The cost of living is the preeminent economic concern for American voters. As recent polling commissioned by Pinpoint demonstrates, inflation is the leading issue for swing state voters. Given this reality, it’s no surprise that Vice President Harris made the rising cost of living central to her economic pitch in today’s speech in Pittsburgh. However, Harris faces a significant challenge in maintaining credibility on this issue after the cost of living skyrocketed under the current administration.
A simple statistic belies the challenge that Harris faces in distancing her campaign from her administration. In December of 2020, average hourly earnings, adjusted for inflation, was $11.41. According to the most recent data, real hourly earnings were $11.21. Put simply, for a given hour of work, Americans make less now than they did before the current administration assumed office. Yes, there are legitimate nuances with measuring real earnings over the last several years, but there’s a reason inflation has been hanging around the current administration’s neck like a millstone.
That the inflationary spiral kicked off with a partisan spending binge is not lost on voters. Nor was it lost on the Biden administration itself, as reporting suggests that former Fed Chair and sitting Secretary of the Treasury, Janet Yellen, shared the concerns of a bipartisan chorus of economists warning about the inflationary risks from the American Rescue Plan.
An honest approach to addressing the cost of living would be a recapitulation of “Bidenomics,” but rather an acknowledgement of past policy mistakes. Today’s policy speech embraced the former approach over the latter.
In addressing the runaway prices under Biden and Harris’ watch Harris invoked the concept of “greedflation,” which has been progressives’ clumsy attempt to shift blame on from the recent inflationary surge away from the laws of supply and demand. Of course, when studied seriously, this distraction evaporates.
To affirmatively address the cost of living, candidate Harris proposed another variation on recent policy themes: subsidize demand.
When it comes to family budgets, candidate Harris has proposed a substantial expansion of the Child Tax Credit. She has likewise proposed raising the U.S. corporate tax rate to the second highest rate among developed economies. Research shows this is a bad trade. Indeed, a new analysis from EY and the American Action Forum show that this policy, while providing some short term benefit, will leave the economy and taxpayers worse off over the medium and long-term through reduced wages, lower employment, and a diminished economy.
On healthcare, candidate Harris has embraced price controls. She has vowed to “take on corporate landlords,” echoing the administration’s calls for rent control. Rent control would be a predictable disaster for the U.S. housing market. Where it has been tried, it has consistently proven to be a demonstrable failure.
These are the challenges of the Harris economic agenda. How does a sitting vice president establish distance from a demonstrably failed agenda? The best the Harris campaign appears to be able to do is borrow from more distant administrations’ policy failures.