Vice President Kamala Harris’s first policy proposal since replacing President Joe Biden at the top of the Democratic ticket was stealing former President Donald Trump’s “no tax on tips” idea.
Media reports indicate that Harris will now propose a Soviet-style grocery price control regime.
Grocery prices have risen 21% since Biden and Harris took office in January 2021. Government lockdowns kick-started inflation by disrupting supply chains and killing businesses. Harris dumped gasoline on the inflation fire by casting the tiebreaking vote to pass the $1.9 trillion “Inflation Reduction Act.” Thanks to this inflation, her pledge not to raise taxes on voters making less than $400,000 is worth only $332,653.
To deflect from the price pain the Biden-Harris administration has inflicted, Harris is trying to pin inflation on a favorite progressive punching bag: “corporate greed.” Harris wants to pass a federal ban on “price gouging,” empowering bureaucrats and state attorneys general to levy massive fines on food companies that sell groceries above a government-determined price. Harris would also increase scrutiny on “unfair mergers that could inflate food prices.”
The problem is that price controls lead to scarcity, price hikes, and government rationing. Harris already wants to raise the corporate tax rate higher than Venezuela, so it makes sense that Harris wants grocery store shelves to be barren like Venezuela’s. It is economically illiterate to smear grocery stores as price gougers when the industry recorded a razor-thin 1.18% profit margin in 2023.
Federal Trade Commission Chairwoman Lina Khan laid the groundwork for Harris’s price control regime with last week’s announcement of an investigation into “Big Grocery” for the role “corporate greed” has played in high food prices. Like “no tax on tips,” Harris once again has stolen a campaign idea from someone else. Ironically, the Biden-Harris FTC is raising food prices in two ways that will only get worse if Harris wins.
Khan is suing to block the Kroger-Albertsons merger, a deal Harris wrongly singles out as an example of monopolization in the grocery industry. In reality, Kroger and Albertsons combined would only hold 12% of the U.S. grocery market. The merger would give the new entity a puncher’s chance at competing on price with Walmart, Costco, Aldi, and other big grocers. Kroger has lowered prices every year since 2003, and both companies have pledged to pass down the $1 billion in administrative cost savings to consumers.
Khan is also set to revive Robinson-Patman Act enforcement, a Great Depression-era law that prohibits suppliers from selling “commodities of like grade and quality” at different prices to different buyers. There is no market power component, meaning that a grandmother selling cookies to two different grocers at two different prices could violate the statute. The Justice Department abandoned RPA enforcement in the 1970s, finding that the law’s greatest impact was banning discounts and raising prices. Turbocharging RPA enforcement leads to three unelected FTC commissioners having the power to set the price of every product sold in this country.
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There has been significant media speculation over Khan’s future in a Harris administration. Left-wingers want Khan to stay, and Harris donors want Khan to leave. The establishment press refuse to make Harris reveal Khan’s future because it risks fracturing her support base and harming fundraising.
The Harris price control proposal puts this speculation to rest: Khan is not going anywhere if Harris wins and will be more powerful than ever. Life for shoppers will get worse, not better.
Tom Hebert is Director of Competition and Regulatory Policy at Americans for Tax Reform and executive director of the Open Competition Center.