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Former Obama administration economic adviser Jason Furman slammed Democrats’ push for anti-price gouging bills in Congress, saying these kinds of bills wouldn’t do much to lower inflation and could even increase shortages.
Furman appeared on CBS’s Face the Nation on Sunday and discussed whether Democrats’ call for a cap on price gouging would have any impact on consumers if inflation rises.
“I think it’s pretty gimmicky, these price-boosting bills, because you know you’ve got a lot of additional demand,” Furman said. “What happens when demand increases? Prices go up.”
A gas pump displays current fuel prices along with a sticker of President Joe Biden at a gas station in Arlington, Virginia, March 16, 2022. (SAUL LOEB/AFP via Getty Images)
According to a recent analysis by Moody’s Analytics, the average American is likely paying an extra $311 a month because of inflation. The financial squeeze stems from the rising cost of basic necessities, including cars, rent, groceries, gas and health care.
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“There’s an old adage, the cure for high prices is high prices,” Furman said. “It’s a bit painful, but it’s what creates the extra supply, it brings more producers into the market, and it’s what drives prices down.”
“We have to make this process work,” the economist continued. “If you try to interfere, you will make things worse. We tried that in the 70’s, it was a big failure. We should not repeat it again.”
Inflation accelerated again in April, the Labor Department reported last week, with the consumer price index rising 8.3%. While that’s slightly lower than March’s 41-year high, it’s much higher than economists were expecting.
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Furman said that while President Biden’s US bailout plan helped the US economy recover faster than any other economy, it was also partly responsible for our “unbelievably high inflation.”
President Biden signed into law his $1.9 trillion American bailout plan on March 11, 2021. (Getty Images)
“I wished at the time that he would do it — he did something smaller. I think it was bigger than necessary, but it was good that something happened.”
Furman blamed the Federal Reserve for “a series of mistakes” after Biden’s plan went into effect in March 2021.
“[The Fed] was behind the curve for most of last year,” Furman said. “They always thought the inflation was temporary, they didn’t move to normalize interest rates and now you have President Putin’s invasion of Ukraine and that’s like the cherry on top of this awful concoction that we already have had.”
Fox Business’ Megan Henney contributed to this report.