Or will they just blame immigrants and Democrats?
By Philip
Mattera, director of the Corporate
Research Project of Good Jobs First, for the
Apparently shaken by the Democratic gains in this month’s
elections, Donald Trump has changed his tune on the economy. He still tries to
get us to believe everything is marvelous, but at the same time he has rolled
out a series of proposals designed to give the impression he is addressing the
affordability crisis.
This administration must be on drugs
Most of these initiatives do not amount to much. The rollback of tariffs on some food products is easing an aspect of inflation Trump himself caused. The idea of getting banks to offer 50-year home mortgages would result in modest monthly savings for borrowers while causing them to pay much more in interest over the life of the loan and slow the rate at which they build equity in their homes.
It is unclear whether the deals he has been making
with pharmaceutical companies will result in significant cost reductions for
consumers. The suggestion that Obamacare subsidies be replaced with payments to
health savings accounts would result in the proliferation of junk insurance
policies and financial ruin for those with serious health conditions.
What these initiatives also have in common is that they do
not challenge corporate interests in any significant way. The one possible
exception to this is Trump’s call for a probe of price fixing in the beef
industry.
Earlier this month, Trump put out a social media post asking the Justice Department to “immediately begin an investigation of into the Meat Packing Companies who are driving up the price of Beef through illicit collusion, Price Fixing, and Price Manipulation.”
So far, so good. But Trump went on to refer to “Majority
Foreign Owned Meat Packers,” suggesting that his real aim was xenophobic. A
related White House press
release was headlined “Trump Administration Cracks Down on
Foreign-Owned Meat Packing Cartels.” The release went on to name what it called
the Big Four meat packers—”JBS (Brazil), Cargill, Tyson Foods, and National
Beef”—noting that two of them “are either foreign-owned or have significant
foreign ownership and control.” (National Beef is controlled by Brazil’s
Marfrig.)
It is not surprising that Trump is willing to criticize
foreign corporate interests when the country involved has been the target of
his scorn because of the supposed mistreatment of its former president Jair
Bolsonaro, whose supporters mounted a January 6-style attack on the seat of
government.
This is not to deny that the Brazilian beef giants have
engaged in anti-competitive practices, yet there is no indication that their
market behavior has been significantly worse than that of U.S.-based Cargill
and Tyson Foods.
All four companies have been entangled in legal disputes
over alleged collusion and price-fixing, yet those cases have involved private
litigation rather than government enforcement actions. JBS has already paid out
$160 million in settlements in class action suits filed in U.S. courts by
different categories of beef purchasers.
Additional cases brought against JBS as well as Cargill,
Tyson Foods, and National Beef have been consolidated in a multidistrict action
now centered in federal court in Minnesota. The litigation alleges that from at
least 2015 the four companies agreed among themselves to reduce live cattle
purchasing and slaughter volumes for the purpose and effect of increasing their
margins.
The plaintiffs charge that the companies accomplished and
perpetuated this agreement through collusion at trade association conferences
and industry events between executives and key employees, and through ensuing
collusive relationships. This anti-competitive activity, the plaintiffs say,
caused them to pay artificially and illegally inflated prices for boxed beef,
which in turn elevated prices for consumers.
It is not at all clear that the Trump Administration will be
as aggressive as the plaintiffs’ lawyers in attacking beef industry collusion.
Attorney General Pam Bondi responded to Trump’s tweet by saying an
investigation was already underway. Yet the DOJ’s Antitrust Division has been
less than dynamic under Trump 2.0. No significant price-fixing action against a
corporation has been resolved this year.
The seriousness of the Administration’s move against the big
meatpackers was also put into question by the ridiculous statements of
Treasury Secretary Scott Bessent suggesting that high beef prices are the
result of reductions in the supply of cattle caused by diseased animals brought
into the country by illegal immigrants.
In the end, the DOJ’s beef investigation may turn out to be
no more effective in addressing affordability than any of the other gimmicks
Trump has offered.
