Senator Bob Casey’s inflation plan has become a national topic of discussion

One of the biggest debates of this year’s election is the back-and-forth over consumer price inflation under President Joe Biden.

U.S. Senator Bob Casey, a Pennsylvania Democrat whose election could decide control of the Senate in January, played an significant role an significant role in shaping the message of their party on this matter.

Republicans, including Casey’s opponent Dave McCormick, blame the inflation on multitrillion-dollar initiatives Biden has backed to facilitate the economy recover from the COVID-19 pandemic.

» READ MORE: Prices of potatoes, Huggies diapers and toothpaste are rising, and Bob Casey says greedy corporations are to blame

But Casey, who voted for Biden’s spending bills, has zeroed in on another culprit: substantial corporations that continue to rake in huge profits while raising prices for consumers. He calls it “greedflation,” a concept that has caught on among leaders in his party, including Biden and Vice President Kamala Harris.

Despite a drastic slowdown in price growth this year, inflation and its causes are still likely to be a major issue in the Senate race, and Casey and McCormick could discuss it in person next month. The candidates this week agreed to debate Oct. 3 in Harrisburg.

Here’s what you need to know about exactly what Casey is proposing and why it’s become such a substantial issue in this year’s Senate and presidential elections:

What is Casey’s “greed” plan?

Casey issued a series of reports on rising prices in 2023. Among other things, his office found that while inflation rose 14% over the two-year period ending in July 2022, corporate profits rose more than 74% during that time.

Since then, he has helped promote legislation that would enact a national ban on price gouging and has challenged companies like Walmart and Amazon on how they set their prices. He has also criticized manufacturers for reducing the size of products or the quantity of items in packages without lowering prices, a practice known as “shrinkflation.”

The Price Gouging Act, introduced by U.S. Sen. Elizabeth Warren (D., Mass.) and co-authored by Casey and other Democrats, would make it illegal to “sell or offer for sale a good or service at an abnormally excessive price, regardless of the person’s position in the supply chain or distribution network.”

The bill leaves it up to the Federal Trade Commission to decide what constitutes an abnormally excessive price, and recommends that the agency set a limit price at 120% of the “average price of such good or service in the marketplace during the 6-month period preceding the sale.”

The bill does not call on the FTC to create a set list of prices for various consumer goods, as some of Casey’s critics have argued. Instead, it allows the agency or state attorneys general to investigate companies accused of overcharging.

Casey noted that 37 states, including Pennsylvania, already have laws against price gouging and that “capitalism is alive and well there.”

“My legislation would give the federal government the same authority to go after big corporations that overcharge American families,” Casey said in a statement.

Why did Casey’s plan become such an significant topic?

Democrats have struggled to find a foothold in the inflation debate for much of Biden’s term. Casey’s focus on “greed inflation” gave them a chance to go on the offensive, blaming corporations for inflation, rather than playing defense.

First, Biden addressed Casey’s “shrinkflation” plan during his State of the Union address in March. And now that Vice President Kamala Harris has taken Biden’s place on the Democratic ticket, she has passed legislation to ban price gouging.

» READ MORE: In a speech at the DNC, Senator Bob Casey said that corporations are “extorting money from families at the checkout line.”

Casey was given the chance to speak at the Democratic National Convention in August and used it to get his message across.

“Prices are going up because corporations are scheming to raise prices,” Casey said. “Most of the companies are good companies. They’re the food conglomerates. … They’re the ones who are extorting money from families at the checkout. It’s greedflation.”

The Democrats’ platform to inflate prices has also drawn criticism. Z. John Zhang, a professor at the Wharton School at the University of Pennsylvania who studies pricing issues, described the strategy as “blaming.”

“It’s more political opportunism than a real diagnosis of what caused inflation,” Zhang said. “Politically speaking, it’s always a good message to tell consumers that companies are just so greedy that they’re making too much profit.”

Zhang said the companies acted appropriately given the economic conditions during the pandemic, including high energy costs, significant supply shortages and a widespread consumer perception that disruptions could push up prices.

“It’s not that the company has become greedier than usual,” he said. “They’ve just had more opportunity to raise prices.”

More aggressive laws against price gouging, he said, would make companies reluctant to raise prices and consequently reduce how much the companies make on a product. That, in turn, would make them less motivated to produce more, worsening supply shortages, he said.

What does McCormick say about this plan?

McCormick said Casey’s plan “imposes socialist price controls on groceries and other necessities in the style of Venezuela” and that the primary blame for inflation should be placed on Democrats’ “unprecedented taxpayer-funded spending spree.”

“They ignored warnings, even from within their own party, that their spending plans would trigger once-in-a-generation price increases,” he said in a speech on economic policy last week.

McCormick said he instead plans to boost energy production, make the United States more competitive in international trade, “recover inflationary spending on liberal pet projects and provide another round of tax breaks for the middle class.”

Like Casey, McCormick has also shown a penchant for economic wordplay, as evidenced by the launch of Bobflation.com, which allows users to track the price increases of Pennsylvania goods since 2019.

What caused inflation?

The factors driving the recent period of high inflation are not as elementary as Casey and McCormick make them out to be.

While White House economists have said corporate behavior has played a role in recent price hikes, few believe a nationwide price-gouging ban before 2020 would be effective. could prevent significant inflation in the years that followed.

On the other hand, many economists have said that unprecedented federal spending measures in the wake of the pandemic have contributed to inflation — but they also point to significant macroeconomic factors.

Shutdowns in production and transportation networks during that time caused long-term supply shortages. Geopolitical turmoil following Russia’s invasion of Ukraine drove up gas prices. The pandemic also caused unexpected changes in consumer behavior, such as increased spending on goods compared to services. And the Federal Reserve adopted an “easy money” policy in the immediate aftermath of the pandemic, reintroducing quantitative easing and cutting interest rates.

The GOP line of attack also ignores the fact that two of the four major federal spending bills passed in response to the pandemic — the $2.2 trillion CARES Act and the $484 billion Paycheck Protection Program and Health Care Improvement Act — were signed into law by former President Donald Trump.

According to Zhang, all these factors contributed to the circumstances that were bound to lead to inflation.

“If you want to blame anyone, blame the environment” [companies] “were placed,” he said. “In reality, the companies did what they were supposed to do.”