Federal officials are undermining the market dynamism that allowed American businesses to flourish during the pandemic by overreaching to curb the power of big companies and underachieving on trade policies that would open up new markets, U.S. Chamber of Commerce President Suzanne Clark said Tuesday.
One of the business group’s top priorities this year, she said in her first “State of Business” address, will be to thwart the Biden administration and lawmakers from pursuing heavy-handed antitrust regulations on the “false premise” the market is too concentrated and stagnant, which would make it more difficult for companies to compete.
The Biden administration last summer issued an executive order for agencies to pursue 72 initiatives aimed at promoting competition across industries, including meatpacking, railroads and shipping.
“Modern-day ‘trust busters’ on Capitol Hill — from both parties — think all big is bad and necessarily a threat to small, when in fact our economy is an ecosystem where big business depends on small companies and vice versa. They are each other’s vendors, suppliers, customers and partners. And they each employ the consumers who keep the whole system afloat,” Clark said.
Record levels of new business formation, product choices and lower prices are proof that the antitrust laws work, the Chamber chief noted. She didn’t mention that inflation ended 2021 at nearly 7%, the highest it’s been in almost 40 years, but economists attribute higher prices to unusually high demand for goods and supply chain bottlenecks sparked by the COVID pandemic and expect them to eventually recede.
White House officials and congressional progressives have indicated the spike in inflation is a sign big business is taking advantage of circumstances to rake in profits at the expense of consumers and smaller businesses.
Clark singled out the Federal Trade Commission and Chair Lina Khan for taking “such an aggressive stance against mergers and acquisitions that small and medium-size businesses fear they’ll have worked for years to build something and have no exit strategy if they choose to sell.
“The FTC has a really important job to do in stopping anticompetitive behavior that harms consumers. But it can’t do that job if instead it is trying to enlarge its powers to, as [Khan] has actually said, ‘shape the distribution of power and opportunity across our economy.’”
The FTC recently expanded its scope with a probe into supply chain disruptions and whether several big corporations exacerbated shipping delays and product shortages, and contributed to rising consumer prices, by using their clout to get around the chokepoints. Some Washington observers say those issues should be left to the Federal Maritime Commission or the Justice Department.
In a follow-on news conference, Clark elaborated that the problem with having too broad an agenda “is that you lose focus and you have a problem actually fixing the things that would help consumers the most.”
The White House’s narrative that market concentration is to blame for economic hiccups doesn’t fit, added Chief Policy Officer Neil Bradley.
“The administration has a point of view about concentration across markets. Every time a problem comes up with the economy, whether it’s inflation or supply chain bottlenecks, some in the administration are suggesting that, ‘Ah, the culprit must be this solution that’s our preexisting agenda.’
“We didn’t have a sudden surge in concentrations in our supply chains that suddenly produced the bottlenecks. So when the administration goes to antitrust at the FTC as the solution, they’re really missing the large solutions that they need to be working on, which is helping us modernize our ports and intermodal systems so that we can get the traffic where it needs to be going more quickly and efficiently,” Bradley said.
Now that the FTC is trying novel ways to address structural issues, the Chamber is working harder to make sure their not exceeding their jurisdiction and to hold them to account, he said.
Chamber officials criticized Democrats for pursuing the $1.8 trillion Build Back Better plan for strengthening the social safety net, which they said would fuel the fire of consumption and exacerbate inflation.
The government can best help the private sector, and tame inflation, during a fragile recovery by helping get people back in the workforce, alleviating supply chain disruptions, reining in zealous regulators at the IRS and other agencies, and focusing on low corporate taxes, they said.
Clark urged bureaucrats and elected officials to “be an enabler, not an inhibitor” to favorable business conditions and pledged to stop them in legislatures or courts if they don’t back off from the aggressive regulatory approach. “What’s at stake is no less than the future of our free market economy,” she said.
Trade policy vacuum
U.S. businesses are frustrated that the White House, “consumed by caution and internal reviews,” has done little to advance new trade deals that would open access to foreign markets, Clark said, adding that the retreat in export competitiveness hurts sales and domestic jobs.
“On trade our nation is standing still, which means we are falling behind,” she said during the press conference. That includes not renewing the Generalized System of Preferences for duty-free access of select goods from developing countries, and the Miscellaneous Tariff Bill, which temporarily eliminates tariffs on select products.
Mutually beneficial trade deals with close allies, such as the U.K., should be uncontroversial, but there is little progress so far, Clark lamented.
Europe has 46 trade agreements with 78 countries, while the U.S. has just 14 deals with 20 countries — none in the past decade (not including a do-over with Mexico and Canada). Meanwhile, the Regional Comprehensive Economic partnership — a China-led trade pact that covers all of East Asia — went into effect on Jan. 1, giving the U.S.’s main economic and strategic rival better terms in fast-growing markets such as Korea and Vietnam.
Many business leaders have urged the administration to drop tariffs on Chinese imports to help lower prices for importers and consumers, but Treasury Department officials don’t think doing so will have much effect on inflation and will only make the president look weak on China in an election year, according to a Washington Post report on Monday.
The U.S. tax code, regulatory framework, manufacturing policy and supply chain strategies “should support private sector-led innovation, not put U.S. companies at a disadvantage,” Clark said.