Democrats are increasingly blaming producers of goods for high prices as rising inflation drags down President Joe Biden’s approval ratings and threatens the party’s prospects.
For most of this year, the messaging from the Left has been that high inflation, rather than being attributable to government spending or monetary policy, is merely a temporary phenomenon that will start decreasing. That notion has not turned out to be correct, and inflation clocked in at a 39-year high this month. Now, some Democrats are pointing their fingers at big business and corporate greed.
The biggest driver of the high inflation numbers has been energy costs, which are up more than 30% year over year. Many people are feeling pain at the pumps, especially those in the rural parts of the country who have long daily commutes. Gas prices, as a national average, are more than a dollar higher than they were in December of last year.
The higher prices prompted President Joe Biden to call upon the Federal Trade Commission to launch an investigation into oil and gas companies. He claimed their “anti-consumer” behavior is behind the inflated gasoline costs.
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“The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies’ costs are declining,” Biden said in a letter to FTC Chairwoman Lina Khan. “The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately.”
While gas prices have declined slightly in the last month, in November, Biden highlighted that the cost for refined fuel was dwindling while gasoline prices were increasing, something that he contended was evidence of major corporations taking advantage of consumers.
The global oil cartel OPEC+ has declined requests by the administration to increase output substantially amid the rising energy costs. Biden ultimately released 50 million barrels of oil from the Strategic Petroleum Reserve in an effort to tamp down gas prices.
Similarly, Sen. Elizabeth Warren, one of Congress’s fiercest antitrust enforcers, sent letters to the country’s biggest natural gas producers following reports that energy companies are exporting gas overseas, thus creating further scarcity in the domestic market and driving up prices.
“The cause of rapidly rising energy prices for consumers and manufacturers is clear: some of the nation’s largest and most profitable oil and gas companies are putting their massive profits, share prices and dividends for investors, and millions of dollars in CEO pay and bonuses ahead of the needs of American consumers and the nation’s recovery from the pandemic,” the Massachusetts Democrat said.
The industry has responded that oil and gas business is competitive and that prices are determined by supply and demand.
Around Thanksgiving, Warren also drew headlines when she called upon the Justice Department to investigate anti-competitive practices in the poultry industry, which she blamed for higher turkey costs. The price of a turkey for this year’s Thanksgiving was up 24%, and an entire average Thanksgiving dinner was up 14%, according to the Farm Bureau.
“Given the apparent connection between rising poultry prices for consumers and the history of anticompetitive practices in the poultry industry, I ask that you open a broad investigation into the impact of price-fixing, wage-fixing, and consolidation in the poultry industry on consumers and farmers,” she said.
John Rosen, an adjunct economics professor at the University of New Haven, told the Washington Examiner that the driving factor behind the current broad-based inflation in the economy and marketplace is simply too much money chasing too few goods. He said that during inflationary years, politicians like those in the administration try to look for “villains” to blame for the higher prices.
“But blaming producers for price increases is kind of like blaming an airplane crash on gravity. It’s technically accurate, but it’s not very informative, and it doesn’t tell you what to do,” Rosen said, adding that producers don’t like having to raise prices because it can drive their customers toward their competition.
White House press secretary Jen Psaki addressed a question during a briefing this week about whether Biden agreed with some on the Left that corporate greed was contributing to inflation. Psaki said there are differences from industry to industry but did make a point of highlighting the “greed of meat conglomerates.”
“Gross profit margins for big meat processors are up 50%, and net margins are up over 300%. That should not be the case,” Psaki said. “That is not all attributed to the supply chain issues.”
This is not the first time that Biden’s White House has waded into the realm of meat price policy. This summer, the president signed an executive order on competition that targets what the White House sees as unfair practices in the agribusiness industry.
The order directs the USDA to issue new rules under the Packers and Stockyards Act that the administration believes will make it easier for farmers to bring claims, help chicken farmers from being exploited and underpaid by chicken processors, and put in place anti-retaliation protections for those who speak out about bad practices.
Earlier this year, a bipartisan group of lawmakers signed a letter to Attorney General Merrick Garland asking him to take action over what they perceive as anti-competitive practices. The lawmakers said that four large companies, two of which are foreign-owned, control 80% of the meatpacking industry “and are seemingly able to control prices at their will, or even defy expectations of market fundamentals.”
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As Democrats increasingly blame producers for rising prices, Rosen said the messaging that higher prices are the fault of greedy corporations might not work for most people, but it will resonate with some portion of the electorate. Messaging on the economy is crucial for Biden and Democrats right now because Republicans are undoubtedly gearing up to use the higher prices as a cudgel in next year’s midterm elections, when they hope to retake Congress.
“The administration and the politicians will continue to mount the argument and attack producers, and there is at least some subset of the American public that will believe them and agree with them,” Rosen said.
