Last week, in an op-ed for The Guardian, Pennsylvania Senator Bob Casey attributed the cause of inflation to businesses. However, critics argue that his statements are misleading and aim to divert attention from his own role in exacerbating economic issues.
Casey acknowledged that inflation is affecting millions of Americans but pointed fingers at business practices as the main driver. "From mid-2020 to mid-2022, corporate profits rose by 75% – five times as fast as inflation. In fact, corporate profits jumped so much that they played a major role in causing inflation," he wrote.
However, studies from the Federal Reserve Bank of San Francisco and Harvard Business School Pricing Lab challenge this assertion. These studies indicate that overall markups remained stable between 2021 and 2023, suggesting that rising prices were due to increased production costs and government monetary policies rather than corporate greed.
Critics argue that the root cause of inflation lies in Washington's spending habits. They point out that progressive politicians like Casey have supported significant spending bills over the past four years, including the Inflation Reduction Act and the American Rescue Plan. The latter injected $1.9 trillion into an already saturated market in March 2021.
According to these critics, such decisions have led to too many dollars chasing too few goods, devaluing each dollar's purchasing power. While some pandemic-related spending might have been necessary initially, continued massive expenditures post-pandemic lacked justification and contributed significantly to current inflation levels.
Opponents also caution against government intervention in setting product prices or penalizing companies for high charges. They argue this could lead to economic instability and potential misuse of power by politicians.
They claim Casey’s proposed bill aims more at political gain than addressing real economic issues: "This cynical plan has nothing to do with inflation and all to do with politics — and it would do nothing to help everyday Americans."
