The Dem’s Inflation-Fighting Plan Is A Cruel Joke
https://issuesinsights.com/2022/06/21/the-dems-inflation-fighting-plan-is-a-cruel-joke/
‘Today the Democratic House takes a strong step to bring down crucial kitchen table costs of the pump and grocery store and across the board.”
That’s the transcript of what House Speaker Nancy Pelosi said on the House floor before all but five of her fellow Democrats voted for the “Lower Food and Fuel Costs Act” last week.
Pelosi’s garbled syntax aside, the only thing this bill would lower is the public’s trust in anything Democrats say these days. Despite its title, this bill would expand government but do nothing – repeat, nothing – to lower prices today, tomorrow, or any time in the future.
Among the Democrats’ brilliant inflation-fighting ideas is to create a new meat police to harass the meat industry. Another is to expand a subsidy program for farmers that has already proved ineffective in keeping food prices from skyrocketing. Finally, it would expand the use of ethanol – a plan that even President Joe Biden admits will fail to lower fuel prices.
Biden loves to blame high food prices on the supposed lack of competition among meat packers. This is a favorite Democratic tactic whenever the price of something goes up. If oil prices soar, they accuse Big Oil of conspiring to rip off consumers. Now it’s Big Meat.
Never mind that there’s no evidence of any industry collusion on prices. If they were able to collude, why wait until now? Up until the COVID fiascos, beef prices had tracked overall inflation for decades.
There’s the fact that creating a new “special investigator,” with sweeping authority to sue the industry for alleged anti-competitive behavior without any evidence, is hardly going to affect prices. If anything, it will raise costs by imposing the heavy foot of government on what is today a functioning market.
The bill also claims to lower food costs by encouraging farmers to adopt “precision farming” techniques that would lower their reliance on fertilizer, the cost of which has also spiked.
Here’s how Democrats on the House Agriculture Committee describe this: “Expanding access to precision agriculture has the potential to reduce fertilizer use and lower costs while also providing resource benefits including clean water and reduced carbon use. It is also a priority to help deal with the water shortages facing growers in much of the Western United States.”
But this program has been around for 26 years and Washington has dumped more than $25 billion into these subsidies. What effect has all this largesse had on food price inflation today? Go to your nearby grocery store for the answer.
The idea that expanding this program slightly will miraculously bring down food prices in the near future, let alone anytime in the future, is ludicrous. Besides, farmers have a built-in incentive to improve the efficiency of their operations without needing government loan programs.
So, what about plans to expand ethanol use? The Democrats say that letting retailers sell so-called E-15 gas year-round will cut pump prices because ethanol is cheaper per gallon than conventional gasoline. (The reason E-15 – which is comprised of 15% ethanol instead of 10% – isn’t sold in the summer is that it aggravates smog.)
But an analysis by McKinsey concluded that this would have a “negligible impact,” mainly because E-15 is sold at fewer than 2% of gas stations around the country, accounts for less than 1% of gasoline sold, and letting it be used year-round would result in a tiny 0.11% increase in annual ethanol production because E-15 requires specialized equipment. Not to mention the fact that most consumers would avoid it for fear of wrecking their car engines.
Democrats know this is the case, which is why the best justification they can come up with is that letting E-15 be sold year-round would “encourage and incentivize businesses that may have been reluctant to expand capital for biofuel infrastructure.” So, encouraging businesses to spend more will dampen inflation? Come again?
Biden doesn’t believe this will make any difference either. The Washington Post reported recently that while talking up E-15 as a money saver in public, “privately, Biden dismissed the policy as ineffective” and “worried … that it exaggerated ethanol’s ability to cut gas prices and could harm his climate goals.”
There’s also the inconvenient truth that encouraging farmers to turn more corn into fuel will leave less corn for food, pushing up grocery prices. So even if consumers did see gasoline prices fall, they’d pay for it in higher food prices
The Democrats’ bill does have one thing in its favor. It makes it clear that the only way to change the direction of economic policy coming out of Washington is to change the leadership in Washington.
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