Jeanna Smialek:
So what exactly is kind of the key question here? And the answer is, we don't know yet. We do not know exactly what this policy would look like.
And I think the devil is really in the details. We do not know how they go about preventing price gouging or even how they're defining price gouging at this point. What we do know is that profits went up quite a lot in the grocery sector during the sort of aftermath of the 2020 pandemic.
So, in 2021, we saw profit shoot up at grocery stores and they stayed up for a while. That was pretty consistent with what we saw across the economy. We really saw a lot of companies raking in a lot more profits because they were charging more. As costs had started to shoot up, they were charging more to try and cover those costs and they actually even charged a bit more than was just necessary to cover costs during that period.
And so there are a lot of people out there, a lot of economists, particularly on the progressive side of the aisle, who have been saying things like this was an example of price gouging. This was an example of what happens when you have an imperfectly competitive marketplace and really saying that we need to see some sort of response from the government on this.
And that is what we're potentially seeing here. Now, you will get economists on the other side saying that this was an economy that basically worked the way you would expect. We had shortages for things. We had shortages for eggs. We had shortages for a lot of grain-type things during this period. And as a result, companies were charging more because things were in short supply and they could charge more.
And that resulted in more production and then prices came down. And so some economists are saying, this is econ 101. This is how things work. If you put some sort of price mechanism or in some way stop the economy working from working the way that it just would on its own, you might not have that supply come online.
And at the same time, progressive economists are really celebrating this. So you have got a very, very contentious debate without a lot of detail.
Jeanna Smialek:
Yes, so I think there are two big questions here. One is political viability and the second is economic viability.
So when it comes to the political viability side, this stuff would have to pass Congress. In order to get those three million new homes built, you would really have to have a lot of — the way the Harris campaign is proposing to do it is through a lot of incentives for homebuilders and for local housing authorities to really sort of encourage home building.
And that money needs to come from Congress. So I think there's a real question, could you get it through? What does Congress look like? Is this going to be possible?
Then, on the back side of that, you have got to say, would it work and would it work in the time frame that the Harris campaign is talking about? Because it's a pretty ambitious, pretty accelerated time frame they're laying out here. She's saying those three million units will go up within the four years that she's — the first four years that she's in office.
And so I think that those are those are some big questions. And then flip side here is, if you're not building enough supply and you're giving employer — or you're giving first-time homebuyers $25,000 as a credit, is there a risk that just all goes to prices? Is there a risk that home sellers can just charge more these, because now homebuyers can afford to pay more?
And so I think this is a big, knotty set of questions that will really depend on sort of the political and practical realities at the moment.
Jeanna Smialek:
Yes, so this is a fascinating one because there really is a lot of bipartisan support for the child tax credit, in fact.
You actually saw J.D. Vance over the weekend talking about how he'd love to see a bigger child tax credit. And so I think that there is some possibility that Republicans would reach across the aisle on this one, that you could get something through Congress on the child tax credit.
I think the huge question, though, is, how do you pay for it? It obviously is expensive to do these things. The Harris campaign hasn't laid out in detail how they're planning on paying for these kinds of policies. They do mention in their campaign briefings things like making corporations and wealthy Americans pay their fair share.
But, at this point, we don't have any sort of detailed explanation of how these policies would be offset in the budget. And so I think that's the big question here going forward.
