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At Congressional Hearing Focused on Blaming Big Business For Economic Woes, Rep. Byron Donalds Directs Blame Where It Belongs: At Democrats

September 24, 2022
Margaret Flavin

Rep. Byron Donalds (R-FL)  is a rising star who is unafraid of fighting back against failed Democrat policies.

On Thursday, Donalds destroyed economists at a House Oversight and Reform Subcommittee on Economic and Consumer Policy hearing.

The hearing, “Power and Profiteering: How Certain Industries Hiked Prices, Fleeced Consumers, and Drove Inflation,” focused on “how certain industries have used their market power to drive inflation to 40-year high levels that cannot be explained solely by traditional supply-and-demand factors.”

Witnesses included Robert B. Reich, Carmel P. Friesen Professor of Public Policy The Goldman School of Public Policy University of California, Berkeley; Mike Konczal, Director, Macroeconomic Analysis Roosevelt Institute; and Rakeen Mabud, Ph.D., Chief Economist and Managing Director of Policy and Research Groundwork Collaborative.

Also testifying was economist and economic historian Tyler Goodspeed.  Gooodspeed was the acting chairman of the Council of Economic Advisers from June 2020 to January 2021.

Despite claims the hearing was not focused on vilifying corporate America, comments from witnesses did just that.

The House Committee on Oversight and Reform shared:

Today, Rep. Raja Krishnamoorthi, Chairman of the Subcommittee on Economic and Consumer Policy, held a hearing to examine the role of excess corporate price hikes in driving the inflation that U.S. consumers have been experiencing since early 2021.

“We are not here today to vilify corporations.  As a former small businessman, I know that American innovation is the backbone of our economy, and many corporate leaders deserve praise for creating jobs and growth,” said Chairman Krishnamoorthi in his opening statement.  “We are also not here to suggest that excessive price hikes are the sole cause of inflation.  But we cannot ignore the reality that American companies today are reporting higher profit margins than ever, while increasing prices more than necessary to cover costs—all at the expense of the American consumer.  And we must do everything in our power to shine a light on these practices.”

Members and witnesses discussed how corporations seeking excess profits—not worker wages—have been a significant driver of recent inflation.

  • In response to questions from Chairman Krishnamoorthi about corporate executives’ comments on earnings calls—including one executive’s commitment to “take as much pricing as we think the consumer can absorb,” and another’s observation that “following periods of higher inflation, our industry has historically not reduced pricing to reflect lower ultimate costs”—Dr. Mabud explained:  “[These comments] mean that [companies] will keep prices as high as they possibly can to rake in record profits as long as they don’t start losing consumers.”
  • In response to a question from Rep. Porter about whether labor costs, supply chain issues, or corporate profits have been the biggest driver of inflation during the pandemic, Mr. Konczal confirmed the answer is “corporate profits.”
  • In his opening statement, Secretary Reich explained:  “Rather than causing inflation, wages are reducing inflationary pressures.  The underlying economic problem, in addition to global problems, is not wage-price inflation—it’s profit-price inflation.”  Secretary Reich added that, due to large price increases, “corporate profits are at levels not seen in over a half-century.”
  • In response to a question from Rep. Bush about the relationship between worker productivity and worker wages over the last decade, Secretary Reich explained, “Worker productivity has continued to rise, but wages have continued to stay relatively flat, adjusted for inflation.”

 

Transcript of Donalds’ remarks:

Rep. Donalds:

If you go down the pathway of providing dollars to people and they don’t have to exchange labor, which is the way our economy functions, for money to pay for their goods and services. Do you think that leads to a labor shortage? Yes or no.

Economist Mabud:

Like I said, I believe we’re experiencing a shortage of good jobs and a shortage of labor. And I think it’s really critical not to blame working people.

Rep. Donalds:

I’m not blaming working people. What I would say is that I am blaming government policy.  Because if you’re given money, without having to exchange it with labor, having to take your talents and abilities and you’re getting money as a result, it depends on the industriousness of the individual at that point. I’m not blaming anybody. If you’re given out free money, shoot, okay, cool. Most people are just going to go ahead and take it. We know this. But if you had a legitimate economic choice to make at your kitchen table, I can go work 40 hours or I can go work 20 hours, and our living does not change, people have their own decision to make about what they’re going to do.

The point I’m making is,  that labor shortage, that was created by the “American Rescue Plan” led to a labor shortage. And that labor shortage has led to price increases because you had people who had the revenue and the disposable cash flow to buy goods, but not enough goods in circulation to purchase.  Mr. Goodsby, is that an accurate assessment of what’s happened in America since Joe Biden’s become President of the Unites States.

Dr. Goodspeed:

Yes, I think that’s a fair description.

Rep. Donalds:

So, let’s establish a couple things.  Are prices up? Yes they are.  Electricity prices are up, good(s) prices are up…the only reason why fuel, gasoline prices, are down is because the President’s been basically buying down the price with releases from the Strategic Petroleum Reserve which, by the way, that’s coming to an end as well.  We are in a recession, I think we’ve covered a lot here.

Look, I understand the Majority Party’s desire to try put this on Corporate America for raising prices.

But if you do not have enough workers working, there’s not enough goods produced. If there’s not enough goods produced, but everybody still has money to go buy goods, the price of each unit actually goes up.  That’s how inflation is always created.

More policies of the same is only going to lead us further down the road to perdition which we are already on.  With that, I yield back.

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