Good evening! President Joe Biden is vacationing today in the Santa Ynez Valley in Santa Barbara County, California, after delivering his emotional speech at the Democratic National Convention last night and passing the torch to Vice President Kamala Harris. “I did my best for you,” Biden told the crowd and the country.
Tonight’s DNC schedule includes speeches from Senator Bernie Sanders, Senate Majority Leader Chuck Schumer, Second Gentleman Doug Emhoff, and former President Barack Obama and First Lady Michelle Obama. Some anti-Trump Republicans will also take the stage. But Harris and her running mate, Minnesota Governor Tim Walz, will begin the evening with a rally at the Fiserv Forum in Milwaukee, the site of last month’s Republican National Convention.
Donald Trump, the Republican presidential candidate, made a campaign stop in Michigan on Tuesday, where he justified an appeal to suburban women with a promise to get tough on crime, reviving his vision of an American carnage. “When I return to the White House, we will end the looting, the rape, the slaughter and the destruction of our American suburbs, our cities and our communities,” Trump said. said.
Find out what else is happening here.
Harris’ allies defend her plan to end price gouging
The economic platform Vice President Kamala Harris outlined last week includes a proposal to limit price increases on staples, including groceries. Following the spike in inflation that drove up prices during the pandemic, Harris promised to “advance the first-ever federal ban on price gouging on food and grocery items,” as well as provide federal standards to define “excess profits” and step up antitrust efforts in an industry that is becoming increasingly concentrated.
The reaction to Harris’ proposal, which was extremely light on details, was swift and fierce, with both conservative and liberal critics vociferously condemning it. The New York Post denounced “CAMUNISM,” while Donald Trump predicted on social media that “Soviet-style price controls” would ruin the economy. Meanwhile, Washington Post columnist Catherine Rampell accused Harris of spouting “economic nonsense” and warned the Democratic candidate that she was only helping her opponents: “If your opponent claims you’re a ‘communist,’ maybe you shouldn’t start with an economic agenda that could (accurately) be called federal price controls,” Rampell wrote.
The Harris team and a handful of less excited economists think the critics are getting it all wrong. Jeff Stein of the Washington Post ReportsHarris’ allies, including Illinois Governor JB Pritzker, pointed out that many states have already passed laws to limit price increases for essential goods in the event of a disaster.
In addition, there are laws that empower the president to restrict price gouging on certain goods that are in short supply during emergency situations. Former President Donald Trump himself used this power to crack down on price gouging on medical goods during the pandemic, which began while he was in the White House.
A typical “centre-left agenda”? Economist and New York Times columnist Paul Krugman defended Harris’ economic program, saying it was far from radical, despite critics’ insistence. “The usual suspects say Harris has turned out to be an extreme leftist,” he said. wrote“Even some moderate economic commentators are furious and say she is essentially calling for price controls, which is odd because she didn’t say anything like that.”
Krugman argues that Harris is calling for a law that would prohibit gouging on food under certain circumstances, not a Soviet-style price-fixing authority. Although Harris has only provided a rough draft, making the whole debate more difficult than it would otherwise be, Krugman says a bill introduced this year by Democratic Senator Elizabeth Warren offers a possible template. The “surprisingly mild” law would prohibit gouging on food during emergencies and is similar to laws that exist in several states. “For example, Texas (yes, Texas) prohibits many businesses from charging ‘exorbitant or excessive prices’ for things like food and fuel during disasters,” Krugman writes.
Emily Peck of Axios Notes that 38 states have passed similar laws, including California and New York. The laws only come into effect in emergency situations, where price increases are limited to about 10%, and usually apply only to large retailers such as supermarket chains. “If banning price gouging is communist, then the US became Marxist a long time ago,” says Peck.
Peck also notes that economists and their supporters in the media typically hate these kinds of laws because they affect the price signals of markets. “Yet most Americans intuitively understand the logic behind them, and Harris is trying to appeal to voters – not academics or newspaper columnists,” Peck says.
Would a ban on price gouging now apply? The debate raises the question of whether Harris’ plan would make a difference in food prices today. After all, the pandemic is over, so a law regulating price increases during an emergency would likely have no effect. It could be that, as some critics suggest, Harris’ proposal is more about signaling to voters that she is on their side than about actually lowering prices here and now.
Nevertheless, high food prices remain a problem for many Americans. Prices are more than 20% higher than before the pandemic. Economist Ernie Tedeschi, a former member of President Joe Biden’s economic advisory council, told the Wall Street Journal that profit margins in food retail have increased during the pandemic and remain high (see chart below).
Are higher margins in grocery retail a sign of ongoing price gouging? The higher margins could reflect new consumer demand for more profitable goods, Tedeschi told the Journal. At the same time, “economists need to be curious and find out what’s going on.”
The conclusion: Until we know the details of Harris’ proposal, it’s impossible to say whether her plan will help lower food prices in the future or whether it will only be used during future emergencies. But there’s little reason to believe that Harris is planning a Soviet-style supermarket revolution, despite what her critics like to imagine.
Schumer aims to end SALT deduction limit after 2025
Senate Majority Leader Chuck Schumer told reporters Tuesday he supports President Joe Biden and Vice President Kamala Harris’ pledge not to raise taxes on people earning less than $400,000 a year, and insisted he would not allow an extension of the $10,000 cap on state and local tax deductibility after it is scheduled to expire at the end of next year.
That $10,000 limit has been a point of contention for residents and lawmakers in high-tax states like New York, New Jersey and California since it was introduced to offset the cost of the 2017 Republican tax cuts.
Schumer was reportedly asked Tuesday about Democrats’ chances of winning key elections on Long Island, the New York City suburb that helped Republicans gain a majority in the House of Representatives in 2022.
“One of the issues that is dear to the hearts of the people of Long Island is state and local deductibility,” Schumer said, according to The Hill“When the deductibility expires at the state and local level, it will no longer exist for us Democrats as long as I am chairman.”
Schumer also reportedly said he wants to end some of the other 2017 tax cuts and partially reverse the Republican’s corporate tax cut from 35% to 21%. “To solve our budget problems, we want to reverse some of the Trump tax cuts that benefited the super-rich,” Schumer said.
The conclusion: The elections in 2024 will help determine the outcome of the tax battle in 2025.
