A former economic adviser to ex-President Barack Obama has expressed doubts pertaining to Vice President Kamala Harris‘ plan to combat rising grocery costs by banning “corporate price gouging.”
Harris announced a series of economic policy proposals this week, including a plan for the “first-ever federal ban on price gouging on food and groceries,” arguing that “the excessive prices that Americans have seen in the food and grocery industry” are “unrelated to the costs of doing business.”
Jason Furman, former Obama administration official currently serving as a Harvard University economics professor, told The New York Times on Friday that rising prices had more to do with supply and demand, and expressed concerns that limiting the ability to raise prices could hurt the economy by dissuading new companies from entering the marketplace.
“This is not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality,” Furman said. “There’s no upside here, and there is some downside.”
Newsweek reached out for comment to the Harris campaign via email on Friday.
Prices for groceries and other consumer items soared as the U.S. economy adjusted to supply and demand issues during the COVID-19 pandemic, reaching a 9.1 percent inflation rate in June 2022, the highest in decades. Similar increases were seen around the world.
Inflation, however, has recently been decreasing. The U.S. Labor Department announced on Wednesday that the year-over-year rate stood at 2.9 percent in July, the lowest since March 2021.
While Furman and other economists who previously spoke to Newsweek argued that the Harris price gouging plan has major flaws, opinions on the matter are not unified, with some instead offering praise.
University of Massachusetts Amherst economics professor Isabella Weber told The New York Times that companies were following competitors by raising prices during the pandemic, which in some cases allowed them to increase their profits.
She warned that the practice may continue even without similar pandemic-era economic conditions.
“If the worst of times for ordinary people ends up being the best of times for corporations … Some sort of basic social contract is kind of crumpling,” Weber said, while praising Harris for the price gouging proposal.
Other proposals in the Harris plan include $25,000 in down payment assistance for first-time homebuyers, tax credits for developers who build affordable rental units and starter homes, expanded earned income tax credit, expanded child tax credits and stopping “predatory” investors from colluding to raise rent prices.
Harris and former President Donald Trump, her Republican opponent, have expressed support for eliminating taxes on tips for service and hospitality workers, a proposal that economists and tax experts also expressed doubts about in previous comments to Newsweek.
