Iowans are still cringing at the checkout counter, even after 15 months of tame inflation and solid wage growth under President Trump.
Food prices rose over 20% during Biden’s term, and it takes time to undo that kind of damage.
Democrats, meanwhile, see a golden opportunity to focus their midterm campaigns on what they’ve dubbed the “affordability” crisis. Promising cheaper bread, milk, and eggs is a good way for Democrats to juice their poll numbers. Unfortunately, their proposed solutions would only make things worse.
We can see this in Washington, where Senate Democrats are pushing the so-called Fair Prices for Local Businesses Act. This bill promises to help small businesses by cracking down on large companies that negotiate bulk pricing deals but would in fact drive up prices for ordinary Iowans.
The legislation won’t move forward unless our senior senator, Chuck Grassley — who chairs the Judiciary Committee, the committee this bill must clear — allows it to, and fortunately, he probably won’t.
Still, it’s worth considering what this bill would do if it ever became law.
According to a press release from Sen. Chris Murphy (D-CT), who introduced the legislation, “Small businesses nationwide – from small town grocers to big city restaurants – are forced by mega-corporations to pay higher prices for identical products.”
Regular people call this “bulk pricing,” and whether you’re a shopper wandering the Costco aisles or a wholesaler dealing with different-sized clients, it’s a pretty fundamental principle of commerce: buy more, pay less per unit.
For example, ground beef today is 53% higher in one pound packages as compared to a 10 lb tube. A 5 lb bag of potatoes will save the consumer 86% when compared by the pound to individual potato prices. These are simple economics that shoppers understand. Why shouldn’t they continue to apply from the warehouse to grocery stores?
If a supplier suddenly faces legal penalties for giving Wal-Mart a better deal than an independent grocer, they’ll only have two options:
They could stop selling to smaller clients altogether, or they could eliminate the volume discounts that major grocery chains pass along to their customers.
Either way, everyone loses. Iowans end up with fewer options, higher prices, or both.
Under Biden, the Federal Trade Commission already tried to ram this policy through via lawsuits, but current FTC Chair Andrew Ferguson isn’t interested in carrying on the fight. He recently dismissed a Biden-era lawsuit that aimed to punish Pepsi for offering bulk pricing discounts to wholesalers, and he’s widely expected to do the same with a similar case against wine distributor Southern Glazers.
For more evidence of how Democrats’ grocery price proposals would backfire, look no further than the ongoing contest over the Democratic nomination for Iowa’s open Senate seat.
State Rep. Josh Turk, who according to one recent poll leads his primary opponent by 20 points, says on his website that he would “[i]mpose a federal ban on price gouging on food so Iowans pay less at the grocery store.”
If that sounds familiar, it’s because Kamala Harris proposed the same thing during her failed 2024 presidential campaign. As even her fellow Democratsadmitted at the time, “price gouging” is a subjective term. What she and Turek are actually proposing is an arbitrary price cap, and any economist can tell you that price caps don’t work.
When President Nixon implemented price controls on groceries and other goods in 1971, it “led to predictably disastrous results,” economist Ryan McMaken explained. “[F]armers couldn’t sell chicken products at prices high enough to justify the cost of feeding the chickens. In the early 1970s, farmers killed over a million baby chicks. Similar problems occurred in the beef and pork industries with farmers sending pregnant sows to the slaughterhouse while dairy cows were butchered.”
These brutal reductions in inventory led to shortages that continued for years, driving prices even higher than they were before the freeze. Inflation spiraled out of control and remained high until the Reagan years.
Turek and Kamala’s grocery price cap is just as bad an idea as it was two years ago, and Iowans should reject it in November — just like they did two years ago.
Grocery prices are still too high, but reckless, counterproductive bans on bulk discounts or “price gouging” will only make the situation worse.
Steve King is a former Member of Congress from Iowa. Her served on the House Judiciary Committee.
