Presidents Can’t Bring Down Grocery Prices

Grocery prices are up 28% since 2019.

Photo by Martha Ture

The cost of groceries is one of the U.S. public’s biggest concerns, and the belief that a president can do something to lower food costs is is one of its biggest myths.

People, it’s not true. No president can lower the grocery bill.

There are plenty of reasons to fight the drivers and forcers of high grocery bills. But the results, if those fights are successful, won’t be observable for – years.

Grocery stores’ profit margins increased in recent years, according to a March 2024 report by the Federal Trade Commission.

Food manufacturers have relied on price hikes and other tactics to maintain profitability, as well. Besides price gouging, you might recall shrinkflation, in which the amount of product inside the wrapper or box is decreased.

President Joe Biden called out “shrinkflation” during his State of the Union speech in March. And Sen. Elizabeth Warren blamed high grocery prices on “corporate price gouging" during a Senate subcommittee hearing on high food prices in May.

Federal Trade Commission Chair Lina Khan has said she wants the commission to launch an inquiry into big grocery chains’ pricing practices. Khan said the FTC wants to understand why prices remain high even as costs have declined and supply chains have improved. “We want to make sure that major businesses are not exploiting their power to inflate prices for American families at the grocery store.”

Uh-huh.

In the beef, pork, and poultry industries, six players control between 50 and 75 percent of the market.

So the Biden administration has proposed regulations as part of a policy to tackle fairness, competition, and resiliency in meat supply chains. In October of 2022, the Department of Agriculture proposed regulations to further prohibit discrimination and deceptive practices in these meat processing markets to increase competition and integrity in those markets. The pricing power of these few players in the industry is vast when supply shocks happen. And they may be in violation of price discrimination laws. Wait, you’ve never heard of such laws, or their enforcement?

Shocking. A president COULD get the FTC to apply the law and prosecute a little bit. .

The rest of this piece, rather than reinventing the wheel, is taken from a POLITICO article from September 13, which summarizes the tools presidents have to address grocery bills, and the inherent failures of those tools. The one fact that POLITICO does not address head on is that when outfits like Kroger and Archer Daniels Midland buy Congress members’ votes on their policy issues, the public has no chance to prevail. The only way to fix that problem is to reverse the Supreme Court’s 2010 Citizens’ United decision, which authorizes unlimited corporate funding on political campaigns. And what Congress would vote to end a policy that cuts off their income?

So let’s read some of the POLITICO wishes versus facts article - and please read the rest of the piece here:

Price gouging ban

Harris called on Congress to pass a federal food price gouging ban as part of an economic policy speech she gave in August. Her proposal would largely mirror a bill Sen. Elizabeth Warren (D-Mass.) reintroduced earlier this year, which would empower the Federal Trade Commission and state attorneys general to penalize companies that try to use their market leverage to attempt to sell goods or services “​​at an excessive price.” But it would leave it up to the FTC to define what qualifies as “excessive.”

Harris also pledged that, as president, she would empower the FTC to help enforce the legislation and carry out other antitrust enforcement. 

Supporters of such a proposal point to an admission by a Kroger grocery store executive, in a March email, that the company hiked its prices on milk and eggs more than necessary during the pandemic. The email was revealed as part of a federal antitrust trial challenging Kroger’s merger with fellow grocery giant, Albertsons.

“My plan will include new penalties for opportunistic companies that exploit crises and break the rules, and we will support smaller food businesses that are trying to play by the rules and get ahead,” Harris said in her Aug. 16 remarks.

Reality Check

Democrats on Capitol Hill are privately saying that Warren’s bill or similar legislation has no chance of passing Congress anytime soon, even if their party wins the White House and control of Congress this November. Democrats would also likely struggle to win more funding for the FTC if Harris is president and maintains the commission’s current, liberal leadership.

Harris’ campaign, itself, has toned down its rhetoric on the issue and on how aggressive she would be as president. Brian Nelson, a top Harris economic adviser, told reporters at the Democratic National Convention in Chicago last month that the plan simply aimed to match up federal standards with so-called price gouging guardrails that already exist in 37 states — many of them Republican-led and enforced by current GOP officials. 

Those restrictions, however, would only apply during emergencies, like the Covid pandemic, and empower agencies to more aggressively go after pricing behavior far outside the norm.

Economists, especially on the right, have called Harris’ price gouging proposals unnecessary and even communist. David Kelly, an economics professor at Miami Herbert Business School, said her approach is “not effective at all.” But others have argued that it could deter opportunistic behavior – especially as climate change and geopolitical conflict could lead to more frequent emergencies. 

“​​Supply shocks in the future are likely to be sharper and more frequent,” said Isabella Weber, an economist at the University of Massachusetts Amherst. “We need to equip the FTC and state attorney generals to deal with the coming supply shocks.”