The next president will have few options to significantly or quickly lower food costs — though voters believe otherwise.
A majority of U.S. consumers believe elected officials, of one party or the other, can help lower their grocery bills — an expectation that could help swing the election, given how important inflation is to likely voters in 2024.
The truth is likely to disappoint them. Despite what both Vice President Kamala Harris and former President Donald Trump are promising on the campaign trail, the next leader of the free world has limited options to lower food costs in the speedy or widespread way many voters might hope. (Just ask President Joe Biden, who struggled for much of his presidency to show Americans he was reining in grocery prices). That said, POLITICO spoke to a number of economists who argued there are good reasons to go after some of the drivers of high food costs, even if the impacts won’t be felt for some time.
POLITICO took a look at some of the policies Biden, Harris and Trump have used, or said they plan to use, to address high food prices and the limitations of each. Neither the Harris nor Trump campaigns responded to a request for comment.
Price gouging ban
Harris called on Congress to pass a federal food price gouging ban as part of an economic policy speech she gave in August. Her proposal would largely mirror a bill Sen. Elizabeth Warren (D-Mass.) reintroduced earlier this year, which would empower the Federal Trade Commission and state attorneys general to penalize companies that try to use their market leverage to attempt to sell goods or services “at an excessive price.” But it would leave it up to the FTC to define what qualifies as “excessive.”
Harris also pledged that, as president, she would empower the FTC to help enforce the legislation and carry out other antitrust enforcement.
Supporters of such a proposal point to an admission by a Kroger grocery store executive, in a March email, that the company hiked its prices on milk and eggs more than necessary during the pandemic. The email was revealed as part of a federal antitrust trial challenging Kroger’s merger with fellow grocery giant, Albertsons.
“My plan will include new penalties for opportunistic companies that exploit crises and break the rules, and we will support smaller food businesses that are trying to play by the rules and get ahead,” Harris said in her Aug. 16 remarks.
Reality Check
Democrats on Capitol Hill are privately saying that Warren’s bill or similar legislation has no chance of passing Congress anytime soon, even if their party wins the White House and control of Congress this November. Democrats would also likely struggle to win more funding for the FTC if Harris is president and maintains the commission’s current, liberal leadership.
Harris’ campaign, itself, has toned down its rhetoric on the issue and on how aggressive she would be as president. Brian Nelson, a top Harris economic adviser, told reporters at the Democratic National Convention in Chicago last month that the plan simply aimed to match up federal standards with so-called price gouging guardrails that already exist in 37 states — many of them Republican-led and enforced by current GOP officials.
Those restrictions, however, would only apply during emergencies, like the Covid pandemic, and empower agencies to more aggressively go after pricing behavior far outside the norm.
Economists, especially on the right, have called Harris’ price gouging proposals unnecessary and even communist. David Kelly, an economics professor at Miami Herbert Business School, said her approach is “not effective at all.” But others have argued that it could deter opportunistic behavior – especially as climate change and geopolitical conflict could lead to more frequent emergencies.
“Supply shocks in the future are likely to be sharper and more frequent,” said Isabella Weber, an economist at the University of Massachusetts Amherst. “We need to equip the FTC and state attorney generals to deal with the coming supply shocks.”
Antitrust enforcement
The Biden administration has aggressively gone after what it calls “anticompetitive behavior” in the food industry, using existing antitrust laws. It argues this behavior has helped drive up food prices, among other everyday goods. Biden’s FTC has sued to block the $25 billion acquisition uniting two of the nation’s largest retailers, Kroger and Albertsons, arguing that the deal will raise prices for consumers. (The retailers, for their part, have promised price cuts on hundreds of items should the deal close).
At the Justice Department, federal attorneys have gone after meatpackers with allegations they’re illegally squeezing farmers and consumers throughout the supply chain. They have also sued an agricultural data company for operating a price-fixing scheme they allege has inflated meat and poultry prices among dozens of the biggest protein companies in the world.
The FTC has also signaled it plans to revive enforcement of the Robinson-Patman Act, a 1936 law that prohibits price discrimination but hasn’t been enforced in decades. Its successful use could help small grocers get better contracts from their suppliers and in turn offer more options and lower prices to consumers, supporters say.
Harris has hired two advisers to her campaign that were closely tied to Biden’s aggressive antitrust approach, a signal she is likely to pursue a similar tack if elected.
Reality Check
Lawsuits can be effective tools to curtail large companies from gobbling up their rivals — and to deter companies from collusive schemes to raise prices. But it will take time for lower prices to ripple through the market and the regional impact could be uneven. It’s been decades since the federal government has brought lawsuits to break up monopolies — and those are the kinds of lawsuits that might have more immediate impact on consumers’ grocery bills, economists say.
“This anti-competitive activity, it's not just textbook discussion. This is actually happening and being litigated in our food system,” said Daniel Scheitrum, an agribusiness professor at Cal Poly. “If the federal government can rein in anti-competitive behavior, supply restrictions, price-fixing, that could bring down food prices in the U.S.”
Expanding domestic energy supply
Trump regularly slams Democrats, and Harris, in particular, for Biden administration spending policies he claims drove up costs, but he has not offered proposals to lower food prices, specifically.
In remarks to the New York Economic Club last week, Trump promised “low taxes, low regulations, low energy costs, low interest rates, secure borders,” which he argued would “quickly bring down prices.”
Energy costs, in particular, have been a significant factor in recent food price inflation — fuel is a major production cost for the agriculture sector.
“Energy was what caused our problem initially,” Trump said in New York last week. And he promised to bring “gasoline below $2 a gallon,” which he suggested would “bring down the price of everything from electricity rates to groceries, airfares, and housing costs.”
Reality Check
The U.S. government has limited influence over those global prices, which are shaped by market and geopolitical factors. Gas prices dropped during the early months of the pandemic, for example, because millions of people stayed home and dramatically reduced their gas consumption. But as the Bureau of Labor Statistics documented, prices surged as society reopened and the economy started to rebound.
While energy prices have consistently been higher under Biden than they were during Trump’s first term, they have dropped from their heights in 2022, when Russia’s invasion of Ukraine sent global prices soaring. As the Agriculture Department noted in February, fuel and oil costs saw significant declines in 2023 and are expected to decline again in 2024, thanks to drops in global energy prices. U.S. oil prices in the past few days have dropped to their lowest level in two years as OPEC+ says it will increase its own oil production later this year and fuel demand in China looks weaker.
And it’s not clear green-lighting more domestic drilling would have much impact on energy costs. For one thing, the U.S. is already producing record amounts of oil and gas, not to mention renewable energy like solar, wind and hydropower. The Biden administration has also approved more permits to drill for oil on federal land than many of its predecessors, even as it moves to restrict how much federal land is available for drilling.
Several economists also told POLITICO that while energy costs are a factor in every part of the food supply chain, they’re just one of many inputs companies consider when setting prices.
Countering Big Meat
Four companies control the vast majority of beef and pork production and just a handful control the poultry industry. That consolidation, which has largely remained steady for decades, gives big meatpackers the power to raise consumer prices while keeping farmers’ paychecks low, the Biden administration says.
To fight that consolidation, USDA has spent more $1 billion on grants and other financing to bolster small and mid-sized meatpacking plants, an effort the department says will encourage competition, give farmers a raise and make supply chains more resilient
The department is also writing a series of rules aimed at making meat and poultry markets fairer and more competitive for farmers and small businesses. Harris has expressed support for continuing Biden’s plans, including spending to help smaller packers to emerge as serious competitors.
Reality Check
Consolidation is a factor driving up meat prices in recent years — but it’s just one of many contributing to consumers’ rising grocery bills. Increasing labor costs; tangled supply chains during the pandemic; the war in Ukraine, which triggered a surge in the costs of fertilizer and grains; and periodic shortages in critical components for cold storage, such as carbon dioxide are just some of the other contributing factors.
And while investing in robust supply chains and introducing new rules to force companies to play fair is likely to help bring down meat prices, the effects won’t be immediate. And, some experts have warned that even these investments are not big enough to help emerging businesses compete with the dominant players. Without continuing investment and aggressive antitrust enforcement, newer, smaller meatpackers could go belly-up – or even be bought up by the big packers.
Bully pulpit
Like America’s most famous trustbusting executive Teddy Roosevelt, President Joe Biden has wielded the White House megaphone to try and pressure corporations to lower prices for food and other goods.
In his most recent state of the union, Biden made an example of the Snickers bar, lambasting the manufacturers for charging the same price while surreptitiously shrinking its size, a practice dubbed “shrinkflation.” (Snickers has denied this). He’s also brought the executives of big box retailers like Target to the White House to discuss the economy and inflation, while senior White House aides have personally pressed major retail executives behind the scenes to help curb the price hikes hitting family budgets. When Target and other chains, like Walmart, Aldi and Walgreens, subsequently announced price cuts earlier this year, the White House quickly took credit.
Harris has matched Biden’s message on the campaign trail, blaming corporate power and for lofty food bills.
Reality Check
A president can’t singlehandedly force companies to cut prices or keep them there. The retailers who cut prices earlier this year said the moves were prompted by consumer spending trends, not White House pressure. And it’s difficult to verify if these newly-discounted goods are actually the ones consumers buy most often or that these discounts don’t come at the expense of increased prices on other goods.
Hal Singer, an economist at the University of Utah, said that for the bully pulpit to be effective, presidents need to be more aggressive than Biden has been.
“You have to make an example of someone,” he said. “Who are the bad actors? What's the industry? Just call them out. Have congressional hearings. Ask them to justify what's going on.”
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