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**MAY 11, 2022**
Kuttner on TAP
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**** Biden and the Inflation Trap
Can the president be even more effective in countering the
Republicans' false narrative?
Consumer prices rose at an annual rate of 8.3 percent in April,
according to the Bureau of Labor Statistics report
, slowing a bit from the
March rate of 8.5 percent. Energy prices increased by 30 percent; food
costs rose 9.4 percent, the highest annual rate in four decades.
As I suggested in yesterday's column
,
one villain of the piece was price-gouging by the airlines. Airfares
increased at an annual rate of 33.3 percent. Only a small fraction of
this was more costly aviation fuel. Most was the result of airlines
holding back capacity to drive up fares.
Biden gave a major speech
on the economy yesterday. The speech was one part explainer-what's
really behind inflation-and one part belated partisanship: Democrats
actually have a serious strategy for moderating inflation and
Republicans don't.
He scored a few good punches when he discussed Democrats' proposals
for putting more money in people's pockets, such as giving Medicare
the power to negotiate the same drug discounts that the VA negotiates.
In his previous May 4 speech
,
he whacked the plan of Sen. Rick Scott of Florida, chair of the National
Republican Senatorial Committee, to reduce the deficit by sticking
middle-class families with a tax hike averaging $1,400. (Unfortunately,
that speech bragged about the Democrats' deficit reduction in the
current recovery, lending credence to the wrong litmus test.)
Overall, I'd give Biden's recent speeches on the economy a B-plus.
His task is far from enviable. The sources of inflation are complex; and
despite Larry Summers, most of the cause is not excessive stimulus of
the economy. As Biden explained, inflation is mainly the result of the
COVID-driven supply chain shock and its reverberations, compounded by
the supply effects of Russia's invasion of Ukraine.
But a key source of price hikes not emphasized by the president is sheer
opportunistic price-gouging, as in the airline industry. Here, Biden's
tone and policies are disappointingly mild. Biden said:
I've often said that capitalism without competition isn't
capitalism, it's exploitation. So, we're promoting competition for
everything from Internet services to meat processing.
We basically have four meat processors in the whole country. They
process the meat that goes into the hamburgers you buy, so they set the
price. When there's no competition, they can set the price higher and
higher. So, we're helping smaller companies get into the game to
compete and help bring down the overall prices.
Great, but what about naming and shaming the giant meat processors? What
about the underutilized powers of federal agencies from the Department
of Transportation to HHS to go after price-gouging? If Biden is going to
be credible on inflation, he needs to be more of a fighter for regular
Americans against the plutocracy.
****
~ ROBERT KUTTNER
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House of Representatives Staff Given the Right to Form a Union
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While millions of Afghans hunger, a radicalized Taliban movement is
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skies. BY EMRAN FEROZ
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