Vice President Kamala Harris announced its economic agenda last Friday. It is best summed up as a distraction and a projection. It seeks to shift the blame for inflation from Biden-Harris economic policies – where it belongs – to what it calls “price gouging” by American companies. Ironically, data from the government’s own Labor Department proves that its claims of price gouging are simply false.

Prices paid by businesses (as measured by the Producer Price Index) have increased by 19.4 percent under the Biden-Harris administration. That’s exactly the same increase that occurred in prices paid by consumers (as measured by the Consumer Price Index) during the same period. In other words, inflation affects the entire supply chain from farm to fork.

If manufacturers or retailers had engaged in extortionate pricing (that is, increased prices more than inflation justified), the inflation rate for consumers would have been higher than for manufacturers. This was not the case.

Vice President and Democratic presidential candidate Kamala Harris and her running mate, Minnesota Governor Tim Walz, hold a campaign rally in Milwaukee, Wisconsin, USA, August 20, 2024. (REUTERS/Kevin Lamarque)

In fact, consumer price increases have only recently caught up with business price increases. For most of the past three and a half years, cumulative inflation for businesses has been higher than cumulative inflation for families. In other words, businesses have raised consumer prices more slowly than inflation has raised their costs.

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Either companies were unable to keep up with soaring inflation, or they were protecting consumers from the intensity of the inflation surge under Biden and Harris—or both. Either way, companies were clearly not engaging in price gouging.

The introduction of price controls in the food sector will neither reverse these measures nor mitigate their effects.

The reality is that Biden and Harris’ economic policies caused the inflation that working and middle class Americans are experiencing today. These policies include massive government spending that required a dramatic increase in the money supply, as well as burdensome costs from over-regulation. Their cumulative effect has been devastating.

The first policy mistake of the Biden-Harris administration was excessive government spending. This should not have been a surprise. Recall that in February 2021, before the passage of the ironically named American Rescue Plan and its $1.9 trillion in government spending, Democratic economist emeritus Larry Summers warned that it would “unleash inflationary pressures the likes of which we have not seen in a generation.”

Combine that law with about another trillion dollars in spending under the absurdly named Inflation Reduction Act passed the following year, and we experienced inflation at levels not seen since the 1980s. This spending spree has now institutionalized annual deficits of several trillion dollars. Outside of national emergencies such as war or recession, our deficits have never been so gigantic.

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The Federal Reserve financed this spending by literally creating money for the Treasury to borrow and spend. This caused the dollar to depreciate and prices to rise around the world at the fastest rate in over 40 years, far outpacing wage growth. As a result, even though personal incomes have risen, people can afford far less today than they could three and a half years ago.

Excessive government spending not only drove up prices, but also interest rates. This increased the cost of borrowing for businesses and consumers alike and exacerbated the cost of living crisis. Because of higher prices and higher borrowing costs, the average American family has effectively lost over $8,000 in annual income compared to when Harris took office.

Harris bears enormous responsibility for the overspending that has caused these problems. Not only has she championed every major spending plan over the past three and a half years, lauding the success of “Bidenomics,” but as Vice President she was the deciding vote in the Senate on the two largest spending bills. Her fingerprints are all over the powerful weapon that has ruined Americans’ finances.

But spending is only part of the cause of today’s cost-of-living crisis. The regulatory burden on American families and American businesses has exploded under this administration.

These regulatory costs affect both producers and consumers because they mean higher production costs that are simply passed on to customers.

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A study released just last month found that the Biden-Harris administration will have increased regulatory costs per household by nearly $50,000 (net present value) by the end of its current term, equivalent to an annual cost of $6,300 per household over 10 years.

However, this regulatory burden is not taken into account in the inflation calculation, so it is in addition to the 19.4 percent inflation that the Biden-Harris administration has imposed on American consumers.

Conclusion: Biden and Harris’ economic policies have fueled the crippling inflation of the past three and a half years. Accusations of price gouging are a baseless attempt to avoid blame for the obvious consequences of these policies.

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Imposing price controls on food will not reverse this policy or reduce its impact. In fact, it is simply another government program—which has already failed every time and everywhere it has been tried—that would exacerbate the inflation that the Biden-Harris administration’s policies caused in the first place.

It’s bad enough that Harris has played such a major role in raising prices for businesses and consumers. But it’s even worse when she tries to blame hard-working entrepreneurs for the mess she herself created.

EJ Antoni, a finance scholar at Heritage, is a senior fellow at Unleash Prosperity.

Heritage is listed for identification purposes only. The views expressed in this article are those of the authors and do not reflect the institutional position of Heritage or its trustees.

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