It IS the Economy, Stupid
August 22, 2024 | Washington, D.C.
by Tabitha Walter, Executive Director, Eagle Forum
Harris and Trump Offer Contrasting Economic Plans
Inflation and the economy are top issues this election year. Everyone feels the strain in their wallets at the grocery store, shopping mall, car dealership, and gas station. The cost of groceries has risen 25% since January 2020. Eggs saw the greatest price increase — a 94% increase from January 2020 to January 2023. Although the cost has come down, a dozen eggs are still more than 40% higher than pre-pandemic.
“Bidenomics” has resulted in the urban Consumer Price Index being 21.8% above its level in January 2020. Voters are looking closely at the ideas being suggested to get the economy back on track. Both candidates have proposed economic plans, but one is suggesting reforms with a communist touch!
Despite Vice President Kamala Harris dodging the press since she became the nominee, she is finally spilling the beans on her big government proposals during the Democrat National Convention this week. One of her economic ideas is to ban price gouging. This isn’t a new concept that the Harris campaign conjured up. At the start of the COVID-19 pandemic, then-President Donald Trump issued an executive order to ensure all medical supplies would remain affordable. Many states have similar laws that apply in declared states of emergency and for a limited number of products and services related to that emergency. The plan proposed by Harris goes well beyond these limited instances.
The details of her plan reveal that she ultimately wants to impose price controls on groceries. No matter which way she spins this, it will not help consumers. Grocery stores are currently making slim profits — they are averaging a 2 percent profit margin compared with the 8 percent margin of their retail counterparts.
In response to government intervention, grocers will be forced to limit their suppliers, resulting in fewer consumer choices and hurting farmers and food manufacturers. They will also be forced to make up profits elsewhere like increasing the costs of cleaning supplies or paper goods. In the end, such price controls will benefit larger companies like Walmart and Costco which also sell non-food items and harm small businesses the most. The “emergency” the Harris campaign is responding to is a poor economy and high inflation caused by the reckless Biden-Harris policies.
Economists aren’t thrilled with the idea. Mark Zandi, chief economist at Moody’s Analytics, told CBS MoneyWatch:
There are lots of reasons for the high inflation we’ve suffered over the past several years, but aggressive or unfair pricing practices are at bottom of list of reasons, if they’re on the list at all. It may have been more of an issue back when supply chains were being disrupted by the pandemic, but today it’s hard to point to any significant, meaningful examples of price gouging.
He goes on to say that offering plenty of alternatives and competition in the market is the solution. A true fix will look beyond the pricing into the reasons businesses and farms are being stifled.
Harris is doubling down on her communistic, redistributive philosophy by promising a $25,000 allowance for first-time home buyers. It doesn’t take an economist to realize that this will make housing $25,000 more expensive across the board. Of course, with housing prices so different depending on where you live, the impact will vary greatly.
For example, the median home price in Iowa is $229,000, but in California, it is $787,000. An allowance would cover nearly 11 percent of housing costs in Iowa, whereas it would only cover 3 percent in California. Iowans would be using the allowance more often as well since they have a higher rate of home ownership than California.
In addition, the larger question is why some taxpayers will be forced to subsidize home purchases of others. Also, Harris suggests that she can spur the construction of 3 million new homes over four years — or over 2,000 homes built every day — with a proposed tax incentive for homebuilders who build starter homes for first-time homebuyers. The National Association of Home Builders pointed out that “unfortunately, the plan makes no mention of reducing onerous federal regulations that add to the 24% cost burden on single-family home construction.” Clearly, this plan lacks the research and common sense needed to drive down housing costs.
Trump has a proven record of stabilizing our nation’s economy. During the first three years of his presidency, 7 million new jobs were created, household incomes were rising, and unemployment fell to a fifty-year low. Yet, the Biden administration complained that they inherited the current poor economy and high inflation rates from the Trump administration.
While it is true that the pandemic harmed the economy by disrupting supply chains and closing businesses, it is important to remember the Democrats who supported extended lock-down in their cities and states while conservative officials encouraged reopening the economy. Liberal leaders sought to arrest people who tried to go to work and fire those who refused to get the COVID-19 vaccine. Minnesota Governor Tim Walz, the Democrat VP nominee, actually set up a COVID snitch line to enable people to turn in their neighbors who did not follow “proper” social distancing protocols.
Trump’s plan includes a pledge to impose a 60 percent tariff on Chinese products, a 100 percent tariff on all cars made outside of the United States, and a 10 percent tariff on all other foreign-made products. While the Biden-Harris Administration and their compatriots on Capitol Hill are allowing the Trump tax cuts to expire, Trump will make those tax rates permanent and lower the corporate tax rate to 20 percent which will lower the cost of doing business.
While Harris’s economic plan for groceries and housing is unsound economically, her other liberal ambitions such as Medicare-for-All, Green New Deal policies, and taxpayer-funded abortions will wreak further havoc on our country. Trump’s plan isn’t perfect, but his vision is to create a more self-reliant country and citizenship. There is no quick fix that will repair the decades of fiscal abuse on the federal level, but one thing is for sure: the U.S. cannot afford to have a Kamala Harris presidency!