Why Harris’s Cost-of-Living Plan Will Backfire

 

Kamala Harris's cost-of-living plan is nothing more than a collection of feel-good policies that will drive up prices, deepen the deficit, and ultimately fail the very people she claims to help.

Kamala Harris’s cost-of-living plan promises to take the country on a shopping spree of epic proportions, but at what cost? The real price might just be paid by the very families she claims to help. With inflation still looming large after it reached a 40-year high during her time as vice president, Harris is keen to present herself as a cost-cutting champion. But her strategy, riddled with half-baked economics, risks steering America into even choppier financial waters.

Harris’s plan, though well-intentioned, seems destined to fail, driven by misguided attempts to address housing, groceries, healthcare, and taxes. Her ambition to build 3 million new homes may sound like a boon to those struggling to afford a roof over their heads, but the math doesn’t add up. While it’s true that America faces a shortage of anywhere from 4 million to 7 million homes, Harris’s approach relies heavily on local governments to foot the bill and find solutions. Can these local entities really build the homes, or are we looking at another bureaucratic bottleneck?

In addition, her attack on Wall Street investors, who own less than 1% of single-family homes, feels like a scapegoat tactic rather than a meaningful solution. Ironically, these investors have been more involved in building homes than just buying them up. But in a political climate where Wall Street makes an easy villain, Harris’s rhetoric hits the mark with many. Yet, in her zeal to tackle corporate greed, she’s missing the bigger picture: handing out $25,000 to first-time homebuyers without addressing the fundamental supply-and-demand imbalance will only serve to drive prices higher.

And then there’s Harris’s grocery plan. She’s proposing the first-ever federal ban on price-gouging for food and groceries. But this idea harks back to the failed price controls of the 1970s under Richard Nixon. Economists, including researchers from the Federal Reserve, have found no real evidence that inflation was driven by opportunistic price hikes. In fact, rising prices for everything from food to vehicles sent signals to producers to increase supply and to consumers to curb demand. If we tamper with these market signals, will we end up with shortages like those witnessed in Venezuela’s failed experiment with price controls?

Healthcare reforms in Harris’s plan are similarly problematic. While her push to cap insulin prices at $35 per month and to limit out-of-pocket drug expenses to $2,000 a year is admirable, price controls often backfire. These measures could create a ripple effect, with insurance premiums rising across the board. Look no further than the Biden administration’s recent moves to cap drug costs for seniors, which are already pushing insurers to hike premiums. If Harris truly wants to reform healthcare, she should be asking why medical costs are so exorbitant in the first place, not merely slapping band-aid solutions onto a broken system.

Harris’s plan to tackle medical debt also sounds promising on the surface, but it’s short-sighted. Canceling medical debt without addressing the root cause of high healthcare costs is akin to bailing water from a sinking ship without plugging the holes. According to Glenn Hubbard of Columbia University, this quick-fix mentality has plagued both parties. Politicians, he argues, are no longer interested in long-term planning. Instead, they chase short-term gains, leaving lasting economic problems for future administrations to handle.

Her tax proposals for low- and middle-income families, such as expanding the child tax credit to $6,000 for a baby’s first year of life, may also seem like a win for struggling households. But America is already running a deficit of 7% of GDP, a level typically reserved for times of war or economic recession. Harris’s plan to raise corporate tax rates to 28% from 21%, along with increasing income taxes only on those earning more than $400,000, falls far short of covering the costs of her ambitious agenda. Piper Sandler, an investment bank, estimates that her plans would add $1.4 trillion to the deficit over the next decade. This kind of reckless spending threatens to plunge the country into deeper debt, leaving the American people footing the bill.

Yet, Harris's proposals pale in comparison to the colossal $4.5 trillion that Trump’s tax cuts are predicted to cost over the next decade. Trump's economic plan might sound aggressive with its emphasis on tariffs, but it’s at least rooted in a consistent philosophy. Trump isn’t trying to fix the cost-of-living crisis by pretending to solve every problem with a quick-fix tax cut or price control. Instead, he’s offering a cohesive plan based on stimulating economic growth by reducing taxes and increasing competition through deregulation. His tariff increases may seem extreme, but they're designed to bring back manufacturing jobs, restore America’s competitive edge, and promote a self-sustaining economy.

Harris, meanwhile, promises much but delivers little more than soundbites aimed at soothing short-term anxieties without addressing long-term economic realities. Even the parts of her plan that seem to draw applause — like her crackdown on corporate greed in the food industry — are nothing new. The Federal Trade Commission is already battling to block the biggest supermarket merger in history. In other words, Harris’s bold ideas aren’t really all that bold; they’re more a repackaging of existing policies wrapped in populist rhetoric.

Perhaps the most amusing — or alarming, depending on your point of view — is that Harris’s plan isn’t as radical as it seems. In many ways, she’s merely continuing the Democratic Party’s legacy of industrial policy, a trend that gained momentum under Biden’s presidency. Harris’s buy-American rules reflect a broader anti-globalization sentiment, not unlike Trump’s own economic agenda. In fact, as Greg Mankiw from Harvard points out, Harris’s criticism of Trump’s tariffs falls flat when she herself is promoting protectionist policies.

Harris’s plan may not be as damaging as Trump’s, but that’s not exactly a ringing endorsement. At the end of the day, the vice president’s cost-of-living plan looks less like a path to prosperity and more like an expensive experiment in government overreach. It's as if she’s trying to bake a cake without realizing she’s out of flour.

And so, if Harris’s plan is a recipe for disaster, perhaps we should brace ourselves for a long, bitter taste of reality — one that’ll leave many Americans wondering whether their future was left in the oven too long.