Price controls: What Chuck Grassley and Kamala Harris have in common

Price gouging proposal spurs absurd comparisons

Photo by Matthew Burpee on Unsplash

Surely, Chuck Grassley isn’t a communist, right?

You’ve got to wonder.

In 2019, Grassley pushed a bill aimed at cutting the cost of prescription drugs covered by Medicare.

The pharmaceutical industry didn’t like the bill, which Grassley sponsored with Oregon Democrat, Sen. Ron Wyden. A lot of Grassley’s fellow Republicans didn’t like it, either.

Critics called it price control.

One likened the plan to a government “sledgehammer.”

Grassley pushed back. He said the other side was engaging in scare tactics.

The bill merely matched government subsidies going to drug manufacturers to the rate of inflation.

Grassley continued pursuing his plan in 2020. Joni Ernst signed on.

Opponents continued to call it price control.

To be clear, I don’t think Chuck Grassley is a communist. Joni Ernst, either.

Still, it is easy to mislead. Words like “communist” and “price control” come loaded for bear. They frighten people and conjure up all sorts of bad images. Which is why Republicans—including, yes, Joni Ernst—are turning to these words to falsely describe Vice President Kamala Harris’s approach to dealing with high grocery store prices.

Such is politics. But it’s not the truth.

Harris did not propose price controls. Not once. She did propose a federal anti-gouging law, though she didn’t explain how it would work. What she did say is, “my plan will include new penalties for opportunistic companies that exploit crises and break the rules, and we will support smaller food businesses that are trying to play by the rules and get ahead.”

Beyond that, there are few details. Which has given rightwing critics room to run wild with the Red Scare tactics, labeling her a communist. They’ve also compared her approach to the most infamous modern example of price controls in US history, Richard Nixon’s 1971 decree that froze wages and prices temporarily.

After Harris’s speech, the Wall Street Journal editorial board ran a piece entitled: “Kamala Harris endorses Nixonomics” It accused her of adopting “Venezuelan-style” policies.

The comparison is ludicrous. She never suggested the kind of controls being exerted in Venezuela. And even a cursory study of Nixon’s price controls shows there is no parallel.

The US government’s power over wages and prices was so pervasive back then that an elaborate system of pay boards and price commissions had to be set up just to implement it. The reach of the government was so deep the town of Cresco, Iowa, had to get an exemption in the fall of 1971 from the federal Cost of Living Council to increase utility rates to pay for a new sewage disposal plant. The town of North English, Iowa, couldn’t initially get a water rate increase to pay for drilling a new well because the feds spiked it.

The federal government investigated hundreds of school districts—many of them in Iowa—for suspected non-compliance with rules governing teacher salaries.

Kamala Harris endorses Nixonomics?

Give me a break.

Read Harris’s words again: “My plan will include new penalties for opportunistic companies that exploit crises and break the rules…”

If those words sound familiar, it’s because they echo laws and rules in dozens of states—including Iowa—that prohibit price-gouging when there’s a crisis. Like during a flood, hurricane or tornado—or a pandemic.

Iowa’s rule, which includes food and medicine, says an excessive price is one that is “not justified by the seller’s actual costs of acquiring, producing, selling, transporting, and delivering the actual product sold, plus a reasonable profit.”

Republicans in red states, such as Florida, regularly invoke anti-gouging laws during emergencies. Even Brenna Bird, the Trumpian attorney general in Iowa, advises people who believe they are the victims of price gouging during emergencies that they can file a complaint.

The fact is, we don’t know precisely what Harris has in mind when she talks about a federal law banning price gouging in grocery stores. Would it go beyond what the states are doing? Would her plan mean an aggressive regulatory approach toward large grocery chains?

To be fair, economists on the left have expressed some concerns about this, too, though not with the kind of hyperbole we’re hearing from the right. So, it would be good for Harris to offer more details. This is especially true, if she expects to convince people her ideas will work to alleviate high costs and aren’t just a messaging tactic, as Politico reports some congressional Democrats are saying.

Trump should also be expected to offer specific ideas, too. So far, his most prominent economic proposal—a universal tariff on all imported goods and enhanced tariffs on China—would raise prices on the typical American household by $2,600 per year, according to the Peterson Institute for International Economics.)

Even if Harris does offer a detailed plan, I doubt it will blunt the lies and exaggerations.

Let’s face it: Price controls are scary, and scary is good politics.

Just ask Chuck Grassley.

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