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Biden Can't Fix High Beef Prices With $500 Million

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Biden Administration

Eric Boehm | 9.24.2021 4:45 PM

The rising price of beef offers a meaty lesson on the limits of the government's ability to combat inflation by throwing more money at the problem.

Even in an environment where almost everything is getting more expensive, the price of a pound of beef can make your eyes water. The Bureau of Labor Statistics says beef prices are up 12 percent since last September—beef steaks, specifically, are up by 16 percent over the same period. That's considerably more than the increases for food products (3.7 percent) and all products (5.3 percent) over the past 12 months.

The Biden administration, perhaps worried about the political toll that rising food prices could extract in next year's midterms, announced plans earlier this month to offer up to $500 million in loan guarantees to beef producers. That's on top of $500 million approved as part of the $1.9 trillion American Rescue Plan that was supposed to "expand processing capacity and increase competition in meat and poultry" industries, according to the U.S. Department of Agriculture.

The second prong of the White House's plans seems to involve shaming meat-processing companies. "Just four large conglomerates control the majority of the market for each of these three products (beef, pork, and poultry), and the data show that these companies have been raising prices while generating record profits during the pandemic," Brian Deese, director of the White House's National Economic Council, said during a press briefing last Friday, the Detroit Free Press reports.

Taken together, the White House's approach to high meat prices can be summarized as an argument for greater government subsidies based on the idea that stimulating more competition in the meat-packing industry will expand supply and reduce bottlenecks.

But, as David Frum details in The Atlantic today, there are some good reasons to be skeptical of this argument. For starters, it takes about $200 million (and several months, if not longer) to build a single new meat-processing plant. That means the Biden administration's new loan programs will not purchase much additional capacity, and whatever........

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