As the Federal Reserve continues to work to rein in inflation, the White House is attacking the high prices that are straining American balance sheets in another way: with a new “strike force.”
President Joe Biden announced the interagency effort, formally called the Strike Force on Unfair and Illegal Pricing, on Tuesday. According to a fact sheet, its mission is to “eradicate and stop illegal corporate behavior that raises prices on American families through anticompetitive, unfair, deceptive, or fraudulent business practices.”
The last goal? Billions in savings on junk rates, plus lower prices on everyday items like gas and groceries.
The task force will be led by the Department of Justice and the Federal Trade Commission – which Jared Bernstein, president of the Council of Economic Advisers of the United States, tells Money is noteworthy because the agencies have “the legal means to prosecute illegal behavior on prices”. With fewer silos and more data sharing between departments, the hope is that the task force will be better able to crack down on wrongdoing.
“There is much more to do in space than we have been able to block so far, and so we will intensify our efforts,” says Bernstein.
How competition drives prices down
Biden has recently made competition a key part of his economic agenda. Last year, for example, the administration sued to block the merger between JetBlue and Spirit Airlines (the companies announced this week that their plans had been canceled). Last month, the FTC moved to block grocery giant Kroger from acquiring Albertson’s.
“When companies compete for your business, they are more likely to lower costs and improve quality,” Lael Brainard, director of the National Economic Council, tells Money. “Historically we have seen that when there is more competition consumers get a better deal.”
Brainard says supply chains were disrupted by the pandemic when Biden took office, and the situation was exacerbated by Russia’s invasion of Ukraine in 2022. These pressures, combined with pent-up consumer demand, have led to the inflation to rise.
But this phenomenon has since subsided.
Although it remains above the Fed’s long-term target of 2%, inflation has fallen from a peak of 9.1% in June 2022. In January, the consumer price index was up 3, 1% on an annual basis.
“Supply chains are now back to normal and many costs for businesses have also decreased,” adds Brainard. “But some companies don’t pass the savings on to consumers.”
Meeting daily expenses remains a priority for many Americans: In the results of a survey released Tuesday by personal finance company Achieve, 66% of respondents said “making ends meet” is a top financial concern that could be affected by impending financial crisis. Presidential Elections.
These issues – competition, convenience and fair prices – are expected to be part of Biden’s State of the Union address on Thursday, but not everyone agrees with the administration’s approach. THE Wall Street Journal‘s editorial board rejected the White House strike force’s revelation, writing that the administration should instead consider “lifting burdensome government regulation that is driving up prices.”
For example, the board highlighted a new rule from the Consumer Financial Protection Bureau intended to cut credit card late fees, which — combined with the crackdown on overdraft fees — the board says will “reduce the availability of free checks”.
For its part, the CFPB estimated that the rule will save Americans $10 billion a year.
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