Congress examines price hikes as big businesses make record profits
WASHINGTON (NEXSTAR) – A Congressional committee is examining whether big corporations are taking advantage of consumers by hiking prices purely to increase profits. This comes as supply chain issues already caused a natural price hike.
Many of the experts who testified before the Congressional committee agreed that big corporations are artificially inflating prices, which forces consumers to pay record high prices while corporations make record high profits.
Representative Raja Krishnaomorthi (D-IL) explained that “companies raising prices far more than required to offset higher costs.”
Democrats say large corporations are exploiting pandemic-related supply chain issues to raise the prices consumers are paying.
“They are going up because powerful executives are making deliberate choices to maximize their profits,” Rep. Katie Porter (D-CA) said.
An economist tracking corporate profits through the pandemic says, during that time, corporations saw the highest quarterly profit margins in over seven decades.
“Big companies, like Procter & Gamble, know that they can take advantage of consumer’s basic needs because they make necessities like diapers and laundry supplies,” explained Dr. Rakeen Mabud of Groundwork Collaborative.
But watchdogs say after decades of deregulation, Congress is also to blame.
“If corporate power allows margins and goods inflation to continue to be this elevated, then there is no real path back to pre-pandemic levels without severely driving down demand for services,” said Mike Konczal of the Roosevelt Institute.
Additionally, Republicans like Congressman Michael Cloud (R-TX) say Democrats are using corporations as a scapegoat.
“I’m concerned that this hearing may be another effort to shift blame from the policies of this administration and the reckless spending of this Congress,” Cloud said.
Republicans say President Biden’s pandemic stimulus package drove prices higher. Tyler Goodspeed, an economist with the Hoover Institution at Stanford University, says that spending caused big problems.
“A 240% annualized rate of growth in demand for goods. That’s a lot. That is a lot,” Goodspeed said.
In an effort to lower inflation by cooling down demand, the Federal Reserve raised interest rates again this week. Interest rate hikes are expected to continue until inflation hits the target rate of 2%.