Politicians & The Inflation Disconnect genre: Econ-Recon

The President and a number of politicians are scratching their heads as they attempt to understand why average Americans aren't all that enthused about the U.S. economy. The solution to this "puzzling" lack of optimism is found in a new article at McClatchy News...and it clearly demonstrates the degree to which our elected officials lack an understanding of the travails that face many of their constituents.

MIDLAND, Va. — The Labor Department’s most recent inflation data showed that U.S. food prices rose by 4.1 percent for the 12 months ending in June, but a deeper look at the numbers reveals that the price of milk, eggs and other essentials in the American diet are actually rising by double digits.

Already stung by a two-year rise in gasoline prices, American consumers now face sharply higher prices for foods they can’t do without. This little-known fact may go a long way to explaining why, despite healthy job statistics, Americans remain glum about the economy.

Meeting with economic writers last week, President Bush dismissed several polls that show Americans are down on the economy. He expressed surprise that inflation is one of the stated concerns.

“They cite inflation?" Bush asked, adding that, “I happen to believe the war has clouded a lot of people's sense of optimism."

But the inflation numbers reveal the extent to which lower- and middle-income Americans are being pinched.

Rising Food Prices

We've all seen a politician tripped up by a reporter asking them the price of a gallon of milk...and we've often discovered that they either can't answer the question or the answer they provide is woefully inaccurate. Therein lie the problem with many of our elected officials...they simply can't empathize because they don't face the same problems.

It goes well beyond inflation and the price of food staples. There are other examples. During a recent Democratic debate in Chicago, a gentleman was nearly in tears when he asked the candidates what they would do to fix the situation which allowed him to work for thirty years at a company only to end up losing a large portion of his retirement along with his family's health insurance when the company filed bankruptcy.

Frankly, the experience of our elected officials lacks the same realities faced by voters. The fact that they receive generous retirement benefits and the best health care without having to worry that it could suddenly be lost leaves them sorely lacking an appreciation for the daily concerns that plague the average voter. The fact that politicians haven't moved to protect their constituents from such situations only exacerbates the impression that they are out of touch.

Why are food prices rising?

It's partly because of corn prices, driven up by congressional mandates for ethanol production, which have reduced the amount of corn available for animal feed. It's also because of tougher immigration enforcement and a late spring freeze, which have made farm laborers scarcer and damaged fruit and vegetable crops, respectively. And it's because of higher diesel fuel costs to run tractors and attractive foreign markets that take U.S. production.

To make more milk, or raise more chickens that lay more eggs, farmers need feed corn and other feed products. But corn prices have soared over the past year as Congress pushes ethanol, a renewable fuel made from corn. Fields that previously grew soybeans are now yielding corn, and that’s driven up the price of soybeans as they become scarce.

Again, these situations point out the lack of awareness found in Washington. Politicians, in their haste to demonstrate their concerns about U.S. dependency upon foreign oil, fail to realize that the average American stands to pay the price at the grocery store. Year after year, these same politicians drag their feet on passing legislation requiring automakers to improve the mileage standards on the vehicles they produce.

While I understand that such requirements might also have detrimental effects, it is clear that our elected officials pass laws without a full appreciation for who might benefit and who might suffer. Further, the ability of interest groups to impact legislation further relegates the concerns of voters to a secondary role as politicians pander to those groups that can afford to hire high powered lobbyists and bankroll a candidates campaign.

Recent abysmal approval ratings for Congress suggest that voters are keenly aware of the many inconsistencies and that they are growing increasingly weary of the apparent disconnect that exists. Perhaps a few more politicians should forego the next free trip to some remote region of the world in favor of an excursion to the neighborhood grocery store?

Tagged as: Economy, Energy Prices, Ethanol, Inflation, Mileage Standards

Daniel DiRito | August 15, 2007 | 9:38 AM
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