Washington Post: White House economists push back against pressure to blame corporations for inflation

February 17, 2022 Media

When the prepared congressional testimony of a senior administration official was circulated inside the White House in recent weeks, it included a passage tying inflation to corporate consolidation and monopoly power.

That language was eventually taken out of the remarks before they were delivered. Members of the White House Council of Economic Advisers had raised objections to the idea that a spike in prices was due to corporate power, according to two people aware of the matter who spoke on the condition of anonymity due to fears of professional reprisals.

Still, the administration faces mounting pressure from other key allies to more aggressively connect rising prices to corporate power and exploitation.

This week, two groups — the American Economic Liberties Project and the Groundwork Collaborative — sent a letter to Biden urging him to order the CEA to “study market realities” and determine the connection between corporate profits and higher prices.

The memo also told Biden to instruct the CEA to study the question: “What percentage of recent price hikes are opportunistic and not associated with any documented shortage or supply chain failure?”

Antitrust advocates often say their arguments are more nuanced than their opponents suggest. They contend that while it is true that American industry has been consolidated gradually over the course of several decades, only now in an environment where it has become easy for firms to blame broader trends are they able to fully exploit it by passing costs onto consumers.

Celinda Lake, a Democratic pollster, pointed to the recent result of a focus group in which some respondents expressed outrage at corporations over a massive increase in the cost of chicken fingers. “People are really responding to the idea that corporations are price gouging. You can’t tell people that’s not going on. They’re experiencing it,” Lake said. She added that “it’s testing off the charts.”

The letter from the American Economic Liberties Project and the Groundwork Collaborative pointed to an analysis finding corporate consolidation costs the average American household $5,000 per year. “There is now overwhelming evidence that large corporations with significant market power are exploiting the broader supply chain crisis to raise prices even when no bottleneck or shortage seems to exist,” the letter stated.