By Paul Krugman
On Friday, Vice President Kamala Harris gave her first big economic policy speech as the Democratic presidential nominee. It was, of course, very different from the “economic” speech and news conferences Donald Trump has held in the past couple of weeks.
For one thing, Harris actually outlined her economic proposals, rather than veering off onto topics like who has the biggest crowds and how windmills are killing birds. For another, she doesn’t seem to have said anything demonstrably untrue — a sharp contrast with Trump, who lied or distorted the facts about twice per minute during an event at Mar-a-Lago.
But what about the substance? The usual suspects are claiming that Harris revealed herself to be an extreme leftist. Even some middle-of-the-road economic commentators have been hyperventilating, saying she’s essentially calling for price controls, which is odd, because she didn’t say anything like that.
All in all, Harris staked out a moderately center-left position, not too different from President Joe Biden’s original Build Back Better agenda, which he was able to implement only in part because in an evenly divided Senate, Joe Manchin had an effective veto.
So let’s go through the substance, working off a fact sheet released by the Harris campaign, which provided more detail than the speech itself.
The most important and, as I see it, best proposal was for the restoration of an expanded child tax credit, which the Biden administration implemented in 2021 but expired at the beginning of 2022 because Democrats didn’t have a big enough congressional majority. This credit significantly reduced child poverty while it was in effect; Harris would supplement it with an even bigger credit for families with children in their first year.
Let’s start by saying that the case for aggressively fighting child poverty is overwhelming, not just on moral grounds — in a rich country, why should children who happen to be born into lower-income households suffer deprivation? — but in terms of the economics: On average, Americans who grow up in poverty have worse health and lower incomes as adults than those who don’t, which makes fighting child poverty an investment in the nation’s future.
(Let’s also note that we could have expanded the child tax credit just a few weeks ago — although not as much as Harris wants — but Senate Republicans blocked the bill.)
I’m less enthusiastic about Harris’ proposals on housing, which combine tax incentives for homebuilders with down payment assistance for first-time homebuyers. These aren’t bad policies per se. But the broader problem with housing affordability in America is zoning and regulation that blocks construction of new housing units. Unfortunately, these barriers to construction exist mainly at the state and local levels and are out of reach of any politically plausible federal policy.
By the way, one little-noticed aspect of the Heritage Foundation’s Project 2025 is that despite all the railing against red tape and environmental regulation, its “Mandate for Leadership” blueprint goes all-in on NIMBYism: “Localities rather than the federal government must have the final say in zoning laws and regulations, and a conservative Administration should oppose any efforts to weaken single-family zoning.” Drill, baby, drill — but don’t build affordable housing.
Finally, about prices: I’ve been amazed by how many credulous commentators, and not just on the right, have asserted that Harris is calling for price controls, making her out to be the second coming of Richard Nixon if not the next Nicolas Maduro.
What she has actually called for is legislation banning price gouging on groceries. Obviously, this is a populist political gesture — a way to offer something to voters upset about high food prices. But just because something is popular doesn’t mean that it’s a bad idea.
We don’t have a detailed Harris price-gouging plan, but it’s unlikely to be more aggressive than a bill introduced this year by Sen. Elizabeth Warren. And that bill is surprisingly mild — not all that different from the anti-gouging laws on the books in many states. For example, Texas (yes, Texas) prohibits many businesses from “demanding an exorbitant or excessive price” on things including food and fuel during disasters.
Why do we have laws against price gouging? Mainly because voters hate it when businesses take advantage of shortages to charge very high prices, but also because when there aren’t effective price limits, businesses sometimes act to make shortages worse. Some of us still remember the California energy crisis circa 2001, when power producers reduced supply to drive up electricity prices.
The point is, you can consider it reasonable to have legal restrictions on price gouging without accepting the popular but almost surely wrong view that corporate greed was the main driver of recent inflation. And for those comparing Harris to Nixon, who imposed price controls in 1971, bear in mind that Nixon also pressured the Federal Reserve to juice up the economy before the 1972 election — while Harris has been clear about respecting the Fed’s independence.
So what have we learned about Harris’ economics? She is, as expected, moderately center-left. And for those determined to view her as a communist, sorry, she isn’t.
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