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(WASHINGTON) — Vice President Kamala Harris unveiled a sweeping economic agenda on Friday, vowing to ease inflation, fix the housing market and slash taxes for middle-income families.
The plans include eye-catching proposals such as a ban on grocery price gouging and a $25,000 subsidy for first-time homebuyers.
Economists who spoke to ABC News offered up a mixed assessment of the newly released agenda. Some experts lauded the effort to slow rising costs and restrain corporate power in key sectors, while others criticized what they consider a misguided attempt to override market forces that risks worsening the nation’s debt.
Less than three months before the presidential election, the economy tops lists of voter concerns. Growth is slowing but remains solid. Price increases have cooled dramatically but remain higher than the Federal Reserve’s target level.
The Harris campaign did not immediately respond to ABC News’ request for comment.
Here’s what to know about how economists assess three key pillars of Harris’ economic plan: fighting inflation, recalibrating the housing market and cutting taxes for families.
Fighting inflation
The campaign aims to rein in price increases for everything from groceries to prescription drugs to homes.
Harris points to the market power of large corporations as a key cause of rapid price increases for essential goods, saying companies use their outsized role in a given market to raise prices without fear of a competitor offering a comparable product at a more affordable price. Consumers, the Harris campaign says, are left with nowhere to turn.
The grocery industry exemplifies the damage caused by mega corporations, according to the campaign. “Extreme consolidation in the food industry has led to higher prices that account for a large part of higher grocery bills,” the campaign said in a statement on Friday.
Grocery store profit margins surged in 2021 and rose even higher two years later, even after price increases had begun to cool, a Federal Trade Commission study in March showed.
To control the price hikes, Harris proposed a federal ban on price gouging for food and groceries. While details remain limited, the plan could resemble price-gouging bans in place in 37 states, which prohibit a sudden spike in prices for scarce goods.
Lindsay Owens, executive director of the Groundwork Collective, in a statement on Friday echoed the Harris campaign’s criticism of the broken market for groceries.
“Price gouging, price fixing, and just plain profiteering are rampant in the food and grocery sector,” Owens said. “There is still more the government can do to reduce food and grocery concentration and stop the cheating that is costing families dearly.”
Some economists, however, rejected the notion of corporate power as an important cause of inflation, saying a limit on price hikes could result in shortages of goods.
“Most of the inflation over the past few years has been caused by increases in costs,” Steven Hamilton, a professor of economics at George Washington University, told ABC News. Hamilton acknowledged that price increases for some groceries may owe to corporate concentration, but said it doesn’t stand as a primary cause of overall inflation.
“You have to be careful not to cherry pick,” Hamilton said.
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.
Fixing the housing market
In recent years, the housing market has suffered from a convergence of high mortgage rates and elevated home prices, shutting out prospective buyers with high costs.
The Harris campaign proposed restoring affordability through a combination of boosting home supply and easing the price pressures for some homebuyers.
Plans to grow the supply of homes include a tax incentive for companies that build starter homes and affordable rental homes, the Harris campaign said. The campaign’s plans to aid buyers feature a $25,000 subsidy for first-time homebuyers.
Economists who spoke to ABC News lauded the Harris campaign’s effort to boost housing supply, but offered differing opinions about the support for homebuyers.
“The reason that housing prices have gone up in most places in America is that supply is limited,” Hamilton, of George Washington University, told ABC News. “That commitment to increase supply is rare among politicians but it’s something that economists should praise.
Some economists said the subsidies for homebuyers threaten to undermine the price cuts achieved through additional supply. If prospective buyers know they’ll receive a subsidy of $25,000 from the government, they’ll boost their asking price by that amount, said Jones, of the University of Cincinnati. As a result, he added, home prices will rise.
“If they have $25,000 more to spend on a house, they’ll submit bids up to $25,000 higher for the home,” Jones said. “That policy in particular is a bad idea because it won’t bring the price of housing down.”
Mark Zandi, chief economist at Moody’s Analytics, said the combination of supply growth and homebuyer support could work effectively as long as Harris focuses on boosting supply before she bolsters consumers.
“You’ve got to put the horse before the cart,” Zandi said. “It’s a matter of timing.”
Cutting taxes for middle-class families
The Harris campaign said it aims to keep some money in middle-class consumers’ pockets by reducing their tax burden.
The plans include a restoration of the expanded child tax credit of $3,600 per child that expired in 2022. Harris also proposed an additional, new $6,000 child tax credit for families with a child in the first year of life.
The tax cuts for families drew wide support from economists who spoke to ABC News, though some emphasized the importance of accompanying those proposals with revenue-raising measures that will offset the tax reductions.
“A child tax credit expansion is fantastic and I would fully support it, as long as they find way to pay for it,” said Hamilton, of George Washington University. “This is a policy targeted toward people who really need it, and families who really need it.”
For its part, the Harris campaign said on Friday that it would safeguard the federal government’s financial health, in part by increasing taxes on wealthy individuals as a means of offsetting middle-class tax cuts.
Harris and Minnesota Gov. Tim Walz, the Democratic nominee for vice president, will “fulfill their commitment to fiscal responsibility, including by asking the wealthiest Americans and largest corporations to pay their fair share,” the campaign said.
Zandi, of Moody’s Analytics, voiced support for the tax cut but also urged caution about the potential loss of tax revenue. If the tax credits end up adding to the national debt, it would undermine the savings for consumers by risking an increase in overall inflation.
“I don’t think you can do anything without it being paid for,” Zandi said. “That would be counterproductive.”
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