The Limits of Presidential Power: Debunking Economic Myths

A long-held political belief has been that the president often receives too much credit or blame for the state of the economy. However, this hasn't stopped presidents and presidential candidates from making bold promises to quickly and effectively turn around economic woes, particularly when it comes to food prices. As the 2024 election approaches, both former President Donald Trump and Vice President Kamala Harris have unveiled proposals to address these issues, but experts caution that the president's ability to directly influence consumer prices is often overstated.

Uncovering the Realities Behind the Rhetoric

Harris' Proposal to Ban Price Gouging

Vice President Kamala Harris has called for Congress to pass a bill that would empower the Federal Trade Commission and state authorities to penalize companies for "price gouging" on food products. This proposal closely mirrors a bill introduced by Senator Elizabeth Warren earlier this year. While the intent is to protect consumers, the implementation of such a measure would likely face significant partisan opposition, and with a divided Congress, the chances of it passing in the near future are slim. Even if Harris were to win the presidency, political experts believe Republicans could control both houses of Congress, further complicating the path forward for this initiative.

Trump's Reliance on Tariffs

Former President Donald Trump has long touted the benefits of tariffs, claiming they are "the greatest thing ever invented" and that they are paid for by foreign countries. However, the reality is that tariffs are ultimately borne by American consumers and businesses. When Trump imposed a 9% tariff on imported washing machines, for example, the consumer price of those appliances rose by a corresponding 9%. Economists widely agree that while tariffs may provide some short-term protections, they often lead to higher prices for consumers in the long run.

Antitrust Enforcement and Food Prices

The Biden administration has taken steps to address what it perceives as "anticompetitive behavior" in the food industry, which it believes has contributed to rising food costs. This includes the Federal Trade Commission's efforts to block the $25 billion merger of Albertsons and Kroger, two of the country's largest grocery store chains. While aggressive antitrust enforcement can potentially have an impact on market dynamics, economists caution that the effects on retail food prices would likely take a significant amount of time to materialize.

The Influence of Energy Costs

Trump has argued that lowering energy costs, through measures such as increased domestic oil production, would have a ripple effect on the prices of various goods and services, including food. However, while energy is a factor in the food supply chain, it is just one of many variables that influence consumer prices. The U.S. government's ability to directly control global energy markets and gas prices is limited, as these are largely shaped by international political and market forces.

Perception vs. Reality

Despite the evidence that presidents have limited power to immediately influence consumer prices, a recent survey found that most respondents believe their preferred political party can effectively lower food prices. This perception seems to be particularly strong among supporters of both Trump and Harris, with around 65% of Trump supporters and 50% of Harris supporters believing that only their party can accomplish this task.The reality, as outlined by experts and historical precedent, is that the president's ability to directly impact consumer prices is often overstated. While policy decisions can have indirect effects, the complex web of factors that shape the economy and consumer prices means that the president's influence is typically more limited than the rhetoric would suggest. As the 2024 election approaches, it will be crucial for voters to critically examine the claims made by candidates and to understand the true scope and limitations of presidential power when it comes to economic issues.