Casey committee shows partisan divides over how to fix high prices

Sens. Tommy Tuberville of Alabama (left) and Bob Casey of Pennsylvania hear testimony at the Senate Committee on Health, Education, Labor & Pensions’ subcommittee on Children and Families July 9, 2024 (U.S. Senate photo)

Since the pandemic, Montgomery County resident Erin Wiggle has been struggling. The cost of caring for her children, operating the nonprofit animal rescue she runs with her husband, and buying the things she needs to survive have all increased.

“We incur many expenses, from diapers and food, to gas and vet costs,” Wiggle told a committee of U.S. Senators Tuesday in Washington, D.C. “This is particularly true given the medical needs of some of our children with special needs. Some require special diets while others require frequent trips to specialists.”

Wiggle was invited by Sen. Bob Casey (D-Pa.) to testify before  the Senate Committee on Health, Education, Labor & Pensions’ subcommittee on Children and Families about the impacts of inflation. Tuesday’s hearing was about the sharp cost of living increases since the beginning of the COVID-19 pandemic, with the prices of everyday necessities like gas, groceries and housing on the rise while Americans struggle to keep up.

Both Democratic and Republican lawmakers agreed that something needs to be done to bring costs down and tamper the impacts of inflation, But the two sides can’t agree on what’s causing it, or what to do next.

Casey, a Democrat, has released four studies in the last year in an attempt to explain the source of the rising price of goods around the country. And he has a portmanteau to describe it: “greedflation.”

Casey acknowledges that pandemic-era supply chain issues, exacerbated by the war in Ukraine, increased the prices of goods at a time when many Americans were out of work. But he says the primary issue now is out-of-control corporate greed.

“To be blunt about it, they’ve been ripping people off,” Casey said. “Using inflation as a cover, corporations have artificially raised their prices, leading their profits to soar. Record profits and exploding costs all at the same time.”

Casey cites statistics from the Federal Reserve Bank of Kansas City that found corporate profits rose 75% between July 2020 and July 2022, growing at five times the rate of inflation.

New report from Sen. Bob Casey outlines impact of ‘greedflation’

But Sen. Tommy Tuberville (R-AL), the minority chair of the subcommittee, put forward a different theory.

He puts the blame squarely on “President Joe Biden and a Congress obsessed with spending money our country doesn’t have.”

“The Biden administration has successfully pushed for trillions of dollars in irresponsible deficit spending and dumped fuel on the inflation fire sweeping our country,” Tuberville said.

The different theories on the cause of inflation have led to different proposals on how to fix the results.

For Casey, the solution comes down to corporate regulation intended to rein in runaway price increases.

In February, he introduced legislation that would ban what he calls “grossly excessive price increases.”

The “ Price Gouging Prevention Ac t”would allow both the Federal Trade Commission and state attorneys general to investigate and penalize companies that excessively raise prices at various points of the supply chain and distribution networks, with carve outs for small businesses. It would also require companies to explain their reasons for raising prices during “periods of exceptional market shock.”

For Tuberville, the solution is to slow government spending and deregulate the market to stimulate an increase of production of goods and services. Tuberville called this “unleashing the power of the free market system.”

Tuberville invited David Malpass, former president of the World Bank Group, to testify.

Malpass pointed to a May study from the Federal Reserve Bank of San Francisco that found while some companies did raise prices of goods far beyond the costs of producing them, corporate greed was not a driving factor in inflation.

Ultimately, Tuberville and Casey have almost diametrically opposed views on the causes of inflation and how to fix it.

Dr. Emily Gee, an economist and the Vice President at the Center for American Progress invited by Casey to testify, disputed the idea that simple deregulation is the answer.

“Rising corporate power and growing inequality come from decades of overly-permissive antitrust policy, labor laws hostile towards workers and a tax system that lets corporations get away without paying their fair share,” Gee said.

The inequality between large corporations and small businesses, Gee said, has created an environment that stifles competition and keeps wages down while prices rise.

Daniel Lee, the owner of Philadelphia pasta restaurant Farina Pasta and Noodle, said that he’s had to raise prices not just because of rising costs, but junk fees and competition from private equity-backed chains.

“Fast casual corporate chains, many backed by private equity investors, are opening all around me,” Lee said. “I’m not afraid of the competition. I will stand by my products and services. But it’s not a level playing field. We don’t have the buying power that they do. We can’t purchase in bulk.”

Moreover, Lee points to newer costs of operating a restaurant in 2024, such as fees charged by delivery apps like Grubhub and Doordash. In order to compensate for the fees, he’s had to raise the prices of the food he sells on their apps. But raising prices strictly in the apps, he says, has led the apps to lower his restaurants’ place in search results. And if he wants to get preferential placement in the apps, he’d have to pay extra for it.

“When prices rose in the pandemic, we accepted the general pricing hikes on everything from produce to packaging,” Lee said. “However there is no longer a shortage of produce, drivers, and general things to bring those prices back down … Why haven’t we seen these prices come down?”

Correction: This article was updated at 1:49 p.m July 10, 2024 to correctly reflect who invited David Malpass to testify.

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