Trump says Kamala is a communist and plagiarist. He’s wrong – about one

Donald Trump says that “Comrade Kamala” Harris’ economic plan is “full communist”. He also claims that she’s shamelessly copied his economic plan. So which is she – a communist or a plagiarist?

Of course, Harris is no communist. She’s not proposing that ownership of the means of America’s production, distribution and exchange be stripped from private interests and held in the “people’s ownership”. But here are a couple of the policies she’s embraced that gave rise to the accusation.

Illustration by Dionne Gain

Last week, she and outgoing President Joe Biden announced big cuts for seniors in the price of 10 widely used prescription drugs. Some 9 million older Americans will see the price of their medications cut by between 38 per cent and 79 per cent next year, for treating maladies like diabetes, heart failure, Crohn’s disease and arthritis.

How is this possible? Because, after half a century of trying, Biden managed to give America’s Medicare system the legal authority to negotiate drug prices with “big pharma”. In communist Australia, we’ve been doing this since 1948 under the Pharmaceutical Benefits Scheme. It’s how private profit and the public interest can co-exist in a mixed economy. And it’s normal in civilised countries.

Second, Harris announced that she’d propose “the first-ever federal ban on price gouging on food and groceries”. This appeals to Americans struggling with grocery prices which have risen by a national average of 21 per cent in three years. But she gave no detail.

“This is not sensible policy, and I think the biggest hope is that it ends up being a lot of rhetoric and no reality,” a one-time senior economic adviser to Barack Obama, Jason Furman, told The New York Times.

His hope is likely to be realised. The last time the US tried to implement broad price controls was under Richard Nixon in the early 1970s. The scheme collapsed and was abandoned. Such schemes so distort market price signals that they prevent resources flowing to areas of shortage, so shortages persist. It’s the reason that Trump called Harris’ plan “Maduro economics”, after the dictator of Venezuela.

Harris isn’t proposing anything so drastic, of course, but the wiser path is to stimulate competition, not stifle price signals.

Is Harris a plagiarist? Well, yes. Trump earlier proposed scrapping the tax on tips for hospitality workers. It was well received. So now Harris has embraced the same idea. But so what? There are no penalties for policy plagiarism in politics. And it turns out that she’s not the only plagiarist in this race. The Democrats have in place a child tax credit of $2000 per child per year. Trump’s vice-presidential candidate, J.D. Vance proposed raising it TO $5000. So who’s copying whose ideas, here?

But wait – within a week, Harris announced that she’d increase it to $6000. When does it cease to be plagiarism and instead turns into an auction? And this is an auction for ownership of a very good policy. The child tax credit has served America well. As an emergency pandemic measure, it proved vital in helping low-income families survive. It lifted more than 2 million children out of poverty with negligible contribution to inflation. It’s a policy to do something that dare not speak its name in US politics – redistribute income. But that’s exactly what’s needed as a prudent welfare measure in pursuit of a decent society.

Crying foul: Donald Trump at a campaign rally in Pennsylvania on Saturday.Credit: AP

Harris had another good idea in her speech on economic policy last week. Like Australia, and most of the developed world, the US has a housing shortage. Harris promised to increase the existing target for building new affordable homes from 2 million to 3 million. And to achieve this, she proposes offering tax incentives to home builders, an idea other countries could well plagiarise.

But Harris also lobbed a stinker. It’s one that Australian governments, state and federal, have been insulting us with for years – cash grants for first home buyers. Harris is promising $US25,000. Such grants merely feed directly into the price of houses in the first home buyer market. The horizon recedes. The policy drains the treasury while helping no one.

But despite Harris’ bad ideas, Trump wins the prize for most harmful specific policy. He’s pledging an across-the-board tariff of somewhere between 10 and 20 per cent on all US imports worldwide, and a tariff of 60 per cent on all imports from China, America’s biggest supplier.

These would be imposed on top of the existing tariffs, most of which were imposed by Trump in his last term, of up to 25 per cent. For goods from China, “the total cumulative tariff under Trump would be 90 or 100 per cent, and that becomes almost prohibitive,” former US deputy trade representative Wendy Cutler tells me.

“This would have a profound impact on inflation,” as the importing businesses pass on the cost to American consumers, “and a huge impact on the US middle class”. The cost to the average household is estimated at between $US1700 and $US3000 a year. Harris calls this the “Trump tax”.

Harris and Trump differ on the particulars of economic policy, but they are united when it comes to the overarching question of how to pay for everything. They are united in living in a magical kingdom where everything goes on the national credit card and no one ever has to pay the debt.

“America is sleep-borrowing $US5 billion a day,” say the respected experts at the non-partisan Committee for a Responsible Budget. “Our elected officials have slept through so many alarm bells that we’ve racked up over $US1.5 trillion in deficits this year, and the interest on our debt alone is more than we spend on national defence.”

“In just three years, within the next presidential term, our national debt will exceed an all-time record share of the economy,” and this is in peacetime with a growing economy, the best of times. We’re hearing shockingly little in the way of plans to turn things around.”

When the bond markets call time on America’s debt, it won’t matter what you call the president.

Peter Hartcher is the international editor.