House Democrats take aim at corporate greed during inflation hearing
House Democrats on Tuesday blamed corporate greed, market concentration and Wall Street investor pressure for contributing to rising prices during a House Financial Services Committee hearing on inflation.
The committee’s Democrats and Republicans traded blame over the root causes of the worst inflation the U.S. has seen in four decades as the price of gas, food, housing, cars and common household goods has skyrocketed.
“Right now, we’re seeing big corporations take advantage of economic conditions and a lack of real competition to pass higher prices onto consumers simply because they can,” said Rep. Maxine Waters (D-Calif.), the committee’s chairwoman.
Several Democrats and committee witnesses cited the highest corporate profit margins in 70 years and earnings calls where executives said customers were more willing to accept price hikes due to the current inflationary environment.
They referred to January remarks from a Constellation Brands executive who told investors that the company wants to “make sure that we’re not leaving any pricing on the table. We want to take as much as we can.” They quoted a Proctor and Gamble executive who said that the company sees “a lower reaction from the consumer in terms of price elasticity than what we would have seen in the past.”
Consumer prices rose 7.5 percent over the last 12 months ending in January, the fastest year-over-year pace since 1982. Economists largely blame the supply and demand issues stemming from the pandemic while also pointing to specific events that have led to supply shortages, such as the global chip shortage in the auto industry.
Democrats’ witnesses on Tuesday said that investors are pushing companies to raise prices so they don’t leave any profits on the table. They also argued that because mega-corporations don’t face enough competition, they are free to hike prices without facing consumer backlash.
“The concern here is that the investor scaffolding that undergirds our entire economy will keep prices elevated for a longer period of time and allow these huge companies to get rich while all of us pay the price,” Rakeen Mabud, chief economist and managing director of policy and research at the progressive Groundwork Collaborative, told lawmakers.
Rep. Cindy Axne (D-Iowa) blamed Wall Street investors for pushing oil companies to execute stock buybacks rather than invest in increased production as U.S. gas prices hit an all-time high.
“This is my big concern, that working Americans are suffering as more money is being put in shareholder pockets,” Axne said. “This is while company after company is reporting record free cash flows. Those calls for more oil production shouldn’t be coming to Washington, they absolutely need to be going to Wall Street.”
Those inflation talking points drew intense pushback from Republican lawmakers, who said that trillions of dollars in fiscal stimulus, including direct checks to Americans, led to excess demand that could not keep up with pandemic-induced supply shortages, leading to higher prices.
“Democrats’ reckless fiscal agenda fueled a spending spree right at the moment our supply logistics were under the most strain,” said Rep. Patrick McHenry (R-N.C.), the committee’s ranking member. “Supply issues are the product of excessive demand that happens by default after a huge government cash dump like the American Rescue Plan.”
Republicans cast the Democratic talking points as an attempt to deflect blame and win back voters who are struggling to keep up with inflation.
Economists have warned that inflation could get worse amid Russia’s invasion of Ukraine, which will cause ripple effects throughout the global economy. President Biden announced a ban on Russian oil imports Tuesday and warned that it will lead to even higher gas prices.
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