America's Talking - Episode 19: Food prices reach highest level in a decade

Episode Date: October 16, 2021

Food prices hit a 10-year high worldwide, according to the Food and Agriculture Organization of the United Nations (FAO)’s food price index. U.S. companies are feeling the pinch, resorting to increasing prices to offset their costs to purchase goods and deal with labor and transportation problems. The FAO index measures the monthly change of international prices of five food commodity prices, including cereals, vegetable oil, dairy, meat and sugar. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to America in Focus, powered by thecentersquare.com. I'm John Spataro, and this is the 40th week of 2021. Coming up, we'll take a quick look at one of the top stories from the center square.com. And later, executive editor of the center square, Dan McAulb, and DC reporter Casey Harper, will take a deeper dive into some of the top stories of the week, including reaction to the possibility of IRS tracking transactions over six, $600, a new study on the effects of President Biden's corporate tax hikes, and unpacking the latest unemployment numbers for the month of September. Coming up right after this on America

and Focus, powered by thecentersquare.com. Hi, this is Chris Krug, publisher of the Center Square. Our team produces the nationally read and recognized news stories at thecenter.com, the country's fastest growing, non-profit, nonpartisan, state-focused news and information site. We deliver essential information with a taxpayer's sensibility through reporting that's easy to understand and easy to share with your friends and family. We know that you need information that allows you to understand what the governor and your local legislators are doing. Get the news that you need to know at thecentersquare.com. That's thecenter square.com. Thecenter square.com.

Welcome back. Here are the top stories of the past week on the center square.com. The price for the standard Medicare Part B plan is set to increase for 2021. The Centers for Medicare and Medicaid services announced that the popular plan, which covers more than 60 million people, will increase by nearly $4 a month to $148.50. Last fiscal year, the country spent almost $836 billion on Medicare, according to a report by the Congressional Research Service. This coming on the heels of the Social Security Administration, announcing it was rolling out its large cost of living adjustment increase in nearly 40 years. Even with the price increases, a new report by Medicare Guide.com found that only one and four senior citizens have $500 or less in a savings account

in the event of a medical emergency. To read more about these stories and many others, visit thecenter square.com. Now for a closer look, over to Dan McAulb and Casey Harper. Thank you, John, and welcome back to America in Focus, powered by the Center Square. I'm Dan McAlebe. executive editor of the Center Square Newswire Service. Joining me today, as he does every week, is Casey Harper. The Center Square is Washington, D.C. Bureau Chief. We are recording this on Friday, October 15th. Casey, today is your birthday.

Happy birthday. How does 50 feel? Oh, you know, Dan, 50 feels as good as it did for you 30 years ago. Just the same. It feels great. Yes, it is my birthday. Very grateful to be. a lot. It's a good year. It's been a good year.

Well, good. Happy birthday. Any special plans? The wife taking you out? What's going on? Yeah, we're going to a lot of town trip. A little, you know, going to Inner Harbor in Baltimore. It'll be fun. As our listeners know, I'm based in D.C. So Baltimore is just a train right away. Well, nice. Just make sure you get a full workday in before you head out. Yeah, yeah, for sure. I'll be sure to do that.

Just, yeah. All right. Speaking of work, we've got a few things to talk about today. Top story for the podcast. This week, Nancy Pelosi doubled down on a plan pitched by President Joe Biden in the administration to beef up the IRS, including forcing banks to disclose transactions to the IRS of accounts holding over $600. That seems to me like that's more than just the wealthy. Tell us about this, Casey. Yeah, your instincts there are the instincts shared by many Americans.

So you pretty much gave the overview. But essentially, one of the big ways that President Biden wants to fund his $3.5 trillion in federal spending without increasing taxes, because increasing taxes is very difficult. It's hard to get him through Congress. They're unpopular. But his scheme, you might call it. I don't mean that in the most negative way, just his idea. is to increase IRS enforcement. That way you can increase revenue without adding new taxes.

And so he wants more federal spending to go to the IRS so that they can beef up their auditing divisions. And so they're going to be auditing more. And a big part of that is they want to have the banks report all transactions or bank accounts over $600. So they say, as you said, that this is for getting, you know, catching very wealthy people who are evading tax. But a lot of people say, well, wait a minute, $600. How is that, you know, how is this going to catch billionaires? Isn't this going to catch basically all, almost all Americans who have bank accounts? And, you know, several, over 100 business groups, you know, all the banking associations

just about have raised the alarm about this for weeks. They've been sending letters, trying to get attention on this issue and saying this is going to be very expensive for banks. It's going to be an invasion of privacy. And so if Biden's hope was to, you know, increase revenue without all the controversy that goes along with tax increases, I think he's got a whole new different kind of controversy on his hands. Yeah. I mean, that's got to be tens of millions of Americans, more than 100 million Americans. I don't even know how it would be doable, particularly with, with the Internet security issues and the potential for, this information to be stolen or leaked or whatever, it just seems, I don't get it. Yeah, I mean, security is a big problem.

I think we've seen there may come a time where the largest institutions in the country are able to secure their data from hackers, but we've certainly not reached that point yet. I mean, there's been, I don't mean, the single many people out, but we know, you know, Wells Fargo. If you think, for example, any place could secure their information and be one of the, you know, largest banks in the country, but they've had issues, you know, with the house. And different very high-level gigantic businesses have been able to have been hacked. And so putting all your eggs in one basket of the IRS, I don't know, it's just a big, a big fat target in the minds of a lot of people.

And I don't know that, you know, I think sometimes people attribute malice to the government or to the president when sometimes, you know, if incompetence is just as good as explanation, you should assume it's incompetence not malice. But I don't know. I think there's just a lot of unintended consequences that are being. pointed out that maybe didn't arise when this plan was first proposed. And not only are banks pushing hard back against this, I mean, states are as well. There are state treasurers, state governors who have said this is massive federal government

overreach. I know some states have said they won't allow the enforcement of such a law. It's just there's so many issues nationally right now between between inflation and the border crisis and just the partisan politics going on. This just seems like proposing something like this seems to be adding fuel to the fire. Yeah. And one thing, I didn't actually include this in my reporting yet. I'm still digging into it. But I spoke with the source this week.

And he pointed out that some of the banks that are hardest hit by this are minority-owned banks or banks that target small ethnic groups. You know, there are banks that serve certain ethnic populations almost exclusively. Some people don't know that. But those banks, according to my source, those are the ones taking the hardest hit because people who immigrated from authoritarian regimes to the United States are extremely wary of this requirement because it reminds them of what they immigrated away from. And he said that, you know, for example, Asian bank, which is a very, this is a large bank that

obviously caters to, you know, certain ethnic groups. And they have received a lot of complaints, a lot of concerns because some of their customers have immigrated from, you know, nations that had very authoritarian regimes and monitored everything, monitored bank accounts. And they say, wait a minute, this looks really familiar. And so I just thought that was particularly interesting. One, that it's hurting minority banks first, but the people who immigrated from authoritarian regimes are the first to point out that this could be a big problem. That's, that's, that is definitely an interesting take. I look forward to reading your reporting on that. Of course, this is part of the $3.5 trillion reconciliation bill that's

tied up in Congress, so it's not law yet. So certainly at the Center Square, the CenterSquare.com, keep coming back to us because we'll be reporting more on this very important story. Also this week, Casey, new study of President Biden's proposed corporate tax hikes came out. What did that study tell us? Sure. So the American Enterprise Institute released a report. this week, which analyzed Biden's proposed corporate tax increases, which are another way to fund this, you know, mammoth spending plan. Funding it has really been a big problem. Congress has a little easier time spending money, not always, but, you know, it's the funding where they rarely rubber hits the road because of the economic impact and, you know, of higher taxes. But, you know, essentially it evaluates how this report evaluates how America's corporate tax rate will, you know, put us in relation to the rest of the world.

It really argues that including this tax hike would make the U.S. less competitive on the world stage and could harm economic growth because it would disincentivize investment. And so to put just kind of give an example to that, if you can imagine that you're some international business and you're looking to invest or to expand your operations or to build the headquarters, one of the main things you're going to look at is the tax structure of the country that you're looking to invest in. There are other factors, like how educated is the population, because you need enough educated workers a lot of times for these bigger companies. How good is the infrastructure? And so it's not that this report is saying that companies are going to leave the U.S. to go to a totally undeveloped nation, right? It's more that there's a group of developed nations that have the population, you know,

the educated workforce and the infrastructure to service corporations. And they all kind of compete with one another for the, these corporate jobs, corporate headquarters. And so you can imagine if the U.S. goes up to the top of this corporate tax rate bucket, then these companies might be incentivized to go to an EU nation or to go to a different developed nation and have their headquarters headquarters there. Right. The plan, I think the plan calls for to raise the corporate rate from 21% to 28% correct. So that's a significant 7 percentage point. Yes. increase. And it also seems to be, in contrast to the previous story, we talked about the

forcing banks to report the IRS. One of the things, one of the concerns the Biden administration has is that big companies in particular, very wealthy Americans, hide their money overseas. If you're going to increase the corporate tax rate that significantly, just as you said, companies might decide to move overseas because of it. That's right. And just to put some hard numbers on this, so the report looked at the Organization for Economic Cooperation and Development, which includes 38 member countries.

It kind of just, it's a group and that is a good way to think about this. And these tax increases, which have not been put in place yet, but would be under Biden's plan, would put the U.S. near the top of those 38. meaning they're having among the highest of those 38. Yes. Yes. So, and there's kind of some different, a little bit of difference between what House Democrats are talking about and what Biden proposed, but there's not that much difference. And so the corporate tax rate will be third, you know, the third highest of the OECD. The METR corporate investment would rise to 20, would be the third highest. And then the other one would be the second highest.

So there's just kind of, there's a lot of moving parts. I don't want to focus. too much on percentages because the percentage is very depending on the different plans. But they're all significant increases and they're all going to be the highest out of the OECD. And so it would be a big difference from what we're used to. And you're right to point out that it will incentivize companies to, you know, move their money overseas. Now, I think a Biden supporter would say that, you know, other provisions of Biden's plan would make sure that they're not able to do that. you know, whether that's or effective is another question. Corporations and wealthy people are really good at not paying taxes.

So they're really good at, you know, they're huge legal teams and things of ways to get around all kinds of stuff. So enforcing these things is a problem that's an entirely separate issue. All right. More interesting news to keep following in Congress. Also this week, Casey, as they do every week, the U.S. Department of Labor released new unemployment data. particularly for new unemployment filings, but also unemployment overall. And was there some good news this week? There was good news.

So the Department of Labor, they released their weekly unemployment filings, and they found that first-time filers for unemployment fell by $36,000 for the week ending October 9th. Now, this is the second consecutive week. The agency reported a big decrease in unemployment claims. So that drops us down actually to $293,000. which is, I mean, below 300,000 is a good benchmark. Go ahead. And this is in new filings only.

Yes. First time, yeah, new filings, correct. And those reached the lowest level for initial claims since March of last year, which is really like after the pandemic began. So we are, these numbers are good for the pandemic era, but they're not good for pre-pandemic is the way to think about it. So you can say we're on the right track. Right.

They're still higher than before the pandemic. but they're significantly lower than the height of the pandemic, essentially, is what you're saying. That's right. That's right. And the ongoing level was down. So these are our first time that I'm talking about. So for ongoing benefits, it decreased $134,000. So that's the lowest since also March of last year when it was like $1.7 million. So now it's $2.9,000. 593 compared to March when it was 1.77 million. So still a lot higher, both in new filers and in ongoing filers, but this is two weeks of significant decrease. And, you know, if you've been following the podcast or the center square.com at all, you know we've reported a lot on the federal $300 a week, a week unemployment benefits. On top of the state benefits. That was a pandemic era action by Congress because so many people were out of work.

Congress stepped in and wanted to help the unemployed, but those expired in September, correct? Yeah, early September those expired. And so a lot of economic groups, you know, Goldman Sachs and different, you know, different analysts have said that after those benefits expired, we could expect unemployment to decrease because, you know, we state benefits with other kind of government benefits with the 300 our weekly unemployment from the federal government. It was enough theoretically to keep people from having to go back. to work or at least enough to just have them kind of take their time and not have a sense of urgency

to go back to work. So those expire in early September and everyone expected unemployment to drop. But as we reported and we've talked about, those number, unemployment actually increased, which was kind of in the early weeks is what you're saying. Right, right. Unemployment increased in the weeks immediately following the expiration of federal benefits. And so it was kind of a head scratcher. Now, Goldman's I've read some of the reporting, they did say that it would be a delayed effect. But anyway, now for the second week in a row, those unemployment numbers have dropped pretty significantly. And so I would say it's too early to tell for sure where this is going.

But this is confirmation of all the predictions. It's two weeks in a row. It's a big drop. And so if we see this steady trend of continued decrease for most of the weeks to come, then I think we can probably safely assume that the expiration of those benefits was responsive. Well, the next week would probably be a pretty big week in terms of next week's reporting by the Department of Labor.

It's been two consecutive weeks. Trend or not trend, don't know, but three consecutive weeks, that's definitely a trend, if you ask me. Yeah. So I expect that we'll be reporting on that again next Thursday, maybe even talking about it on the podcast, America's as long as you don't put me with those first time filers. I'll be right. I hope to not have to, Casey. Yeah. All right. Moving on. Gas prices, of course. Anyone who drives a car knows that gas prices are up significantly year over year. This year,

gases, the average, depending on where you're at in the United States, the average, national average for gasoline is about $3.25.5 per gallon. if you live in California in many spots, it's more than $5 a gallon. But as gas prices continue to go up, President Biden is still pondering new regulations on the oil and gas industry. What's going on here? Yes, you're right. I think Americans don't need the Soonersquare.com to tell them that their gas prices are going up. But we told them anyway, and I'll say that we told them because the numbers have really trended high. I mean, we had reporting by Bethany Blakely that oil prices at the highest level in seven years.

We've seen gas prices just skyrocket in recent years. I mean, some places like Manhattan, gas prices are hit nearly $5 a gallon for unleaded. And you may not be sympathetic to Manhattan residents, but more than 40 states around the country have gas prices well over $3 a gallon. Gas Buddy is one group that's kind of a funny. name, but that, you know, they have reporting on tracking of these numbers. And the national average is around $3.25 per gallon, which is, you know, well above what it was last year, much higher than it was last year. In the last month, gas prices rose just eight cents alone. So eight cents doesn't sound like a lot, but you come, you do that every month. You're really going to be somewhere. And, you know,

you're going to be almost a dollar by by this time next year, you know, so that we, it's If we kept raising eight cents a month next year, we're going to be talking about $4.25 in national average. So yeah, I mean, and to get it a little bit. Oh, one more thing. The gas buddy found that American drivers are paying over $400 million more for gas than they were last year. So there's real numbers on this. You might say, why is it? To be honest, it is a complicated problem.

I don't think it's totally fair to attribute these big supply chain issues and things. just to administrative policies because it is complicated, but there are definitely by the administration policies that have contributed to the problem we're experiencing now. And a lot of people in the oil and gas industry are pointing that out in, of course, asking for changes. So one of those big ones is the keystone pipeline, right? I mean, in some ways, the keystone pipeline is a symbolic, is symbolic of the fight on oil and gas. But President Biden stops the keystone pipeline. And, you know, course, industry insiders want to put that back up. That was just to clarify, that was a pipeline that was under construction, approved by the Donald

Trump administration, the former president, a 1,700 mile pipeline that was going to cross, from Alberta, Canada, across six U.S. states down to the Texas Gulf Coast that was going to deliver tens of thousands of barrels a day throughout the United States. with President Biden, canceled the permits on that and the company decided to discontinue constructing that pipeline. That's right. And, you know, one big criticism that's launched against Biden is that he discourages domestic oil production, but he really encourages it abroad. And we purchase, you know, all this oil and we have it shipped long distances to the U.S.

So we're still really consuming around the same amount of oil, same greenhouse gas emissions. It's just much more expensive because we're buying it from around the world and having it shipped here versus producing it domestically. Under President Trump, we were essentially energy independent, which of course makes gas prices a lot lower, but it is also kind of a national security concern. Right. I mean, for how many decades have we had issues in the Middle East just because of the oil situation? and our dependence on oil over there. We had become energy independent, not to say we didn't export or import any oil over the last several years, but we could become energy independent.

But now these Biden policies are essentially making us rely on foreign oil, which could create future messes between the U.S. and other Middle Eastern countries. Yeah, that's true. There's definitely, there's the international thing at play. I mean, when we talk about other countries that we're competing with, like Russian, China, energy production is, you know, top of mind. We think about being competitive, being independent. China could start leveraging their relationships with some of these Middle Eastern countries if it really came down to where we were in a more tense situation. One of the first, you know, battles, if we really heightened relationships with something like China, would be, leveraging relationships with different suppliers around the world and pressuring them to do different things. And so the more, you know, independent we are energy-wise just gives us a stronger position,

both when we're doing trade deals, when we're bargaining, national security, all that. One, you know, one big new, you mentioned new regulations. I mean, some, I think some in the environmental camp would say that Biden hasn't been strong enough, but he's definitely, he's considering new methane emissions regulations, which would hit a lot of states that produce energy hard. And one thing that people don't understand about this is if you don't live in a high energy producing state, you may not think much of it. But energy industries really do two big things. Why I grew up in East Texas, working in the oil fields was a way that someone could make enough money to support their family without having to go get an advanced degree.

So I had many friends, many guys who, you know, left high school, maybe the community college, but then they went and worked in the oil field and they were able to raise a family. You know, they wanted a wife to be able to stay at home with their kids so that, you know, homeschool or whatever that would be. And they were able to work one good job. And so it creates like really a middle class that the energy industry does create this middle class where people can have good paying job without, you know, getting an undergrad or master's degree. And the other thing it does is it produces a ton of revenue for these states.

there are states in the U.S. that their entire budgets would implode if they didn't have oil and gas tax revenue to depend on. New Mexico is a big one that comes to mine. I know Texas relies on it a lot. Louisiana, yeah. Yeah, and there's many. And so it has, there's after effects. And so if you live somewhere like Maine or Northern California, you may not really see the point. But if you live in some of these other energy producing states, it's a top issue, it's a top campaign issue.

and we try not get too political, but this is the kind of thing that's going to come up in November. If you're running in an energy-producing state, you're going to be bringing up gas prices. You're going to be bringing up oil and gas jobs. And these are the kind of things I think the Democrats are thinking about and probably a little concerned about going into 2022 and 2024. In fact, I know you didn't write this story, but a story we had out of Texas this week based on this topic. or eight U.S. representatives from Texas, Democratic U.S. representative from Texas, sent a letter to the Biden administration, asking him to ease back on these new regulations because it is having such a dramatic effect on their districts back in Texas, which are oil-producing districts.

So it is, there is bipartisan concerns about some of this. All right. Thank you, Casey. that's all the time we have this week. Thank you again. Happy birthday again. Take it easy on the parting. Yes, yes always.

Have fun, but after your workday is done. Hey, that's our motto here at the Center Square. Have fun, but after you're working on. All right. Thank you again. Listeners, we'll be back next week. Thank you.