and nothing compared to the cuts he has given, and intends to give, to the wealthy. The tips and overtime proposals are late-in-the-game pandering to grab votes with policies he never favored as president, when his signature legislative achievement was a massive tax cut for the rich and corporations
When the Inflation Reduction Act was signed into law in August of 2022 inflation was running at 8.3 percent. Two years later inflation is clocking in at 2.5 percent. Has any other legislation ever delivered on its name as effectively as the “Inflation Reduction Act?!” I can’t think of any (the “Trump Tax Cuts” almost certainly gave Donald Trump tax cuts — but that’s not the official name).
That doesn’t mean the battle against higher prices is over. Even if grocery prices have barely budged in over a year, when people are making out their weekly budget, and remember what things used to cost, they wish for the lower prices they used to pay. Even though for most people wages have gone up more than prices, they’d rather have the higher wages without the higher prices and not everyone’s wages have kept up.
Trump tries to assign blame for American inflation on Biden administration deficits, but the truth is that supply chain disruption, changing buying habits, labor shortages and the Russian invasion of Ukraine, with a price-gouging-cherry on top, caused inflation the world over — worse in other countries than here actually. No one serious believes federal deficits were the primary driver. Besides, if that’s what you want to blame, Trump’s federal budget deficit in his last year was bigger than any of Biden’s.
In any event, the question is what to do now to build on the success of the Inflation Reduction Act. Vice-President Harris has some pretty good ideas.
Housing is, obviously, a huge cost for people and bringing the cost of housing down would have an outsized effect on the cost of living. Harris has experience in addressing problems in the housing market from her time as Attorney General for California. As the Democratic candidate for president, she has proposed to reduce government regulatory requirements that slow down housing construction, create incentives for builders who build starter homes, restrict rental housing pricing practices and landlord consolidation that elevate the cost of renting, and provide down payment assistance for those who want to move from renting to owning. By boosting supply by 3 million homes and rental units, and helping out homeowners and renters, the cost of housing would drop.
Groceries are another area of focus for Harris. She has proposals to ban price gouging and to be aggressive to prevent the consolidation among big food corporations that has led to higher prices. She also has plans to help smaller participants in the food industry to make it more competitive. The price-gouging proposal has faced some pushback — and, though there was predatory pricing when inflation was high, at this point it’s hard to see the price-gouging proposal doing much for current grocery prices. It is, however, a good hedge against future corporate malfeasance and it’s not as radical as it’s being made out to be. She isn’t proposing the government setting prices and many states already have provisions in law similar to what she proposes nationally. The bigger picture in the overall Harris package is restoring competition to the food industry to the benefit of consumers.
There are lots of other ways Harris wants to take on high prices. Helping people cover them by lowering middle-class taxes, especially those with children, is part of the plan. Building on the IRA’s measures to bring down energy and health costs is another. Across the economy she intends to battle monopolistic practices that drive up prices. It’s genuinely an all-in approach. That’s a striking contrast to Trump who blames Biden and Harris for inflation but mainly offers proposals that virtually every independent economist says would raise prices — tariffs and mass deportation being at the top of the list. As in his first term, a second Trump presidency would be about taxing the rich less, not addressing higher prices for most Americans.
