Inflation replaced COVID-19 as Americans’ top concern at the beginning of the year when prices surged at the highest rate in nearly 40 years. Cause for concern has only increased since with the latest report that consumer prices rose 8.5% in March.
This comes as President Biden’s disapproval rating reaches a new high, with 69% of voters, and even 44% of Democrats, saying they don’t approve of his handling of inflation. As usual, the government has taken actions that have made the problem worse and the big-government solutions they are pushing will do nothing to address inflation. The Democrats have set a trap, and Republicans need to not fall into it.
During an election year, surging inflation and plunging approval ratings have sent Democrats scrambling to find someone to blame for inflation. In casting about for a more acceptable villain than the government policies that have created this mess, the White House and Congressional Democrats have zeroed in on consolidation and large companies as culprits. Republicans should be wary of playing a supporting role in this blame game as doing so would give Democrats a political excuse for bungling the economy while doing nothing to rein in the real causes of inflation.
The sustained increase in the general price level that consumers are now enduring is thanks largely to so-called government stimulus that has sent new dollars directly to consumers and businesses. This injection of money has caused demand to outstrip supply, which was already straining under pandemic-induced constraints. Rather than addressing these underlying causes, Senate Democrats are reportedly busy drafting legislation intended to cut costs for America consumers while still holding out hope that they can flood the economy with more reckless spending as part of Mr. Biden’s Build Back Better effort.
A key feature of the Democrats’ plan to fight inflation is a slew of new antitrust laws intended to curb the allegedly inflationary practices of large corporations. This push for new antitrust legislation to fight inflation comes despite Mr. Biden’s own Treasury Department expressing skepticism about the impact of such corporations on inflation. According to Jason Furman, a top economist for former President Barack Obama, “almost everything other than the Federal Reserve is a sideshow when it comes to the dynamics of inflation.” In a University of Chicago survey of top economists, three-quarters agree antitrust legislation will not fix inflation. Two-thirds disagreed that today’s inflation is caused by “markets taking advantage of their market power to raise prices in order to increase their profit margins.”
What’s more, the new regulatory legislation that Democrats are pushing is not intended to strengthen the antitrust laws applicable to the entire economy, but rather is limited to just a few tech companies. Democrats like Sen. Amy Klobuchar of Minnesota and Rep. David Cicilline of Rhode Island have sponsored antitrust legislation that targets just a handful of tech companies based purely on their size rather than their market share. These bills aren’t about illegal monopolies charging exorbitant prices, but rather are intended to prevent the targeted firms from engaging in common business practices such as promoting their products and services on their own platforms and marketplaces. That’s hardly the prescription to fight higher prices, even if arguments alleging a link between corporate consolidation and inflation were more than political convenience.
The skyrocketing prices at the pump and grocery store that Americans and small businesses are grappling with today are a result of the failed fiscal policies of this administration and the Democratic majority in Congress. Yet despite their transparent effort to find a scapegoat for their disastrous policies and a convenient “fix” that is unrelated to the actual problems at hand, some Republicans in Congress appear eager to play along. Driven by concerns with Big Tech’s treatment of conservatives, some Congressional Republicans are enthusiastic supporters of these antitrust bills simply because they provide a tool for harming the tech companies they disfavor, even if it means also hurting consumers.
Republicans inclined to support new antitrust laws should take a moment to recognize what’s at stake here. Consumer despair about inflation is sure to translate into angry voters at the ballot boxes. Indeed, that’s the very reason Democrats are now desperately searching to find something, anything, on which to blame inflation ahead of November. But voters don’t want scapegoats. They want solutions. Instead of giving Democrats a free pass on inflation by supporting antitrust legislation targeting Big Tech, Republicans should explain to voters how Democratic policies are to blame for their devalued paychecks, and why they need to elect politicians who won’t make similar mistakes in the future.
• Andrew F. Quinlan is the co-founder and president of the Center for Freedom and Prosperity (@cfandp).
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