Massachusetts Democratic Sen. Elizabeth Warren was grilled about Vice President Kamala Harris’ plan to impose federal price controls on food and groceries during a roughly 20-minute debate on CNBC’s “Squawk Box” on Friday.
Harris announced Last week, Trump vowed to impose federal controls on the prices of food and household goods if elected to prevent corporations from exploiting consumers, a plan that has been widely criticized by economists on both the left and the right, who say artificial controls have been tried in communist countries but have not worked and risk raising prices for consumers.
CNBC host Joe Kernen accused Warren of supporting “false ideas” that even liberal newspapers like The Washington Post called a “populist ploy.”
“There’s no competition,” he says. “If beef is too expensive, people won’t sell chicken. Where beef prices are low, competitors come in and don’t try to drive the price down. Trying to artificially control prices doesn’t work. It’s just a matter of supply and demand. It’s a flawed idea.”
Liberal Washington Post editorial criticizes Harris’ economic plan as a “populist ploy”
“Squawk Box” co-host Joe Kernen took issue with Sen. Elizabeth Warren’s support for Vice President Harris’ price control plan. (CNBC/Screenshot)
“The issue isn’t price gouging,” he said, asking when he plans to propose policies that will “really help” the middle class.
“If you want to lecture me on this, I understand, but let’s start with where you’ve been?” Warren countered to Kernen.
Warren argued that anti-price gouging laws have been effective in the dozens of states that have passed them, and that federal programs are intended to stop companies that she said took unfair advantage of consumers by inflating costs during the pandemic to boost profit margins.
“Remember, we all talked about the price of eggs. And then we had companies like Cal-Maine, which are huge egg producers. And Cal-Maine raised the price of eggs. Their profit margins increased by 718 percent. This isn’t just passing on costs,” she argued.
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Senator Warren cited the price of eggs as an example of the need for price controls on food and groceries. (AP/Terry Chia)
The interview got heated, with Warren accusing Kernen of not giving her a chance to speak, and Kernen accusing Warren of giving misleading examples and not accurately explaining how markets work.
“Senator, you can’t lose an argument like this because no one can say anything back. It’s frustrating,” Kernen told Warren, repeatedly pressing her whether she invited him on her show “just to be preached to.”
“Going back to Cal-Maine,” Curnen later said, “Avian flu destroyed 40 million eggs. They have 20 percent market share. But they don’t control the market. It’s like oil. If the price of oil goes up for any reason, if it goes down, the price of oil dictates. Cal-Maine made money because the price did. The next quarter, their stock price fell in half. They lost 50 percent of their profits. They don’t set the price. Same with Exxon. Exxon doesn’t set the price of oil. So when Exxon is at $80 or $100 a barrel, sure, they make record profits. But when the pandemic hit, their profits went to almost nothing.”
“That’s the status quo. Given that the government can decide if prices are too high or too low, grocery chains have a 2% profit margin. Apple has 50% or 40%? How do you decide that?” he asked the senator.
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The Harris campaign argues that federal price controls would curb soaring food prices driven by corporate greed. (iStock)
“It is not the government’s place to do something like this. It is foolish and is being used to distract from the real causes of inflation over the last four years,” he said, blaming supply chain problems caused by the pandemic and stimulus spending.
The two continued arguing on the issue for several more minutes, with Warren stepping up her defense of Harris’ price control plan amid the continuing “problem” of price gouging.
“This is not about price control. This is about when the market is not functioning. Sometimes the market is not functioning because of local emergencies like hurricanes, wildfires, floods. So in states that have price gouging laws, they step in and say, ‘You can raise your prices a little, but above a certain point, you have to be able to justify it. You have to show what you’re doing in terms of pass-through costs,'” she argued.
“The key is to create a more competitive marketplace,” she continued. “That’s the FTC’s job. That’s what state attorneys general should be working on. We just want to add another tool to the toolbox when CEOs are on the phone saying, ‘Inflation is great because it gives us an opportunity to raise prices.'”
