Kamala Harris claims she has a plan to solve the crisis she helped cause: Inflation.

Under former President Trump, the inflation rate averaged 1.9%. It skyrocketed to 9.1% in 18 months under Joe Biden and Harris, fueled by a $5 trillion spending binge paid for by debt and printing money.

The centerpiece of the Harris plan is the imposition of federal price controls on “greedy corporations” she says are “price gouging” consumers. Landlords would be prohibited from raising rents more than 5% a year. 

Even the Washington Post has trashed the plan, advising Kamala that “when your opponent calls you a ‘communist,’ maybe don’t propose price controls.”

Kamala Harris’ plan for American-style communism is a $1.7 trillion giveaway, when our budget deficit this year is $1.9 trillion, and our national debt is already $35 trillion. We rate some of the proposals on a scale of 1-5 hammer and sickles:

PRICE CONTROLS
Pitch: A “first-ever” federal ban on “price gouging.”

What’s wrong with it: What’s gouging? What’s excessive? It does not say, and price controls invariable backfire as demand increases for limited goods.

Cost: Black markets, hoarding, less competition . . . and higher inflation

Rating:

☭☭☭☭☭

CHILD TAX CREDIT

Pitch: Restore the COVID-era child tax credit of $3,600, but raise it even more to $6,000 for the first year of a child’s life.

What’s wrong with it: It all comes at a massive cost, which is why it wasn’t renewed when the pandemic was over. The credit also disincentivized work, and helped fuel inflation as parents spent more on child care.

Cost: $1.2 trillion

Rating:

☭☭☭

HOUSING GIVEAWAY

Thesis: Up to $25,000 in down-payment assistance for first-time homebuyers.

Critique: Will likely spur even more inflation. With the government chipping in money to help buy a home, home prices will go up.

Cost: $100 billion

Rating

☭☭☭☭

BUILDER TAX BREAKS

Thesis: A $40 billion “innovation fund” to get cities to build more housing.

Critique: Harris again does not trust the market to operate as it always has — demand for homes will spur more construction. Instead she wants to give companies tax breaks, which likely won’t result in affordable housing.

Cost: $100 billion

Rating:

☭☭

Are grocery stores and 7-Elevens and Walmart guilty of price gouging? No. It turns out, as Heritage Foundation economist E.J. Antoni points out, producer prices have risen by 19.5%, which is almost exactly the same pace as consumer prices. In other words, to stay afloat, businesses are simply passing on their higher costs to consumers. 

The San Francisco Fed found the exact same thing a few months ago: “Aggregate markup across all sectors of the economy . . . has stayed essentially flat during the post-pandemic recovery.”

Kamala Harris doesn’t understand that companies must raise their prices to cover their rising costs in order to stay in business. That’s because her administration can run $2 trillion deficits from now until the cows come home.

That’s reflected in the “economic plan” she’s announcing Friday, which includes no blueprint for growth or prosperity. Instead it just makes the government bigger, with the restoration of a child tax credit of $3,600 a kid, and a new proposal to raise that to $6,000 for the first year of a child’s life.

The Tax Policy Center found the cost of the COVID-era child-tax credit was $125.5 billion. Expanding it would cost even more.

How would we pay for that? Who knows? For her, it’s just spend, spend, spend. Inflation would continue to climb.

Those of a certain age will recall that back in 1971 when prices were similarly spiraling out of control, Richard Nixon announced an executive order to stop inflation. “I am today ordering a freeze on all prices and wages throughout the United States.” This unconstitutional move established a 90-day freeze was enforced by a “Pay Board” and a “Price Commission.” It was an utter failure. After the 90 days were up, inflation got worse. 

Price controls have never worked anywhere, at any time. Instead, they almost invariably cause shortages, which lead to higher prices, which make consumers worse off. 

This was the conclusion of a landmark study by Cliff Winston of the Brookings Institution. He found that in industries as wide-ranging as oil and gas, banking, trucking and airlines, it was the cessation of price controls and the return to the free market that led to on average a 30% reduction in prices thanks to the power of free market competition.

The energy crisis of the 1970s ended when Ronald Reagan, on the first day of his presidency, lifted all oil and gas price controls, which had only benefited the Saudis and killed domestic production. It was a teachable moment for the country. 

I used to teach a course in economics to college freshmen. If they had written on their final exam that price controls were the solution to inflation, they would have failed the course.

Congratulations, Kamala Harris: you get an F in economics. 

Stephen Moore is co-founder of Unleash Prosperity. He also serves as a visiting fellow in economics at the Heritage Foundation.