Former Obama chief economist Jason Furman said Sunday that Democrat-backed bills aimed at combating “price gouging” would not actually solve inflation and might make future product shortages worse.
Speaking with host Margaret Brennan on CBS’s “Face the Nation” Sunday, Furman, who served as chairman of the White House Council of Economic Advisers under Barack Obama, said the proposals are “gimmicky” and a failed experiment from the 1970s that should not be brought back.
“As you know, Democrats are pushing bills in Congress… trying to cap what they’re calling price gouging,” Brennan told Furman. “You hear President Biden using that phrase, also talking about raising taxes on the wealthy. As an economist, do any of those things have a measurable impact for consumers in fighting inflation?”
Furman responded by claiming that most of the responsibility for combating inflation fell on the Federal Reserve. He said there was little the President could do unilaterally but credited Biden for taking action attempting to open ports and recruit and train more truckers, as well as releasing oil from the Strategic Petroleum Reserve. “I don’t think, though, that these anti-price gouging bills would do much to bring inflation down,” he said. “They just increase the type of shortages that consumers probably hate even more than the high prices.”
“You were quoted as saying corporate greed is a bad theory of inflation. Is that another way of saying that what Democrats are talking about is just a gimmick?” Brennan followed up.
“I think it’s pretty gimmicky, these price gouging bills, because, you know, he’s got a lot of extra demand. What happens when demand goes up? Prices go up. There’s an old saying the cure for high prices is high prices. That’s a little bit of a painful thing to deal with, but it’s what elicits the additional supply. It brings more producers into the market, and it’s what brings prices down and we need to let that process work. You try to interfere with it, you’re going to make things worse. We tried that in the seventies, it was a big failure. We shouldn’t be repeating it again.”
Democrats in the House of Representatives introduced a bill last week that would attempt to fight inflation by giving the president the power to declare an “energy emergency.” The bill, titled the “Consumer Fuel Price Gouging Prevention Act,” would allow the president to declare such an emergency for up to 30 days, as The Daily Wire reported. During such an emergency, the bill states, “It shall be unlawful for any person to sell a consumer fuel, at wholesale or retail…at a price that is unconscionably excessive; and indicates the seller is exploiting the circumstances related to an energy emergency to increase prices unreasonably.”
Violations of the order would be treated as an unfair or deceptive trade practice, enforced by the Federal Trade Commission. The bill would also set up a “Consumer Relief Trust Fund” to distribute funds collected by the program to low-income households. It passed on a near party-line vote, 217-207, but is unlikely to pass in the evenly-divided Senate, The Hill reported.