A former top Obama economist throws cold water on the Biden administration's favorite inflation argument: 'Corporate greed is a bad theory'

Inflation has been a problem for President Joe Biden. The administration hoped that it would fall as quickly as possible.
The spike in consumer prices has not played out as the White House had hoped, even though the economy rebounded last year. The federal report shows that prices rose a still-elevated 7% in December, the fastest pace in nearly four decades.

Consumer demand is surging for all types of goods, and supply chains are still broken. The Biden administration is blaming meat processors for the rising prices. One economist that served in the Obama administration isn't buying it.

"Corporate greed is a bad theory of inflation, and I think almost everything else is a sideshow when it comes to the dynamics of inflation," said a former top economist for President Barack Obama.

Demand is more important than supply in driving inflation. The main reason prices go up is that companies can't make enough to satisfy everyone, according to a professor. Prices go up when that happens. We would have worse shortages if they didn't go up.

Biden's rise in prices poses a new political problem for Democrats as they try to hold on to their majority in this year's elections. A majority of Americans think the economy is getting worse.

"This report shows that Democrats' spending has pushed Bidenflation to achieve the highest prices in 40 years, killing family budgets and wiping out three years of wage gains," said Kevin Brady, the top Republican on the tax-writing House Ways and Means panel.
The GOP blames the law for inflating. The effects would be modest and brief according to research published by the Federal Reserve Bank. The unemployment rate is falling and wages are rising.

The White House and many Democrats on Capitol Hill have promoted the $2 trillionBuild Back Better plan as a way to hold down everyday costs for Americans.

Manchin put a dagger into the package last month. Democrats can't get the plan through the Senate without him.

Manchin has signaled he won't revisit his position in the near future and has often cited inflation as a reason to put the brakes on the social and climate spending bill. Manchin told Insider that inflation is a concern in West Virginia. It's hitting us very hard.

Manchin's argument was pushed back against it by Furman. Inflation is a bad reason to not pass build back better. It's mostly paid for. It's a medium and long-term agenda that would have no impact on inflation.