VP Harris Calls For Federal Ban on Food Price Gouging

The New York Times’ Jim Tankersley and Jeanna Smialek reported this past Friday that “Vice President Kamala Harris’s economic agenda for her presidential campaign features an argument that blames corporate price gouging for high grocery prices.”

“That message polls well with swing voters. It has been embraced by progressive groups, which regularly point to price gouging as a driver of rapid inflation, or at least something that contributes to rapid price increases. Those groups cheered the announcement late Wednesday that Ms. Harris would call for a federal ban on corporate price gouging on groceries in an economic policy speech on Friday,” Tankersley and Smialek reported. “But the economic argument over the issue is complicated.”

What is Harris’s Plan?

Business Insider’s Ayelet Sheffey reported that “on Friday, Harris’ campaign released new details of its economic policy plan ahead of a campaign speech in North Carolina, and they largely focused on lowering costs for Americans struggling with inflation.”

“A key component of her plan was a “first-ever federal ban” on price gouging for groceries and food. Price gouging, in which companies and corporations raise prices on goods to excessive levels, is something President Joe Biden and many Democratic lawmakers have criticized — and the Federal Trade Commission has launched investigations into high grocery prices, as well,” Sheffey reported. “Harris’ fact sheet stated that she plans to implement this ban in her first 100 days in office and will direct the FTC to penalize companies that do not comply with it.”

“‘Price fluctuations are normal in free markets, but Vice President Harris recognizes there is a big difference between fair pricing and the excessive prices unrelated to the costs of doing business that Americans have seen in the food and grocery industry,’ the fact sheet on the plan said,” according to Sheffey’s reporting.

Economists & Ag Groups Voice Concerns

CNN’s Elisabeth Buchwald reported Friday that “Harris’ proposal could create more problems than the one it’s trying to solve, some economists say.”

“Gavin Roberts studied anti-price gouging laws some states passed during the pandemic. One of the biggest effects he observed, especially at grocery stores, was that these laws motivated people ‘to go buy goods more than they would if prices had risen,'” Buchwald reported. “When prices are high, in most cases, the best policy action in response is actually taking no action, Roberts, the chair of Weber State University’s economics department, told CNN.”

“Jason Furman, a top economist in the Obama administration, shared Roberts’ view that anti-price gouging laws could inadvertently harm consumers,” Buchwald reported. “‘This is not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality,’ he told the New York Times. ‘There’s no upside here, and there is some downside.'”

ABC News’ Max Zahn reported that “Michael Jones, an economics professor at the University of Cincinnati, said a government-imposed ceiling on prices could cause stores to run out of goods in times of scarcity. ‘If there’s a restriction on the prices that companies can charge for products, they simply won’t supply them,’ Jones told ABC News.”

In addition, Progressive Farmer’s Chris Clayton reported that “the meat industry is pushing back on Vice President Kamala Harris’ plan to call for a federal ban on ‘price gouging’ when it comes to groceries, especially meat prices.”

“Julie Anna Potts president and CEO of the Meat Institute — the lead trade association for meatpackers — pushed back on criticisms against the food inflation, saying Harris’ campaign rhetoric unfairly targets the meat and poultry industries,” Clayton reported. “Food prices are coming down from pandemic highs, Potts noted, and meat prices are based on supply and demand. The livestock and poultry industries have faced avian influenza and a shortage of cattle prices, along with higher energy costs and a tight labor market.”

How Much Price Gouging is Going On?

The Associated Press’ Christopher Rugaber reported that “it’s unclear how much price gouging is going on right now.”

“Grocery prices are still painfully high compared to four years ago, but they increased just 1.1% in July compared with a year earlier, according to the most recent inflation report. That is in line with pre-pandemic increases,” Rugaber reported. “President Joe Biden said Wednesday that inflation has been defeated after Wednesday’s inflation report showed that it fell to 2.9% in July, the smallest increase in three years.”

“‘There’s some dissonance between claiming victory on the inflation front in one breath and then arguing that there’s all this price gouging happening that is leading consumers to face really high prices in another breath,’ said Michael Strain, an economist at the American Enterprise Institute,” according to Rugaber. “In general, after an inflationary spike, it’s very hard to return prices to where they were. Sustained price declines typically only happen in steep, protracted recessions. Instead, economists generally argue that the better approach is for wages to keep rising enough so that Americans can handle the higher costs.”