[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                 REVIVING COMPETITION, PART 6: REBUILD-
                  ING AMERICA'S ECONOMIC LEADERSHIP AND 
                    COMBATTING CORPORATE PROFITEERING

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
                         AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                         TUESDAY, MAY 17, 2022

                               __________

                           Serial No. 117-67

                               __________

         Printed for the use of the Committee on the Judiciary
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         


               Available via: http://judiciary.house.gov
               
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
48-832                    WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------                  
              
                       COMMITTEE ON THE JUDICIARY

                    JERROLD NADLER, New York, Chair
                MADELEINE DEAN, Pennsylvania, Vice-Chair

ZOE LOFGREN, California              JIM JORDAN, Ohio, Ranking Member
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
STEVE COHEN, Tennessee               LOUIE GOHMERT, Texas
HENRY C. ``HANK'' JOHNSON, Jr,       DARREL ISSA, California
    Georgia                          KEN BUCK, Colorado
THEODORE E. DEUTCH, Florida          MATT GAETZ, Florida
KAREN BASS, California               MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York         ANDY BIGGS, Arizona
DAVID N. CICILLINE, Rhode Island     TOM McCLINTOCK, California
ERIC SWALWELL, California            W. GREGORY STEUBE, Florida
TED LIEU, California                 TOM TIFFANY, Wisconsin
JAMIE RASKIN, Maryland               THOMAS MASSIE, Kentucky
PRAMILA JAYAPAL, Washington          CHIP ROY, Texas
VAL BUTLER DEMINGS, Florida          DAN BISHOP, North Carolina
J. LUIS CORREA, California           MICHELLE FISCHBACH, Minnesota
MARY GAY SCANLON, Pennsylvania,      VICTORIA SPARTZ, Indiana
SYLVIA R. GARCIA, Texas              SCOTT FITZGERALD, Wisconsin
JOE NEGUSE, Colorado                 CLIFF BENTZ, Oregon
LUCY McBATH, Georgia                 BURGESS OWENS, Utah
GREG STANTON, Arizona
VERONICA ESCOBAR, Texas
MONDAIRE JONES, New York
DEBORAH ROSS, North Carolina
CORI BUSH, Missouri

         AMY RUTKIN, Majority Staff Director and Chief of Staff
               CHRISTOPHER HIXON, Minority Staff Director
                              
                              ------                                

                 SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
                         AND ADMINISTRATIVE LAW

                DAVID N. CICILLINE, Rhode Island, Chair
                PRAMILIA JAYAPAL, Washington, Vice-Chair

JOE NEGUSE, Colorado                 KEN BUCK, Colorado, Ranking Member
ERIC SWALWELL, California            DARREL ISSA, California
MONDAIRE JONES, New York             MATT GAETZ, Florida
THEODORE E. DEUTCH, Florida          MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York         W. GREGORY STEUBE, Florida
JAMIE RASKIN, Maryland               MICHELLE FISCHBACH, Minnesota
VAL BUTLER DEMINGS, Florida          VICTORIA SPARTZ, Indiana
MARY GAY SCANLON, Pennsylvania       SCOTT FITZGERALD, Wisconsin
LUCY McBATH, Georgia                 CLIFF BENTZ, Oregon
MADELINE DEAN, Pennsylvania          BURGESS OWENS, Utah
HENRY C. ``HANK'' JOHNSON, Jr., 
    Georgia

                       SLADE BOND, Chief Counsel
                      DOUG GEHO, Minority Counsel
                            
                            C O N T E N T S

                              ----------                              

                         Tuesday, May 17, 2022

                                                                   Page

                           OPENING STATEMENTS

The Honorable David N. Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island...................................................     2
The Honorable Ken Buck, Ranking Member of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Colorado.......................................................     3

                               WITNESSES

The Honorable Robert Reich, Carmel P. Friesen Professor of Public 
  Policy, Goldman School of Public Policy, University of 
  California, Berkeley
  Oral Testimony.................................................     6
  Prepared Testimony.............................................     8
Dr. Rakeen Mabud, Chief Economist and Managing Director of Policy 
  and Research, The Groundwork Collaborative
  Oral Testimony.................................................    21
  Prepared Testimony.............................................    23
Mr. Barry C. Lynn, Executive Director, Open Markets Institute
  Oral Testimony.................................................    37
  Prepared Testimony.............................................    39
Ms. Patrice Onwuka, Director, Center for Economic Opportunity, 
  Independent Women's Forum
  Oral Testimony.................................................    61
  Prepared Testimony.............................................    63

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Statement from David French, Senior Vice President, Government 
  Relations, National Retail Foundation, submitted by the 
  Honorable David N. Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island, for the record...................................    98

 
                 REVIVING COMPETITION, PART 6: REBUILD-.
            ING AMERICA'S ECONOMIC LEADERSHIP AND COMBATTING 
                         CORPORATE PROFITEERING

                              ----------                              


                         Tuesday, May 17, 2022

                        House of Representatives

                 Subcommittee on Antitrust, Commercial,

                         and Administrative Law

                       Committee on the Judiciary

                             Washington, DC

    The Committee met, pursuant to call, at 1:00 p.m., in Room 
2141, Rayburn House Office Building, Hon. David N. Cicilline 
[Chair of the Subcommittee] presiding.
    Members present: Representatives Cicilline, Neguse, 
Swalwell, Jones, Jeffries, Raskin, Jayapal, Demings, Scanlon, 
Dean, Johnson of Georgia, Jordan, Buck, Issa, Johnson of 
Louisiana, Steube, Bishop, Fitzgerald, Bentz, and Owens.
    Staff present: John Doty, Senior Advisor and Deputy Staff 
Director; David Greengrass, Senior Counsel;Cierra Fontenot, 
Chief Clerk; John Williams, Parliamentarian and Senior Counsel; 
Keenan Keller, Senior Counsel; Slade Bond, Chief Counsel for 
Antitrust, Commercial, and Administrative Law; Phillip 
Berenbroick, Counsel for Antitrust, Commercial, and 
Administrative Law; Mary Helen Wimberly, Detailee for 
Antitrust, Commercial, and Administrative Law; Joseph Van Wye, 
Professional Staff Member/Legislative Aide for Antitrust, 
Commercial, and Administrative Law; Douglas Geho, Minority 
Chief Counsel for Administrative Law; Andrea Woodard, Minority 
Professional Staff Member; Kiley Bidelman, Minority Clerk; and 
Bradley Craigmyle, Minority DOJ Detailee.
    Mr. Cicilline. The Subcommittee will come to order. Without 
objection, the Chair is authorized to declare recesses of the 
Committee at any time.
    Good morning and welcome to today's hearing examining how 
corporate consolidation and profiteering have led to supply 
shortages and high prices across the country.
    I'd like to remind Members that we've established an email 
address and distribution list to circulate exhibits, motions, 
or other written materials that Members might want to offer as 
part of today's hearing.
    If you would like to submit materials, please send them to 
the email address that has been previously distributed to your 
offices, and we will circulate the materials to Members and 
staff as quickly as we can.
    I would ask all Members to please mute your microphones 
when you are not speaking. This will help prevent feedback and 
other technical issues. You may unmute yourself any time you 
seek recognition.
    I now recognize myself for an opening statement.
    As a country, we're all fed up with crisis after crisis 
caused by giant corporations lining their pockets while the 
rest of America struggles to make ends meet. The latest crisis 
is a crippling shortage of baby formula. Over 40 percent of the 
most popular baby formula products are out of stock.
    Parents of infants with allergies are desperate find the 
specialty formulas that their children need to survive. When 
parents can find formulas in stores, the price is up almost 20 
percent over what it was a year ago. This is completely 
unacceptable.
    We know why it's happening. Just two companies control 80 
percent of baby formula production in the United States. When 
something goes wrong with one of them, the entire country feels 
the consequences. We're seeing this today.
    The largest U.S. formula producer, Abbott, shut down one of 
its plants in February due to bacterial contamination. Because 
of the loss of one plant of one company, formula shelves are 
empty. We do not have the diversity of other, smaller companies 
capable of picking up the slack. Our supply chain is not 
resilient or nimble enough.
    We understand how grave problem this is. Baby formula 
shortage is a case study of the market concentration problems 
plaguing the U.S. economy. When we allow corporations to 
concentrate their control, we allow them to concentrate all 
production capacity, and that concentrates a risk.
    It's a system designed to maximize short-term profits at 
the expense of safety and resiliency, and we're now suffering 
because of it. While hardworking Americans are feeling the 
pinch, big corporations are not. Gas prices provide the perfect 
example. They have hit record highs, over four dollars a gallon 
in nearly every State.
    Here is what is telling: Big Oil's profits are also at 
record highs. Last year, major oil companies posted their 
highest profits in nearly a decade. This year, Chevron's first 
quarter profits quadrupled over last year. Exxon Mobile and BP 
at least doubled their first quarter profits, and Shell's 
profits hit a new record high.
    American families are hurting, workers have been furloughed 
due to supply chain disruptions, paychecks are stretched, 
consumers are paying more and getting less. Meanwhile, 
corporate executives are doing better than ever.
    According to the Wall Street Journal, the total 
compensation for most executives rose by 12 percent, while the 
median pay for CEOs at the biggest U.S. companies reached $15 
million last year, a record for the sixth consecutive year.
    Certainly, part of what has caused high consumer prices 
include crises that are largely beyond our control, such as the 
COVID-19 pandemic and Putin's war on Ukraine. These events also 
laid bare the deeper and more systemic diseases that have been 
plaguing our country for decades now.
    American economic leadership has been undermined by years 
of consolidation, under-investment, and focus on short-terms 
profits at the expense of everything else. As Professor Reich 
has written, and I quote,

        There's a deeper structural reason for inflation, one that 
        appears to be growing worse: The economic concentration of the 
        American economy in the hands of relatively few corporate 
        giants with the power to raise prices.

    As my colleague and friend, Senator Amy Klobuchar, said, 
and I quote,

        America's market power problem cuts across our entire economy. 
        We see it in everything from cat food to caskets.

    Because of corporate consolidation, wages have stagnated 
and consumer prices across the board are climbing higher and 
higher. All the while, corporations are reporting windfall 
profit margins in one sector after another, taking advantage of 
the current crises to raise prices even higher.
    As the Economic Policy Institute recently reported, ``Since 
the onset of the pandemic, nearly 54 of the spike in the costs 
of goods and services is attributable to higher profits margins 
by corporations.''
    Over the past several decades, the largest corporations 
have chronically under-invested in research and development and 
in their workforce. In fact, instead of investing in more 
resilient supply chains, innovation, new facilities, or 
workers, the firms in the S&P 500 spent 91 percent of their 
income on share buybacks or dividends between 2009-2018.
    Meanwhile, they have shipped jobs and manufacturing 
overseas and become strategic partners with America's 
adversaries. While this system is working great for wealthy 
CEOs and Wall Street, it's a disaster for working Americans, 
who are struggling with high prices, empty shelves, and few 
competitive alternatives in the marketplace. It's unsustainable 
in the long-term because it threatens our economic prosperity 
and our national security.
    Americans are angry, they're fed up with CEOs boasting that 
record profits are being fueled by the pain being inflicted on 
working families. Americans are overwhelmingly demanding that 
Congress end the corporate greed and runaway consolidation that 
are at the heart of this crisis.
    Today's hearing is an opportunity for us to explore the 
root causes of these concerns and to hear about solutions. I 
thank our panel of esteemed Witnesses for appearing before us.
    I now recognize the distinguished gentleman from the State 
of Colorado, the Ranking Member of the Antitrust Subcommittee, 
Mr. Buck, for his opening statement.
    Mr. Buck. Thank you, Mr. Chair.
    This is the second hearing in this Subcommittee entitled 
Reviving Competition. How tragic it is that an economy that 
should be growing and recovering from government-mandated 
lockdowns is instead stagnating in uncertainty over record-
setting inflation, labor shortages, and a crippled supply 
chain.
    Americans face disastrous economic headwinds, and the Biden 
Administration has doubled down on its failed policies. At our 
last hearing on this subject, inflation was seven percent, now 
it's 8.3 percent. A gallon of gas was $3.31, now it's $4.33. 
Beef went from $4.55-4.92. I suggest we stop holding hearings.
    Perhaps most concerning, however, is the shortage in baby 
formula. Young mothers in my district are driving hours to find 
formula and feed their babies. The most vulnerable population 
in America doesn't have a stable source of food, and Congress 
hasn't done a thing about it.
    Of course, we just passed a $40 billion Ukraine aid package 
that included funds for global food security. Working families 
in the United States cannot feed their children, yet we're 
sending billions of dollars to countries that aren't even 
impacted by the war in Eastern Europe. To make matters worse, 
there wasn't even a requirement that the food in these programs 
come from U.S. producers.
    CNN, no friend to Republican talking points, recently 
tasked a reporter with tracking down baby formula. They used 
the Biden Administration's new highly touted tools. The result: 
Hours on hold and no clear direction for parents in need to 
purchase formula.
    We can have a philosophical debate over the concentration 
of power in different sectors of our economy. I welcome a 
discussion of Amazon's quick acquisition of Whole Foods and its 
anticompetitive pricing and delivery practices that force 
small, independent grocers out of business.
    To suggest that changes to competition policy will put 
formula back on the shelves for consumers is disconnected from 
reality, especially when the Biden Administration is busy 
shipping pallets of formula to the southern border for illegal 
immigrants.
    The Biden Administration and congressional Democrats need 
to stop hiding behind scapegoats and finally address the root 
causes of skyrocketing inflation. Between profligate spending, 
unabashed union protectionism, and radical environmentalism, 
it's no wonder how we got here.
    Since January, the price and availability of goods has gone 
from an expensive headache to a potentially disastrous shortage 
of critical products. If this is not addressed, I fear the 
statistics I'll be reading at the next hearing on this subject 
will be far worse.
    Mr. Chair, I yield back.
    Mr. Cicilline. I thank the gentleman. Now, I will introduce 
today's Witnesses. Again, I thank our Witnesses for joining us 
today.
    Our first Witness, the Honorable Robert Reich, is the 
Carmel P. Friesen Professor of Public Policy at the University 
of California Berkeley's Goldman School of Public Policy.
    During the Clinton Administration, Professor Reich served 
as the Secretary of Labor. Time Magazine named him one of the 
ten most effective cabinet secretaries of the 20th century. He 
has written and published 18 books, including bestsellers 
``Aftershock'' and ``The Common Good.''
    Professor Reich is a founding editor of the American 
Prospect, a founder of Inequality Media, co-creator of the 
documentary series Inequality for All, and a member of the 
American Academy of Arts and Sciences. Additionally, he 
currently serves as a Senior Fellow at the Blum Center.
    Professor Reich received his bachelor's degree from 
Dartmouth University, his master's degree from Oxford 
University, and his JD from Yale Law School.
    Today's second Witness is Dr. Rakeen Mabud, the Chief 
Economist and Managing Director of Policy and Research at the 
Groundwork Collaborative. At Groundwork, Dr. Mabud has led 
their efforts to explain how economic trends impact people's 
lives, with a focus on serious structural disparities and on 
investigating how corporate profiteering exacerbates inflation.
    Before joining the Groundwork Collaborative, Dr. Mabud 
helped develop economic policy as a Special Assistant in the 
Office of Economic Policy at the Treasury Department. Dr. Mabud 
also serves as a board member for the National Employment Law 
Project.
    She has been widely published in some of the nation's most 
prominent publications, including the New York Times, The 
Washington Post, and NPR. Dr. Mabud received her bachelor's 
degree from Wellesley College and her Ph.D. in Government from 
Harvard University.
    Our third Witness is Barry C. Lynn, the Executive Director 
at Open Markets Institute. Mr. Lynn is a leading expert on the 
threat monopolies pose to our democracy, economy, security, and 
individual liberties. He's written three books and has been 
published widely by national publications, including The 
Economist, Rolling Stone, The New Yorker, and The Wall Street 
Journal. Prior to the helming the Open Markets Institute, Mr. 
Lynn was the Executive Editor of Global Business Magazine and a 
correspondent for the Associated Press, and Agence France-
Presse in South America.
    Mr. Lynn received his bachelor's degree from Columbia 
University.
    Today's last Witness is Patrice Onwuka the Director of the 
Center for Economic Opportunity at the Independent Women's 
Forum. Ms. Onwuka Has worked in policy and advocacy in DC for 
more than a decade. Additionally, Ms. Onwuka is a Senior 
Adjutant Fellow with the Philanthropy Roundtable and Tony 
Blankley Fellow at the Steamboat Institute.
    She's a frequent guest on Fox News and a co-host of 
O'Connor and Company, a show on DC's leading talk radio 
station. She also hosts a column called The New Agenda for 
Black Women on Newsmax.com and is a contributor to the 
Washington Examiner.
    Ms. Onwuka received her bachelor's degree from Tufts 
University and her master's degree from Boston College.
    We welcome all our distinguished Witnesses and thank them 
for their participation. I will begin by swearing in our 
Witnesses and ask the Witnesses to turn on their audio if you 
are appearing virtually. Make sure that we can see you. Please 
raise your right hand while I administer the oath.
    Do you swear or affirm under penalty of perjury that the 
testimony you are about to give is true and correct to the best 
of your knowledge, information, and belief, so help you God?
    Let the record reflect that the Witnesses answered in the 
affirmative, and I thank you. I would remind the Witnesses that 
your written testimony will be entered into the record in its 
entirety. Accordingly, I ask that you summarize your testimony 
in five minutes.
    To help you stay within that timeframe, there's a timing 
light on your screen. When the light switches from green to 
yellow, you have one minute to conclude your testimony. When 
the light turns red, it signals that your five minutes have 
expired.
    I'll begin by recognizing Professor Reich for five minutes.

            STATEMENT OF THE HONORABLE ROBERT REICH

    Mr. Reich. Thank you, Mr. Chair and Members of the 
Committee.
    The Commerce Department recently reported that corporate 
profits are at a 70-year high. Now, this raises an obvious 
question: When corporate and corporations are so flush with 
cash, why are they raising prices?
    Now, it's not solely because of the increasing costs of 
supplies and components and labor. Corporations enjoying record 
profits in a competitive economy would absorb these costs, 
keeping their prices down to prevent competitors from grabbing 
away customers.
    The underlying problem is large American corporations have 
so much market power, they can raise prices with impunity. 
Since the 1980s, two-thirds of all American industries have 
become more concentrated, making it easy for corporations to 
informally coordinate price increases with a handful of other 
companies in their same industry without risking the 
possibility of losing customers who have no other choice.
    Airlines, for example, have merged from 12 carriers in 1980 
to four today, which now control 80 percent of domestic seating 
capacity. Three giant cable companies dominate broadband. A 
handful of drug companies control the pharmaceutical industry. 
Two giant firms dominate consumer staples.
    Three global alliances now control 80 percent of global 
container ship capacity. Four giants control over 80 percent of 
meat processing. The biggest U.S. oil companies, headed by 
Chevron and Exxon Mobile, boasted near-record profits last 
year, but they're raising prices at the pump nonetheless 
because they don't worry about losing market share to 
competitors.
    Meat prices are soaring because the four giant meat 
processing corporations that dominate the industry are using 
their market power to extract even bigger profit margins for 
themselves, according to the White House National Economic 
Council.
    Corporate executives brag about their pricing power on 
their earnings calls with Wall Street. The CEO of Tyson Foods 
credits his company's profits with its ``successful pricing 
strategies.'' The head of 3M boasts of a ``marvelous job in 
driving price.'' The CFO of Hormel says, ``We've done a great 
job with our pricing.'' So on and so forth.
    One reason baby formula is out of stock is lack of 
competition. The largest producer, with more than 40 percent of 
the market, is Abbott. After four babies were hospitalized and 
two died from bacterial infections, the FDA appropriately 
recalled Abbott's baby formula products, leaving families that 
depend on infant formula in the lurch.
    Now, it would be one thing if corporations were using their 
profits to invest in higher productivity, better product 
quality, and so on. They're using them to buy back their own 
shares of stock to deliver higher returns to shareholders.
    Stock buybacks hit a record last year. This year is on 
track to exceed that record. The oil giants are planning to buy 
back even more than last year. Abbott, instead of investing in 
safety of its factory, bought back billions of dollars of 
shares.
    Big corporations doing what their shareholders want them to 
do, maximize profits and share values. Unless or until there 
are laws preventing them from doing this, they will continue to 
do this.
    So, I recommend that the Congress and the Administration:

        (1)  Strengthen antitrust laws and enforcement.
        (2)  Prevent price-gouging. The Federal Trade Commission has 
        the power to carry out investigations and impose penalties 
        under existing law.
        (3)  Tax windfall profits, profits of large corporations that 
        exceed their average profit level from 2015-2019.
        (4)  Finally, tax buybacks.

    This would make companies think twice before putting 
shareholders ahead of American families.
    Congress and the Administration have the power to stop 
corporations enjoying the highest profits in seven years from 
raising their prices, thereby requiring American workers and 
consumers to subsidize wealthy investors.
    Thank you.
    [The prepared statement of Mr. Reich follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you, Professor Reich. I now recognize 
Dr. Mabud for five minutes.

                 STATEMENT OF DR. RAKEEN MABUD

    Ms. Mabud. Chair Cicilline, Ranking Member Buck, thank you 
for inviting me to testify today. My name is Rakeen Mabud, and 
I'm the Chief Economist and Managing Director of Policy and 
Research at the Groundwork Collaborative.
    Groundwork is an economic policy think tank dedicated to 
advancing a coherent economic world view that produces broadly 
shared prosperity and abundance for all.
    My testimony today will focus on three key points. First, 
mega-corporations are seeing the highest profit margins in 70 
years.
    Second, entrenched concentration has facilitated high 
levels of pricing power by corporate actors for decades. The 
pandemic, the cover of inflation, and geopolitics has given 
these companies new opportunities to exercise that pricing 
power, and investors are egging them on.
    Finally, the brunt of these price hikes does not fall 
evenly across our economy. Small businesses, low-income people, 
and people on fixed incomes are paying the highest price.
    Recent data and research lays bare the role of plain old 
profiteering in recent price hikes. The Bureau of Economic 
Analysis corporate profit data released in April revealed that 
corporate profits of non-financial firms surged 35 percent in 
2021, and overall profit margins reached their highest level 
since 1950.
    Recent analysis from the Economic Policy Institute finds 
that approximately 54 percent of the price increases that 
consumers are experiencing come from an increase in corporate 
profits. By contrast, labor costs, primarily wages, and non-
labor costs, such as input costs, have only contributed 8 
percent and 38 percent, respectively.
    Groundwork has combed through hundreds and hundreds of 
earnings calls where executives tell investors about last 
quarter's performance and what they can expect going forward. 
Over and over, the message from corporate America is clear. 
They aren't just asking consumers to pay for the rising costs, 
they're going for more.
    Some of the most egregious cases are corporations like Visa 
and Mastercard, a duopoly that controls over 70 percent of the 
payment network market, which cannot even blame supply chain 
disruptions for their profiteering. Since credit card companies 
make their money on a fixed percentage fee off each 
transaction, inflation means they will automatically see higher 
returns.
    Of course, these companies are not content to stop there. 
Both Visa and Mastercard also reported that they will be 
raising fees themselves, that even more in an environment 
already difficult for small businesses. In short, Visa and 
Mastercard are using the power afforded through their duopoly 
control of the market to raise fee on small businesses and 
consumers who have nowhere else to go.
    Wall Street's influence in every corner of our economy 
makes this period of inflation unique and puts us at risk for a 
profit-price spiral. As price hikes drive up profits, investor 
demands for those profits also goes up.
    Take oil and gas companies, an industry dominated by seven 
``super major'' companies. Despite the significant hardship 
that higher gas prices have incurred on families around the 
country, producers resolutely refuse to increase supply and 
respond to the increasing price of gas.
    As the CEO of Pioneer Oil replied when asked to explain, he 
said,

        It's all about the shareholders. Our shareholders own this 
        company, they want a return of cash.

    In fact, 59 percent of oil and gas executives recently told 
the Dallas Fed that investor pressure is the primary reason 
publicly traded oil companies are throttling supply despite 
high prices. Investors have cashed in across the board. In 
2021, S&P 500 firms spent nearly $900 billion on stock 
buybacks, and U.S. companies paid out nearly $1.5 trillion in 
dividends to shareholders, both record highs.
    Small businesses in particular face unique challenges as 
they fight to survive in deeply consolidated markets. Small 
businesses have a harder time navigating global supply chains 
and large corporations throw their weight around to jump to the 
front of the line with shipping companies. Meanwhile, small 
businesses owners sit and wait with empty shelves.
    Big business has also strong-armed suppliers into deals 
that raise prices for small businesses and leave them waiting 
longer for goods and products. Giants like Walmart and Amazon 
have the buying power to negotiate more favorable contracts 
with suppliers in the first place, leaving small businesses 
struggling to keep up.
    Giant corporations' control over supply chains and economy 
more broadly has supplanted the functioning and resilient 
system we could have built through robust public investment and 
free and fair competition. It's not too late, we have many 
policy tools at our disposal.
    Congress can strengthen antitrust laws already on the 
books, better enforce them when anti-competitive behavior 
reaches the threshold for price-fixing and collusion, and enact 
a Federal price-gouging statute to curtail exploitative pricing 
during emergencies.
    Congress can also ensure corporations are paying their fair 
share of taxes and implement an excess profit tax on mega-
corporations when appropriate.
    Finally, Congress can make long-overdue investments in our 
supply chain infrastructure to ensure that large corporations 
can't game the system and use their market power to rig the 
playing field further in their favor.
    Thank you, and I look forward to your questions.
    [The prepared statement of Dr. Mabud follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you, Dr. Mabud.
    I now recognize Mr. Lynn for five minutes.

                   STATEMENT OF BARRY C. LYNN

    Mr. Lynn. Chair Cicilline, Ranking Member Buck, Members of 
the Committee, thank you for inviting me to speak on this set 
of grave, even existential threats to the American people.
    I am Barry Lynn. I direct the Open Markets Institute. It's 
good to see you all.
    Over the last year, the American people have learned that 
extreme concentration of industrial capacity and control has 
empowered corporations across the economy to engage in the 
greatest bout of price-gouging in more than half a century. The 
resulting surge in prices has severely harmed every wage earner 
and small business owner, indeed, almost every person and 
family in America.
    Yes, other factors--COVID, war--play a role in driving 
prices higher, but it's the choke pointing of capacity that 
embeds inflation deep into the structure of the economy. This 
chokeflation, or stranguflation as we might call it, as harmful 
as it may be, is also merely a symptom of an even more 
dangerous set of threats to the security and wellbeing of 
America as a whole, and every American individual.
    That's because the same concentration of capacity and 
control that corporations pursue to boost their pricing power 
also radically increases many forms of physical risk. This 
includes the risks of severe shortages of food, drugs, fuel, 
and housing, even, as we now know, baby formula.
    Severe shortages of the capacity to build weapons, think 
Stinger missiles. Political coercion of individual corporations 
or the U.S. government itself by antagonistic foreign powers, 
China, Russia. Even cascading catastrophic collapses of entire 
industrial and financial systems.
    So, my first main point is that inflation and shortages are 
two sides of the same coin. The corporate master breaks the 
factory, the machine, the skilled worker, the technology, so 
that he may take more for less. It's a swell way to do 
business, to profit from your own failure.
    This breaking can go way too far. Indeed, the breaking in 
the last 40 years now threatens the security of every American 
in new and terrifying ways.
    My second point, the concentration of capacity behind all 
these threats is the direct result of antidemocratic 
competition policies designed precisely to concentrate wealth, 
power, control, and capacity in the hands of the few.
    The process began with Ronald Regan's embrace of Robert 
Bork's efficiency theory of antitrust. It continued with Bill 
Clinton's embrace of Larry Summers' efficiency theory for 
trade. Many understood at the time that it was unwise to put 
all our eggs in one basket and then to put that basket inside 
the borders of China.
    It was 20 years ago this month that I first detailed these 
immense political dangers and economic dangers in this cover 
story for Harper's. It's called ``Unmade in America, The True 
Costs of a Global Assembly Line,'' 20 years ago.
    It was 17 years ago this summer that I published an entire 
book on the issue, ``End of the Line,'' 17 years ago. Others 
warned as well. In 2002, the first annual report of the U.S. 
China Security Review Commission fully embraced the warning of 
supply chain fragility and danger of coercion, 2002, the U.S. 
government documents.
    In 2005, the epidemiologist Michael Osterholm warned of how 
concentration threatened our supply of N95 masks. That was in 
2005.
    The warnings were ignored, dismissed, suppressed by 
executives, economists, antitrust officials, and the financiers 
who back them. Time and again, year after year, because if the 
master cannot break, the master cannot take quite so much. So, 
despite all the warnings, it was the master's right to break 
that was kept intact.
    Third, the good news. This crisis provides a clear and 
historic imperative to rebuild America's industrial systems in 
ways that boost both our security and our prosperity, including 
by fostering the sorts of competition that drive down prices, 
drive up wages, and jump start true innovation.
    Our task is technically simple. Enforce our antimonopoly 
laws as intended. Update the laws where necessary. Most 
important, however, is to always remember the main reason to 
stop corporations from trying to take America is to stop them 
from breaking America.
    Thank you.
    [The prepared statement of Mr. Lynn follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you, Mr. Lynn.
    Ms. Onwuka, you are now recognized for five minutes.

                  STATEMENT OF PATRICE ONWUKA

    Ms. Onwuka. Thank you, Chair Cicilline, Ranking Member 
Buck, and Members of this Committee. Thank you for having me 
appear today.
    My name is Patrice Onwuka, and I'm the Director of the 
Center for Economic Opportunity at the Independent Women's 
Forum. We are a nonprofit organization committed to increasing 
the number of women who value free markets and personal 
liberty. My work focuses on the economy as well as expanding 
opportunities for women.
    Now, as we emerge from this pandemic, it's been encouraging 
to see the recovery of women's participation in the labor 
force. The tight labor market has rewarded them with rising 
wages and increased flexible work. Rapid inflation has placed 
these gains at risk.
    As we know, inflation rose 8.3 percent in April over the 
past 12 months, and prices are rising in every major category, 
with significant increases in energy, food, and shelter. For 
another month in a row, women have watched inflation erode 
their purchasing power, and households have been forced to do 
more with less.
    The hardest hit, as we've heard, are the low-income 
households and those on fixed budgets, such as the elderly. 
Women know what this means. We drive 70-80 percent of consumer 
purchasing power, and so we're attentive to what inflation--
what choices our families have to make because of it.
    Gasoline hit another record today at $4.52 a gallon. A year 
ago, it was $3.04, and two years ago $1.96. So, and even worse, 
parents of newborns and babies face the dual hardship of rising 
prices on baby formula as well as its unprecedented baby 
formula shortage.
    Americans are right to worry about inflation and to see it 
as the top issue facing them. Congress and the Biden 
Administration are wrong to scapegoat a few specific industries 
for this kitchen-table problem. This is an attempt to deflect 
attention for how failed policies and massive Federal spending 
are at the root of inflation.
    Arguments about today's spiking inflation due to price-
gouging are disingenuous. Furthermore, solutions could raise, 
not lower, prices for American households. Price-gouging 
usually occurs in a narrow market over a short period of time. 
However, prices have been rising for over a year and have 
spiked on items in every sector. Are large and small companies 
colluding to raise their prices?
    Now, sure, we've heard a lot about corporate profits today 
rising. Profits do rise with inflation. They also did plummet 
during the beginning of the pandemic. Profit is not a bad 
thing. Economists are skeptical of the price-gouging allegation 
against large companies.
    A survey of two out of three--two out of three economists 
from America's top universities, including MIT, Harvard, Yale, 
Stanford, disagree with the quote--the question, ``Is dominant 
corporations in uncompetitive markets taking advantage of their 
market power to raise prices to increase the profit margins 
lead to today's inflation?'' Again, two out of three said no.
    In fact, some industries with the largest price increases 
are highly competitive. We've heard a little bit about 
gasoline. Well, the top five companies providing gasoline in 
this country, not one of them owns more than 12\1/2\ percent of 
the market share. The top five, about 36 percent of the market 
share in total.
    So, new legislation that cracks down on mergers and 
acquisitions or attempts to control prices will not lower them 
but lead to higher prices and stifle the innovation that leads 
to more options for consumers.
    No doubt, supply chain issues and disruptions, labor market 
shortages are at play and increase the cost of production. 
Demand has been extraordinary, and, unfortunately, we haven't 
heard enough about demand here today.
    From March 2020-March 2021, the U.S. Government made 
massive direct payments to American households through 
stimulus, expanded unemployment insurance, mortgage, and 
student loan forbearance. That kept demand humming along.
    The American Rescue Plan in 2021 added significant cash 
payments, including the expanded child tax credit at a time 
when millions of worker--of jobs had been recovered, at a time 
when vaccines were being distributed, and the economy was 
experiencing a tremendous rebound.
    The Federal Reserve also engaged in hyperexpansionary 
monetary policy. Quote, ``There is a chance that microeconomic 
stimulus on a scale closer to World War II levels than normal 
recession levels will set off inflationary pressures of a kind 
we have not seen in a generation.'' Former Obama Administration 
Treasury Secretary Larry Summers in early 2021.
    He was right. The Federal Reserve Bank of San Francisco 
estimates that the American Rescue Plan added three percentage 
points to inflation. So, driving down inflation ought to be a 
key area to reduce inflation. That includes not passing new 
stimulus or increased fiscal spending on new entitlement and 
student loan forgiveness.
    Maybe Congress could spend some time ramping--figuring out 
how to ramp up supply by raising labor force participating, 
reducing import restrictions, reducing regulations, keeping 
corporate tax rates low, and encouraging oil drilling, and then 
going after price-gouging. American households truly are 
hurting. Thank you.
    [The prepared statement of Ms. Onwuka follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you very much. The Committee will 
stand in recess briefly votes have been called. There are only 
two votes, and we'll come back as soon as those votes are 
concluded.
    I beg the indulgence of our Witnesses, and we'll return. 
We'll stand in recess.
    [Whereupon, the above-entitled matter went off the record 
at 1:32 p.m.]
    Mr. Cicilline. The Committee will come to order, and I want 
to thank, again, the Witnesses for the indulgence and the 
Members of the Subcommittee.
    We will now proceed under the five-minute rule, and I will 
recognize first the gentlelady from Florida, Ms. Demings, for 
five minutes.
    Ms. Demings. Thank you so much, Mr. Chair, and again, thank 
you to our Witnesses for your indulgence and for being with us 
today.
    We all know that prices are rising, and Americans are 
feeling it, especially at the gas pump where prices are spiking 
to their highest point ever.
    Instead of increasing production to meet demand, major oil 
companies are spending on buy backs and dividends, bragging of 
record profits. I'm sure we all heard the audio.
    Exxon Mobil, Shell, Chevron, and BP each reported their 
largest profits in eight years with the four companies totaling 
profits approximately $71.5 billion in 2021.
    Again, of course, we're not here today to talk about 
profits necessarily. God bless them. We are here to make sure 
that they are not taking advantage of a tough time and 
continuing to work in the best interests of the American 
people.
    These oil and gas companies are able to keep prices high 
and bank record profits because they have very little 
competition. The lack of meaningful competition means there are 
no competitive checks on bad behavior such as profiteering by 
dominant corporations.
    We do need stronger enforcement and successful execution of 
existing antitrust laws and policies. I think we say that in 
just about every hearing.
    So, my first question is for Dr. Mabud. Can you give us 
some examples of companies that have used inflation and, 
unfortunately, the pandemic as cover to raise prices and 
increase profits?
    Ms. Mabud. Absolutely. Thank you for that question.
    What we hear in these earnings calls is that in sector 
after sector CEOs are blaming inflation, supply chain snarls, 
basically, everything but their own need to profiteer for 
higher prices.
    This is especially the case for companies like Kimberly-
Clark, which produces what economists called price inelastic 
goods, essentially, essentials that parents who need diapers 
are going to pay whatever they need for diapers. So, Kimberly-
Clark has the market power and the ability to jack up prices 
because they know they're not going to lose consumers if they 
do so.
    Ms. Demings. Thank you so much.
    Professor, what are the consequences of the reduced 
successful enforcement of antitrust laws?
    Mr. Reich. Well, Congresswoman, what we've seen over, 
really, the past decades are that the courts have reduced the 
scope and effectiveness of antitrust as a means of maintaining 
the competition and the competitive process.
    The result of that is that more and more corporations 
dominate their industries. They have the power to set prices.
    They have the power to, basically, generate profits that 
are not being poured back into production or going into higher 
wages. Their profits are going more and more into stock buy 
backs that reward their shareholders but don't really help the 
overall economy.
    The bottom-line consequence for all of this is not only 
higher prices that are necessary but also lower quality goods, 
as we see with regard to Abbott nutrition and the baby formula 
problem--crisis, really--that's gripping America.
    That would not have been a crisis if that particular 
industry, like many other industries, was not so concentrated 
in the hands of a handful of producers, and Abbott is the 
largest producer.
    So, you see how vulnerable this degree of concentration 
makes all of us.
    Ms. Demings. Thank you so much, Professor.
    Mr. Lynn, the Department of Energy has reported that global 
clean energy markets are expected to reach $23 trillion by the 
end of this decade. However, the United States currently likes 
the manufacturing capabilities necessary to actively 
participate in many of these markets.
    As I was walking in the door, you were saying when we put 
all our eggs into one basket the problems that can result from 
that. What are some of the causes of the loss of domestic 
manufacturing capacity and how can we reverse these trends and 
bring back more manufacturing back to the USA?
    Mr. Lynn. I will answer that with one word--silicon. North 
of 95 percent of all silicon ingots come out of China. These 
are the ingots that are used to manufacture photovoltaic panels 
around the world. It didn't used to be that way.
    These ingots used to be made in United States, used to be 
made in many places around the United States. The Chinese 
concentrated that power in ways that would give them the 
ability to choke off and control the manufacture of panels at 
their desire.
    What do we do about it? We open new silicon refining and 
ingot manufacturing facilities in the United States. There are 
mines all over that could be opened. There's one in West 
Virginia on the Ohio River. We could do that tomorrow.
    Ms. Demings. Thank you so much. Thank you to all our 
Witnesses again, and Mr. Chair, I yield back.
    Mr. Cicilline. The gentlelady yields back.
    I would now normally recognize the Ranking Member, but he's 
asked that I recognize the gentleman from Wisconsin, Mr. 
Fitzgerald, for five minutes.
    Mr. Fitzgerald. Thank you, Mr. Chair.
    To Ms. Onwuka, the root causes of inflation, I think, were 
not driven by private sector. The inflation that we're feeling 
now is the result of government intervention and probably some 
reckless spending.
    Coronavirus didn't cause our supply chain issues. Shutting 
down the economy did, and I think now what we're seeing is some 
of my colleagues on the other side of the aisle are trying to 
convince the American people that the only solution would be 
more government and it's not going to work.
    Just last week, Congresswoman Schakowsky introduced the so-
called Price Gouging Prevention Act. This bill, supported by 
some of my colleagues, again, on the other aisle would make the 
FTC the arbiter of what constitutes unreasonable price 
increases.
    If this were to become law, companies--there would be no 
incentive for them to raise wages because they would be taken 
to court and be loaded up with many legal bills.
    So, when prices are fixed too low and companies stop 
producing, which is what we saw during the '70s with the Arab 
oil embargo, can you just give us your thoughts or elaborate a 
little bit on policies such as price fixing that, in this bill 
or in President Biden's recent, quote, ``plan to fight 
inflation'' unquote, how it's not going to work or how it's 
poorly thought out?
    Ms. Onwuka. Thank you, sir. It's so interesting that we're 
talking about price controls because they don't work on many 
levels.
    On a theoretical level, the idea of setting prices, which 
is likely to happen for the government to set prices below the 
market level, would, obviously, increase the demand and supply 
would not keep up with it.
    That is exactly what we have now in terms of shortages when 
we look at baby formula. We don't have--that's not what we want 
across the entire economy. You referenced it just now.
    Historically, we have seen price controls not work. We look 
back to President Nixon trying to control oil and gas prices. 
It's not economic. It's the idea that we can use--that 
technocrats, for example, can somehow determine the best prices 
across the country, across millions of products in our entire 
economy across our entire nation is a recipe for failure.
    So, when I see things like price controls showing up in 
pieces of legislation, they may be well intended we have 
already seen historically the consequence that happens. So, as 
I mentioned, when we talk about what's driving inflation, we 
have not heard enough about demand, and demand--certainly, 
supply has been shortened for many different reasons but demand 
was inflated because Congress decided to give American 
households quite a lot of stimulus in lots of different forms, 
regardless of whether or not the realities really warranted 
that, particularly, back in 2001.
    So, we are now living with the consequences of that.
    Mr. Fitzgerald. Very good. Just one other kind of secondary 
effect, I guess, is the way I would describe it, we have just 
saw double digit increase in the price of farmland in my home 
State of Wisconsin and, obviously, it's tied directly to the 
price of production, crops, and the yields that are affected by 
the cost of land.
    Can you talk a little bit about kind of that bigger picture 
on not only just farmland in Wisconsin, but automobiles and 
other major purchases that consumers may be looking at in the 
future?
    Ms. Onwuka. Absolutely. So, at Independent Women's Forum we 
actually put together a price tracker that looks at some of the 
cost increases every month on things that American households 
are looking at and purchasing. Obviously, used cars are 
increasing, everything from shoes to, boy, the milk and I buy 
lots of milk because I have two toddlers right now.
    When you think about things like what goes into the 
production of those goods that get onto our shelves, the cost 
of fertilizer that feeds that leads to produce or feeds cattle, 
for example, there's so many increases on the production side 
and the producer price index, certainly, has hit a new--almost 
a new high last month.
    Those costs are being--some of them are being borne by 
large companies and small companies, and they pass that on to 
consumers in the form of higher prices.
    So, when we--I worry when I hear about price gouging being 
the only reason why things like farmland or the cost of meat is 
rising because there's so many other costs that I think a lot 
of companies are actually eating that don't get passed on, and 
some that get passed on.
    Labor costs are rising, and when we look at goods-producing 
companies as well as service-producing companies, we didn't see 
labor costs substantially rising in 2020. We did see them 
rising substantially in 2021 because of worker shortages.
    Well, why did we have worker shortages? Well, there's 
plenty of stimulus going into American households that 
discouraged work. So, lots of these factors are going into 
what's driving inflation--demand and supply.
    Mr. Fitzgerald. Thank you, Mr. Chair. I yield back.
    Mr. Cicilline. Thank you. I thank the gentleman for 
yielding back.
    I would just note that the bill you're referring to I'm 
proud to be a co-sponsor of. It's not a price control bill. 
It's an anti-gouging bill, and as you know, Mr. Fitzgerald, 
there's an anti-gouging bill in the State of Wisconsin that I 
know you in the past supported.
    So, I just want to be clear it's not a price control bill. 
So, I want the record to be clear on that.
    I now recognize the gentlelady from Pennsylvania, Ms. 
Scanlon, for five minutes.
    Ms. Scanlon. Thank you, Chair Cicilline, and thank you to 
our expert Witnesses for joining us here today.
    This hearing to address how we need to update our antitrust 
laws to combat market consolidation, anti-competitive behavior, 
and corporate profiteering could not be more timely.
    In recent weeks, families in my district and across America 
have been struggling to find infant formula after a plant 
closure created a national infant formula shortage. There 
couldn't be a stronger example of how market consolidation in 
our economy can hurt everyday Americans.
    Critical supply chains for things like food and energy 
production have become increasingly fragile as past 
Administrations failed to do adequate oversight. The 
consolidation has put the U.S. on a dangerous path towards more 
frequent and severe supply chain disruptions and the infant 
formula is just one of the ones we have been examining. 
Meatpacking is another good example.
    So, when we have these disruptions, they halt vital supply 
chains and have really devastating consequences for Americans. 
Earlier today, my colleagues and I sent a letter urging the 
Administration and its constituent agencies to take corrective 
measures to increase the supply of baby formula in the short 
term but also to examine long-term solutions and restore 
competition and resilience in the market to prevent future 
disruptions.
    So, I know that Congress and the Administration can solve 
this problem together so I'm really looking forward to hearing 
what our experts have to say by way of some suggestions.
    So, Secretary Reich, I know you've tweeted some opinions on 
this subject already today. I would like to look at what kind 
of things should Congress do to update our antitrust laws to 
fix the problems created by decades of anti-enforcement 
philosophy?
    Mr. Reich. Congresswoman, there are a number of specific 
steps that Congress can take. One area that has caused a great 
deal of confusion and the courts have constricted antitrust 
authority has to do with section 2 of the Sherman Act.
    Now, I understand the confusion. I understand what the 
courts have been doing. I understand why they've been doing it.
    The net effect is, basically, to enable more and more 
monopolization and to require a very high threshold with regard 
to the courts need to find and what prosecutors need to show to 
prove monopolization, and that's one area that I would zero in 
on.
    Another area that is extremely important has to do with the 
Federal Trade Commission's authority under section 5 to go 
after various mergers, and it used to be that they could go 
after mergers even before those mergers occurred. I think 
Congress ought to restore and strengthen that authority as 
well.
    Ms. Scanlon. Thank you. So, we find ourselves in a position 
where there have already been multiple mergers within the 
infant formula sector.
    Mr. Lynn, do you see any way to get us out of this 
situation? One thing that's been suggested is possibly using 
the WIC program to try to be empowered through increased 
funding and resources to be part of the solution. Can you help 
us out there?
    Mr. Lynn. Yes. Thank you. Government purchasing is one--is 
actually a power that can be used to concentrate the market, or 
it can be used to deconcentrate and create more competition 
within the market.
    Procurement is one of our most important tools. It has--for 
most of our history it was used to promote competition.
    So, absolutely, government procurement through the WIC 
program can be used to establish more providers and to ensure 
that there is resiliency in the system such as by ensuring that 
there's sort of extra capacity that is available in case of a 
crisis. We should never be running a system like this at 100 
percent of capacity ever.
    Ms. Scanlon. Yeah. I think that goes to something Dr. Mabud 
may have discussed, which is the sort of knife-edge supply 
chains that can't really handle fluctuation. Can you comment on 
that, Doctor?
    Ms. Mabud. Absolutely. Over the last 50 years, mega 
corporations have shaped our supply chains into the brittle 
system that we have today so that when we experience shocks, 
whether that's a plant shutting down that produces baby formula 
or a pandemic, we experience bottlenecks and shortages that 
drive up prices, and big corporations can use their dominance 
in markets to hike up those prices, especially when they have 
the cover of inflation.
    I think we can build an economy that can handle additional 
demand without breaking, and I look forward to Congress making 
those critical investments.
    Ms. Scanlon. Thank you. I see my time has expired. I yield 
back.
    Mr. Cicilline. The gentlelady yields back.
    I now recognize the gentleman from Oregon, Mr. Bentz, for 
five minutes.
    Mr. Bentz. Thank you, Mr. Chair.
    This is a question eventually for Ms. Onwuka. Here's the 
background for it.
    State Street, BlackRock, and Vanguard currently control 
about 20 percent of the S&P 500. Now, they're not using that 
control for the benefit of the investors. They're using it for 
carrying out a political agenda. Yet, today, we have not heard 
a peep about that huge accumulation of capital. Not a peep. We 
have heard about the companies that they own.
    Now, what I understand from reading, of course, they're 
doing is making it almost impossible for gas companies--natural 
gas companies--to get the financing to put in pipelines, and 
assuming they could get the financing, we find that there are 
huge barriers being constructed at the bureaucratic level to 
prevent those pipelines from ever being built.
    Yet, Europe is facing an existential crisis when it comes 
to energy, which could only be solved with natural gas making 
its way across the ocean. Yet, we don't seem to have the 
ability because of this huge accumulation of capital by State 
Street, Blackrock, Vanguard, because they're bringing that 
leverage against banks that they happen to control not to lend 
the money.
    Can you comment?
    Ms. Onwuka. I think you've hit on some of the hypocrisy 
that we're seeing here when it comes to what companies are--
it's okay for them to aggregate wealth and power and how they 
leverage them for different reasons.
    I think you've, certainly, laid out a compelling argument 
there. I don't really have anything else to add to it.
    Mr. Bentz. Thank you.
    Mr. Lynn, you mentioned that we should be opening mines all 
over the United States. I happen to agree with you. In fact, in 
my Natural Resource Committee we have heard over and over and 
over again about why we shouldn't open mines.
    We have heard examples of water being interfered with, with 
cultural values being upset, you name it, any number of reasons 
why we shouldn't mine copper, why we shouldn't mine lithium, 
why we shouldn't mine uranium, why we shouldn't mine nickel, 
why we shouldn't mine, in other words, anything.
    My question to you is how do we tell the American people 
about the damage the crazy position we have put ourselves in, 
not unlike Europe relying upon Russia for all that oil and gas, 
and here we are in the United States the same exact position.
    Yet, we can't seem to touch any of these minerals right 
under our feet. Can you comment?
    Mr. Lynn. Thank you, Congressman. It's a fundamentally 
important issue. I certainly understand why there is concerns 
about certain types of mining practices and I, also, I feel the 
pain for people who have love for the land, but I also 
understand that this is a fundamental issue of national 
security.
    When we depend 100 percent on foreign powers for anything, 
whether it's a component in our computers, whether it's a 
component in our drugs, or whether it is a mineral that goes 
into the supply chains, that puts us at risk. That gives the 
people who we cannot trust power over us.
    So, we must find a way to actually open up more mines and 
open up more production, not just in the United States but 
within the confines of the G-7 nations with whom we are 
integrated.
    Mr. Bentz. Thank you.
    Ms. Onwuka, back to you for my last question. It happens 
that three years ago the price of natural gas per MMBtu was $3. 
A few minutes ago, I checked just while I was waiting to ask my 
questions. It's at $8.31. So, it's gone from $3-8.31, and this 
is, of course, for natural gas.
    We get a lot of talk about people going to the pump. We 
don't have as much talk about people trying to heat their 
homes. Here we have an increase of almost 300 percent.
    So, can you comment on the challenges that a family is 
going to face this winter when their natural gas heating 
prices, not to mention businesses across all the United States 
that use natural gas? Can you comment on that?
    Ms. Onwuka. Absolutely. I actually wanted to read a quote 
from--we receive stories from regular Americans, from your 
constituents every day looking at the rising costs that they 
are experiencing, and home heating bills are one of those areas 
that we continue to track, one of those areas where we are 
seeing so many families struggling.
    I do think it's one of those areas where it's going to 
continue to be an issue this fall. We, certainly, heard many 
stories from people who--families who could not afford to heat 
their homes or they were making very tough decisions, choices 
when it came to how their family budget, which was, obviously, 
decreasing--their real wages were actually decreasing because 
of inflation.
    They were making some tough choices and I think that is 
going to continue to be an issue until we figure out how to get 
back to a place where we recognize our energy sources should 
be--our energy policy should respect all different types of 
energy sources, including natural gas.
    Mr. Bentz. Thank you so much. I yield back.
    Mr. Cicilline. Before I recognize the next speaker, it 
looked like the Ranking Member wanted to say something about--
no? Okay.
    I now recognize the distinguished gentleman from 
California, Mr. Swalwell, for five minutes.
    Mr. Swalwell. Thank you, Chair, for this important hearing.
    I have to say top of mind for me with a six-month-old who 
eats like a horse. His baby formula and this issue is touching 
households across the country, and it needs a solution, and it 
needs a solution yesterday.
    Unfortunately, a lot of moms across America see finger 
pointing in Washington. They hear that this is Joe Biden's 
fault. I didn't know maybe Joe Biden had a baby formula factory 
behind the White House, I didn't know about that he's not 
operating. I don't think that's the case.
    They're hearing solutions that we should take the baby 
formula that's at the border for children who are detained with 
their parents and take their baby formula and let them starve 
and then put that baby formula in America.
    They're not really hearing solutions that are realistic or 
that don't kill a baby at the border to have political theater 
in the United States.
    So, Mr. Lynn, my first question for you is, is it realistic 
that President Biden could invoke the Defense Production Act to 
increase production of baby formula?
    Mr. Lynn. It's realistic. (Inaudible) it's actually 
necessary. I think that the fundamental point here is that this 
is not a zero-sum situation.
    We don't have to be moving formula from the border to 
Chicago, it's like we need to be treating everybody the same. 
We need to be increasing production immediately.
    I think there was a major move yesterday to get the plant 
reopened. There's a major move to sort of bring production in 
from Ireland and elsewhere. So, I think the Biden 
Administration is taking ample actions immediately to improve 
the situation across the United States.
    What we need to be doing now is actually focusing in this 
room on how to ensure that this never happens again. How do we 
ensure that there is sufficient competition within this system, 
so that the corporations are not able to run their capacity at 
100 percent?
    When a corporation is running their capacity as 100 
percent, that is usually an indication of market power.
    Mr. Swalwell. Mr. Lynn, is there any reason that EU-
regulated baby formula isn't good enough to import in the 
United States?
    Mr. Lynn. I don't believe so. I was just in Europe last 
week and there's a lot of things we can learn from Europe. I 
doubt that there's anything wrong with the EU baby formula.
    Mr. Swalwell. We want to have the highest standards for 
baby formula, right. This is our most precious citizens of our 
population. It would seem to me that if it's good enough for 
European babies it would be good enough for the FDA.
    Also, the last Administration discouraged imports of baby 
formula from Canada in the reauthorized North American trade 
agreement and, again, I would offer that Canadian standards are 
probably just as good if not tougher than in the United States.
    I guess one last thought on baby formula. When you say we 
want to make sure this doesn't happen again, going back to what 
you said as it relates to market power, what could you do to 
diversify the production of baby formula in the United States, 
so it didn't happen again?
    Mr. Lynn. It's sort of a two-tier problem. You got 
concentration in retail, and you got concentration in 
production. So, you actually have to attack it at both the 
level of retail and the level of production.
    The extreme concentration of power in the retailers 
actually has driven a lot of the concentration within 
production.
    So, there's simple rules that can be imposed immediately 
that reduce the power of the retailers and those are generally 
anti-discrimination laws that restrict their ability to engage 
in monop-sonistic manipulation of suppliers, and then you sort 
of deal with the concentration within the suppliers.
    Mr. Swalwell. Mr. Lynn, your solutions are common sense. 
They're doable and, as a Democratic Member of Congress, it 
doesn't reek of any partisanship and I think that's what most 
moms in America want, right.
    Most moms and dads in America want right now. They just 
want solutions, and I thank the Chair for a solution-driven 
hearing on what we can do with this crisis.
    I yield back.
    Mr. Cicilline. I thank the gentleman.
    I now recognize the Ranking Member of the Full Committee, 
Mr. Jordan from Ohio, for five minutes.
    Mr. Jordan. Thank you, Mr. Chair.
    Mr. Lynn, three weeks ago, you issued a press statement 
following my statement on Elon Musk and Twitter, byline 
Washington. In response to Elon Musk buying Twitter, Open 
Markets Institute Director Barry Lynn issues the following 
statement, and I quote from there the second sentence.``The 
Open Markets Institute believes that the deal poses a direct 
threat to American democracy and free speech.''
Do you remember that statement you issued?
    Mr. Lynn. I do, Congressman.
    Mr. Jordan. I was just curious. Nineteen months ago, when 
Twitter locked out the New York Post out of their account 
because of the Hunter Biden story, was that a threat to free 
speech?
    Mr. Lynn. I'd go back further, Congressman. Actually, in 
the summer of 2018, I made the case that when Facebook and 
Twitter were cutting off Alex Jones, I said that was a threat 
to democracy and free speech.
    Mr. Jordan. So, when they banned the story in the--October 
of 2020, would you call that a direct threat to democracy? I 
mean, I look at the day's running up to the most important 
election we have, the Presidential election, and they keep a 
story from the American people.
    So, you would agree with me that was a threat to democracy?
    Mr. Lynn. I think that the threat to democracy is to have 
allowed so much of our media to be captured--the control over 
so much of our media to be captured by a few people in Silicon 
Valley.
    Mr. Jordan. That's not what I asked you. I asked you was 
that--the fact that they blocked that story, was that a threat 
to free speech and democracy?
    Mr. Lynn. I think we see threats to free speech and 
democracy every day in this country and they're opposed by the 
power [inaudible].
    Mr. Jordan. Again, you're not answering the question I 
asked you. I asked you specifically about that example. In the 
run up to our most important election we have a story about 
Hunter Biden's laptop that 51 former intelligence agents told 
us was Russian disinformation.
    We know that was false because the Washington Post told us 
two months ago that it was true. I'm just saying, was that a 
direct threat to democracy and free speech, as you just said in 
your press release from three weeks ago?
    Mr. Lynn. I don't think my press release from three weeks 
ago had anything to do with what you're talking about. I do 
believe that, as I said before, the concentration of power in 
the hands of Mark Zuckerberg and the junta at Google--
    Mr. Jordan. Did you issue a press release last--
    Mr. Lynn. --is a fundamental danger to our democracy and I 
am--actually have been thrilled by the ability of this 
Committee to address the problem at the bottom of this to deal 
with this threat to our democracy.
    Mr. Jordan. I just want to ask you a question. Did you 
issue a press release in October of 2020 when that story came 
out and the New York Post was locked out of their account? Did 
you issue a press release then saying this was a direct threat 
to democracy and free speech?
    Mr. Lynn. No, I did not, sir.
    Mr. Jordan. How about two months ago when The Washington 
Post told us that story was actually true, that the Hunter 
Biden laptop was actually real, the eyewitness, Mr. Bobulinski, 
was real?
    The Washington Post did two stories within, like, four 
minutes. Did you issue a press release then saying that what 
happened before was a direct attack on democracy?
    Mr. Lynn. No. What we have been doing, Congressman, is 
focusing on the larger structural problems of our 
communications system, which also I know that this Committee--
Subcommittee has done a wonderful job of actually highlighting 
those problems and working to solve them, and I believe that's 
the way to deal with this.
    It's not to focus on individual problems, but to focus on 
the fundamental structures that pose direct threats to our 
democracy.
    Mr. Jordan. Have you talked to anyone at the FTC about Elon 
Musk's attempt to buy Twitter?
    Mr. Lynn. I have not, Congressman.
    Mr. Jordan. You've not talked to anyone?
    Mr. Lynn. I have not spoken to anyone at the FTC about Elon 
Musk trying to buy Twitter.
    Mr. Jordan. You just issued the press release.
    Mr. Lynn. I just want to--if there's any doubt about this, 
I'm a huge fan of Elon Musk. I think he's done wonderful things 
for the world. So, I think what he's done with Tesla is 
fantastic.
    I think what he's done with SpaceX is fantastic. I just 
think you can't have too much power concentrated in the hands 
of one person and that is pretty much the theme of everything 
that we do at the Open Markets Institute.
    Mr. Jordan. Do you think--do you agree--it's been announced 
a few weeks ago that the Biden Administration and the 
Department of Homeland Security has formed a Disinformation 
Governance Board? Do you agree with the formation of that 
board?
    Mr. Lynn. I think that there is a problem of disinformation 
in this country that is, largely, due to the structure of 
regulation over the platforms that control our communications 
in this country.
    Mr. Jordan. Do you think it's okay for a government to 
decide what kind of information, which is exactly what this 
Disinfor-mation Governance Board--you think that's okay?
    Mr. Lynn. I did not say that. I said it is important for 
the people of the United States--
    Mr. Jordan. Well, let me just ask you really simple. Do you 
support the formation of the board or not?
    Mr. Cicilline. The time of the gentleman has expired but 
the Witness may answer the question.
    Mr. Lynn. I don't know enough about that particular issue 
to say yes or no.
    Mr. Jordan. Come on, Mr. Lynn. You can give an answer to 
that question. Do you support it or not?
    Mr. Cicilline. The time of the gentleman has expired.
    I now recognize the gentleman--
    Mr. Jordan. You said he could answer the question. I'm just 
trying to get him to answer.
    Mr. Cicilline. He answered it already, Mr. --
    Mr. Jordan. I'm just trying to get a yes or no answer, Mr. 
Chair.
    Mr. Cicilline. I accommodated you as much as I could. I now 
recognize the gentleman from New York, Mr. Jones, for five 
minutes.
    Mr. Jones. Good afternoon, everyone, and thank you, Mr. 
Chair, and all our Witnesses. I'm grateful for this opportunity 
to work with you to improve our economy and lower costs for the 
American people.
    Secretary Reich, it's an honor to speak with you this 
afternoon and I'm very grateful for your testimony. I want to 
ask you about some unsolicited testimony that we have received 
over the last week from one of the richest human beings who has 
ever lived, Jeff Bezos, Executive Chair of Amazon.
    It all started when President Biden tweeted,

        You want to bring down inflation? Let's make sure the 
        wealthiest corporations pay their fair share.

    Jeff Bezos, who's enormous corporation paid nothing, 
nothing, in Federal taxes during the first two years of the 
Trump Administration and which still pays a lower rate than the 
average American, thought that he knew better.
    He tweeted, quote,

        Raising corporate taxes is fine to discuss. Taming inflation is 
        critical to discuss. Mushing them together is just 
        misdirection.

    Mr. Secretary, let me ask you directly, how would making 
the wealthiest corporations pay their fair share help bring 
down inflation?
    You got to unmute yourself, sir.
    Mr. Reich. Congressman, the answer is very direct and 
easily understood. If corporations pay their fair share, that 
means that other Americans don't have to pay as much. They can 
afford such things as childcare, which enables them to be more 
productive. It enables most of America, therefore, to generate 
more output, which brings down inflation.
    When you have the second richest man in America saying that 
the President ought to do this or this and presides--that 
particular man, presides over a corporation that paid zero 
taxes in 2018 and over the last four years has paid, as far as 
I understand, a rate of about 13 percent on one of the largest 
sort of incomes--corporate incomes--in the United States, if 
not the world, whereas most Americans are paying a much, much 
higher rate, you've just got to say to yourself, this is rich, 
in all senses of that term.
    Mr. Jones. Well, thank you. A few days later, we heard from 
Mr. Bozos. We heard more from Mr. Bezos, who has so much money, 
by the way, that he could give every Amazon employee a $100,000 
bonus and still have as much in the bank as he had when the 
pandemic began. Can you believe that?
    Mr. Bezos continued,

        Well, in fact, the Administration tried hard to inject even 
        more stimulus into an already overheated inflationary economy 
        and only Manchin saved them from themselves. Inflation is a 
        regressive tax that most hurts the least affluent. Misdirection 
        doesn't help the country.

    I had no idea that Jeff Bezos, who could singlehandedly 
fund pre-K for every child in America, but would rather spend 
his money on vanity trips to space and cowboy hats cared so 
much about the, quote, ``least affluent.''
    Mr. Secretary, in your written testimony you noted that 
investing in care would help reduce inflationary pressures. 
Would you explain for us how the provisions of Build Back 
Better would help the American people deal with inflation?
    Mr. Reich. Absolutely, Congressman.
    First, if we had and every American family had access to 
good high quality childcare, that would enable so many more 
people in the United States to work, to be productive, because 
they are productive, therefore, the entire economy would be 
larger. Therefore, we would have less inflationary pressure.
    There are many other provisions in the Build Back Better 
bill that will also improve overall productivity. It's also the 
case with regard to the bipartisan infrastructure bill. 
Infrastructure is another public investment.
    All these public investments are investments in the future 
productivity of the United States and, as such, they improve 
the capacity of American workers to do better and 
simultaneously enlarge the capacity and output of the United 
States, all anti-inflationary steps.
    Mr. Jones. Thank you, Mr. Secretary.
    Build Back Better and the bipartisan infrastructure law 
sound like great pieces of legislation to lower crisis for 
Americans and to lower inflation in this country.
    I yield back, Mr. Chair.
    Mr. Cicilline. The gentleman yields back.
    I now recognize the gentleman from Louisiana, Mr. Johnson, 
for five minutes.
    Mr. Johnson of Louisiana. Thank you, Mr. Chair.
    When Joe Biden was sworn in as President, the average 
retail price of gasoline was $2.38 a gallon. On Monday, 
according to AAA, it was $4.48. Many parts of the country have 
seen much higher prices, and this is not an accident. These are 
policy choices that led us here.
    Nor is it primarily due to Russia's war on Ukraine, as 
President Biden would like everybody to believe, because gas 
prices had already risen 48 percent since he took office.
    The rise in price is the direct result of this 
Administration's assault on the oil and gas industry. On his 
first day in office, he canceled the Keystone XL pipeline. That 
was expected to bring more than 800,000 barrels of oil from 
Canada to the U.S. every single day.
    Not even a week later, President Biden signed his Executive 
Order to put a moratorium on oil and gas leasing on Federal 
lands, and just last week, the Administration cancelled three 
lease sales in the Gulf of Mexico and Alaska. Why? Because 
they're pursuing a radical environmental agenda for the Green 
New Deal.
    It's destroying our economy. It's killing American 
consumers and they seem not to care.
    Ms. Onwuka, it seems to me that the Biden Administration 
spends a lot of time blaming oil companies for prices, but 
isn't that a little bit hypocritical since they want to make it 
harder to produce fossil fuels?
    Ms. Onwuka. Well, absolutely. I think what we're seeing is 
a war on energy right now, particularly fossil fuels. Let me 
read you an interesting quote from someone. I meant to get to 
it earlier and I couldn't find it. This person said--this 
gentleman, actually Paul Lamier,

        The price of home heating oil under Trump was about $2.25 per 
        gallon. Under Biden, now I have to pay $5.09 per gallon. To 
        fill up my gas tank with Trump and his energy independence 
        policies I was paying $2 per gallon. Under Biden I spend $4.45 
        per gallon. This is insane and has to stop.

I think this represents a lot--the perspective of many 
Americans who recognize when you are pursuing an agenda, 
whether it's clean energy or whatever you'd like to call it, 
there is going to be tradeoffs that has to be made, and when 
you continue to make one particular or two particular 
industries your target--your enemy--making it difficult for 
companies to be able to produce more oil now and in the future, 
obviously, it's going to have some negative impacts and that 
shows up in the prices.
    You laid out some of those examples--the cancellation of 
the Keystone XL pipeline, the freezing of new gas drilling 
leases on Federal land. There's so many more.
    It's so interesting, when you look at the totality of all 
these policies, it bears out at the gas pump, frankly.
    Mr. Johnson of Louisiana. It does, and the great irony--the 
tragedy of all of it is that if you turn down domestic supply, 
if you make it impossible for us to meet the demand for fossil 
fuels here--oil and gas--it means that we got to go hat in hand 
to OPEC, Russia, and Saudi Arabia to get our demand met with 
the supply from overseas.
    Guess what? The supply overseas is produced in a much less 
clean and efficient manner. So, ironically, they're doing more 
harm to the environment with these crazy policies. It makes no 
sense.
    Last week, the Administration released the Biden/Harris 
inflation plan to deal with inflation, right. It includes 
increasing fuel economy regulations for cars and a pie in the 
sky goal of ensuring, quote, ``one of every two cars sold in 
2030 burns no fossil fuels.''
    It's odd to me that our President and Vice President really 
think that imposing more regulations on our auto industry is 
actually going to somehow lower the costs.
    What's your reaction to this plan? How ridiculous is this? 
Does it look--is it as ridiculous as it looks on its face?
    Ms. Onwuka. I think it is. I think when reading through the 
plan, I didn't see anything that's not the--any policies that 
are going to actually reduce costs today or in the future, 
frankly, and whether you're talking about energy policies or 
some of the other things that are included as well as some of 
the ideas, including Build Back Better that we have heard 
today, are supposed to be anti-inflationary.
    Well, they're the definition of inflationary when we 
consider what the American Rescue Plan did in adding points to 
the inflation rate right now. So, I don't see that the 
inflation policy that the White House has put out is going to 
make anything better.
    I think it's going to make things worse.
    Mr. Johnson of Louisiana. This so-called anti-inflation 
plan also mentions fuel economy regulations for trucks. So, 
imposing new requirements on the trucking industry seems to be 
a drag on our economy, given the important role that truckers 
play in the supply chain.
    So, do you think we should be fighting rising prices by 
making it harder for trucks to deliver the goods that we use 
every day?
    Ms. Onwuka. Absolutely not. When I spoke to a trucker in 
Missouri--he actually owns a trucking business and he trains 
new truckers--and he said one of the challenges right now that 
they're facing in the trucking industry, they can't get 
manpower, in part, because of wages, but also because of the 
Federal regulations when it comes to what truck drivers can do, 
how they have to work, how their compensation is tied to stops 
and the amount of driving that they can do.
    So, when we're in the middle of a pandemic with shortages, 
with difficulties getting goods from our ports to our store 
shelves, the last thing we need to do is increase regulations 
on the brave people who are out there every day getting our 
goods to our store shelves, and this is from a trucker in 
Missouri, someone who knows the industry quite well.
    Mr. Johnson of Louisiana. The pain is felt across the 
board. We need to reverse these policies. I yield back.
    Mr. Cicilline. The gentleman yields back.
    I know that we had Mr. Jeffries and Mr. Raskin on the 
screen, but I want to go next to Mr. Raskin. He is back. I 
recognize the very distinguished gentleman from Maryland, 
Professor Raskin, for five minutes.
    Mr. Raskin. Thank you very much.
    The biggest producer of baby formula domestically is Abbott 
Labs, which controls 40 percent of the market. In February, 
they recalled formula produced at their Michigan plant in 
Sturgis because of bacterial contamination. That plant has been 
shut down ever since. At the end of March, instead of investing 
in making its manufacturing plant safer, Abbott Labs bought 
back $2.3 billion in an effort to boost share prices.
    So, Mr. Lynn, what are the circumstances that would 
incentivize Abbott to spend money on enriching investors 
instead of innovating or increasing production at a time of 
crisis?
    Mr. Lynn. Thank you, Congressman.
    I mean, the incentives that would lead a corporation to 
favor payouts to its investors, rather than the building out of 
new capacity at a time of crisis, is simple. They control the 
marketplace. They have no fear. No one is challenging them.
    So, if you have no fear--
    Mr. Raskin. You are attributing this to a lack of 
competition, then, to concentration in the market, is that 
right?
    Mr. Lynn. Absolutely. Actually, I think these numbers, what 
you will see often when we look at numbers that show certain 
corporations 40 percent, another one has 35 percent, often 
those numbers are much higher within certain regions. In 
agriculture markets, you often see 100 percent consolidation in 
particular regions when a single corporation buys all the 
production of chicken or milk, or whatever. So, yes, 
consolidation is at the heart of all of this.
    Mr. Raskin. Thank you.
    Professor Reich, do you agree that is a structural problem, 
that a company like Abbott would not be investing in its plant 
to expand production and capacity, but would be doing a 
buyback. Is that a problem related to concentration in the 
field? If so, what can Congress do to eliminate these kinds of 
perverse incentives for companies to buy back stock, rather 
than invest in industry?
    Mr. Reich. Congressman, there are two problems, and they 
are related. One has to do with concentration. As we have been 
talking about, in the baby formula industry you have a very, 
very few companies, and Abbott is the largest. So, that it 
makes the entire system and American consumers very vulnerable 
when you have only one major producer, and that one major 
producer is shut down for a good reason, because it was not 
investing in quality control.
    Which gets to the second point having to do with buybacks. 
Before 1984, the Securities and Exchange Commission did not 
allow buybacks. This was considered to be market manipulation. 
Ronald Reagan, President Reagan's Securities and Exchange 
Commission decided that it was not market manipulation, allowed 
corporate buybacks. What we see now is a record amount of 
buybacks. Adjusted for inflation, last year was record; it 
looks like this year, according to Citibank, it is going to be 
even a larger amount of buybacks.
    Well, instead of making investments in their plant, making 
sure that their plant was safe, what we saw with regard to this 
Abbott Nutrition is that they simply wanted to make their 
investors richer by buying back shares of stock. We are seeing 
this across the country.
    These two problems are, indeed, structural problems. What 
Congress can do is not only enforce and strengthen the 
antitrust laws, but also can make buybacks either illegal or 
tax buybacks.
    Mr. Raskin. Well, let me pursue that for a second, because 
I feel like my eyes are opening here. So, there is testimony 
that, between 2009-2018, in that decade, firms in the S&P 500 
distributed 91 percent of their net income back to shareholders 
in the form of stock buybacks and dividends. So, there was 
paltry sums going into research and development, new 
facilities, training new workers, and so on.
    So, this, in fact, is, I think you are suggesting, a 
central problem, not some kind of peripheral issue. Is that 
right?
    Mr. Reich. Yes, this is a central problem; it is a growing 
problem.
    Mr. Raskin. Well, I appreciate your testimony very much.
    Mr. Chair, thank you for calling this really urgently 
important hearing that goes right to the question of what we 
are dealing with in the baby formula crisis.
    I yield back.
    Mr. Cicilline. The gentleman yields back.
    I now recognize the gentleman from California, the 
distinguished Mr. Issa, for five minutes.
    Mr. Issa. Thank you, Mr. Chair.
    Ms. Onwuka, I am confused. A little while ago, I understood 
some of my Democrat colleagues, your other panelists, to say 
that, if you put money back in the consumers' hands, they will 
spend it in a way that will reduce inflation. Did you hear 
that?
    Ms. Onwuka. I think I did, yes, sir.
    Mr. Issa. So, this is interesting. A stock buyback and 
dividend payouts, that puts money in the consumers' hands, 
sometimes directly, sometimes through pensions, and so on. A 
tax cut puts money back into the individual's hands. All these 
things to put money in individual hands do seem to be well 
worthwhile, and we certainly encourage it.
    Let's go through this. Isn't one of the two problems right 
now we have in inflation, one is excess demand by lots of money 
being printed out of the government, too much money, if you 
will, being out there, and supply chain interruptions? Those 
are the two biggest reasons, right?
    Ms. Onwuka. Yes.
    Mr. Issa. The third being the tremendous price increase of 
petrochemicals because of supply being limited by the policies 
of this Administration.
    Ms. Onwuka. Yes.
    Mr. Issa. So, I am trying to understand. We are having a 
hearing on antitrust, and I have heard no testimony so far 
about these companies making dramatically excess profits. 
Amazon has been bashed constantly, when, in fact, most of its 
divisions don't make any profits. The one that makes a lot of 
profits, which is the one that right now is running the servers 
probably for this hearing, its biggest customer is the 
government.
    So, am I missing something or are we having an antitrust 
hearing so we can bash corporate profits, even if they are 
distributed to the consumer?
    Ms. Onwuka. From what I have heard, yes, I have heard quite 
a lot about profits today. I have not heard a lot about demand, 
excessive demand, and the source of that being the Federal 
government in generous stimulus, probably unnecessary stimulus, 
at different times over the past couple of years.
    Mr. Issa. Well, I would like to go back to supply chain. 
Supply chain disruption, some of it is outside of our control. 
What is going on in China, what is going on in Russia and 
Ukraine somewhat is out of our control.
    If you would comment on the rising fuel prices of all sorts 
in the United States, how much of that is within our control 
and could be changed? Oh, by the way, those are very large 
companies. They have large market share. We will just have a 
given of why we are asking.
    Ms. Onwuka. Well, it is certainly, as I mentioned earlier, 
the top five largest companies, oil-producing companies in this 
country only control about 36 percent of the market share. So, 
there is still a lot of competition in the oil industry. That 
is number 1.
    Number 2, yes, rising prices, oil prices certainly go into 
everything from transportation costs, rising costs there, to 
just heating your home, as we talked about before. So, those 
are all going to be underpinning a lot of the inflation.
    When we talk about why there are supply chain disruptions, 
we also have to talk about the labor cost and the fact that 
labor has been--people have been sitting on the sidelines of 
the economy. Why have they done that? Again, that goes back to 
demand. When you pay people to stay at home, when you forgive 
their or put on hold their student loan payments, you are 
putting a lot of money in the hands of regular people. That is 
fine, but that is going to drive demand. I haven't heard a lot 
of solutions on how we address that.
    Mr. Issa. No hearing in Congress these days is complete if 
you don't talk about climate change. So, let me bring the 
subject up.
    Currently, Germany and other countries, because of the 
situation in Europe, are turning back on coal-fired plants. 
Huge amounts of additional coal are being burned as a result of 
current disruptions. The United States is unable to answer with 
additional clean natural gas or other fuels because of 
policies. How much of what would drive down the global price of 
oil and natural gas, and eliminate the need for relatively high 
carbon coal, would occur if the policies of this Administration 
were at least favorable to the finance of those types of 
enterprises?
    Ms. Onwuka. Well, I think we can look back at President 
Trump's Administration, when we were a net exporter, right, of 
natural gas. So, to put us back in a position where we are not 
vulnerable to the whims of other countries, even dictators, but 
in a position where we can actually help the world not be 
vulnerable to those same geopolitical issues, I think that is 
where we need to get back to. Policies that take us away from 
there that we have seen over the past year, unfortunately, put 
us in that vulnerable position.
    Mr. Issa. Mr. Lynn, there won't be time to ask you the 
question you didn't answer for the Ranking Member--
    Mr. Cicilline. The time of the gentleman has expired, but I 
will let you--
    Mr. Issa. I hope in the future that we would answer a 
question yes or no when it can be answered yes or no, and then, 
go on to the rest of it. I was deeply disappointed. I know you 
are better than that.
    Mr. Cicilline. I will say, Mr. Lynn, I was gratified to see 
that you are a man of integrity, you answered the question 
truthfully, and despite the fact that the Member of Congress 
didn't like the answer, you pressed. I admire you for that.
    So, with that, I now recognize the gentlelady from 
Washington, Ms. Jayapal, for five minutes.
    Ms. Jayapal. Thank you, Mr. Chair.
    The pandemic has hemorrhaged the global supply chain. 
Corporate monopolies have worsened conditions. This past year, 
corporate monopolies in various industries made record profits, 
and we are going to keep talking about these profits because 
they are crucial to this discussion. At the same time, 
essential products like meat, toilet paper, and baby formula 
flew off the shelves and rose to outrageous prices.
    My home State of Washington currently has the fourth 
highest gas prices, with prices in King County, where I live, 
currently at $5.07 per gallon. Oil and gas companies, as you 
have heard my colleagues on the other side talk about, want to 
try to attribute these prices to pandemic delays and wartime 
sanctions, or to the Biden Administration itself, instead of to 
profiteering. Let's look at the facts.
    First, Shell made $9.1 billion in profit from January-
March, almost three times what it made in the same period last 
year, while Exxon raked in $8.8 billion, a near threefold 
increase over 2021.
    Second, even before the pandemic, U.S. producers lowered 
production and raised prices to increase profits for investors. 
Even though demand has increased, production of oil remains 
slowed. One CEO even stated that, even if the price goes to 
$200 a barrel, they are not going to step up production.
    Dr. Mabud, why is oil production still experiencing these 
delays? What's going on?
    Ms. Mabud. Yes, thank you for this really important 
question.
    Oil and gas companies, as you note, are making record 
profits, all while families around the country are struggling 
to get their kids to school and pay for their drive to work. As 
gasoline prices increased almost 50 percent in 2021, the three 
biggest U.S. oil companies benefitted from those higher profits 
and prices. They saw their previously negative profits jump 
nearly $87.5 billion, while boosting shareholder handouts by 
$4.5 billion in 2021, and that trend has only continued in 
2022.
    Let's be clear. This is not about rising input costs. Even 
as the price of crude has started to come down in recent weeks, 
the gas prices have stayed sky-high, and consumers are really 
paying the price. Large oil companies are simply choosing to 
keep oil prices high, despite lower crude prices, to pad their 
bottom line and to pay out to their shareholders.
    Ms. Jayapal. Thank you.
    Dr. Reich, big oil has achieved its highest profits in a 
decade, as many people have pointed out. Twenty-eight major 
fossil fuel businesses made a combined $93.3 billion in the 
first three months of 2022, a 127 percent increase from the 
same period in 2021. What have corporations done with these 
profits and why don't we see them reflected in the average 
American's price at the pump?
    Mr. Reich. Well, the simple answer, Congresswoman, is that 
they have bought back their shares of stock in an effort to 
raise their stock prices. This is not a new phenomenon, but it 
is new in the sense of how much they are doing right now. They 
are not pouring these profits back into production. They are 
not pouring the profits back into higher wages. They are not 
pouring the profits back into research and development. They 
are pouring the profits into raising share prices.
    In terms of the United States economy overall, that is not 
a plus. In fact, the question that all of you, this hearing is 
really focusing on is quite simple and direct. When 
corporations are so flush--that is, they are enjoying the 
largest profits in 70 years--why are they raising prices? They 
should not be raising prices, particularly when they are just 
those profits to turn around and buy back shares of stock. 
American consumers are paying the price.
    Ms. Jayapal. Exactly the right question.
    Mr. Lynn, gasoline is not a regulated commodity, which 
means that producers and retailers are free to charge whatever 
price they choose. Big oil blames pandemic delays, the Russian 
invasion of Ukraine, but prices were rising long before 
Russia's invasion. How has the freedom of big oil to set their 
own prices impacted the middle-class and lower-income earners?
    Mr. Lynn. Thank you, Congresswoman. You cut to the heart of 
the issue here.
    What we see is a remarkably weirdly structured system with 
oil. You see a series of bottlenecks, starting with OPEC, and 
you see it with the majors who actually have control over most 
of the big wells around the world. Then, you see a power at the 
concentrated level of refining. There has not been a new 
refinery open in the United States since 1978. It is the same 
footprint it was in 1978.
    Then, you have the commodities markets in which, on top of 
this deeply industrialized system in which the amount of oil 
can be guaranteed pretty much week after week, month after 
month, year after year, it is industrialized. Yet, then, we 
have the prices jumping up and down.
    Ms. Jayapal. Thank you.
    Mr. Lynn. So, the market itself, the market structure is 
actually one of the places we want to be looking at because the 
market doesn't make sense.
    Ms. Jayapal. Well, thank you.
    Dr. Mabud, despite the suggestion--
    Mr. Cicilline. The time of the gentlelady has long expired.
    Ms. Jayapal. Okay. Thank you. I couldn't see the time 
clock. Thank you, Mr. Chair. I yield back.
    Mr. Cicilline. The gentlelady yields back.
    I now recognize the gentleman from Utah, Mr. Owens, for 
five minutes.
    Mr. Owens. Thank you. Thank you so much.
    Utah is one of the most vibrant and fastest-growing 
economies in the nation, thanks to a strong, well-educated, 
trained workforce, booming tech industry, and innovative 
collaboration between business and government. So, it is 
especially crushing to see the inflated cost of living in Utah 
at 10.2 percent, which is two percent above the national 
average.
    Unfortunately, we have returned to the 1960 days of Carter, 
a time when our government forgot the basic 101 of economics 
and the impact of hyper-spending and Federal price controls on 
a recovering economy. As it was with my generation in the 
1970s, today's generation of young Americans will see in real 
time the impact of Democrats' failed economy and economic 
policies. Everything costs more--rent, food, gas, clothes, and 
vacations as loss of income. They will never forget this 
moment, and their bank accounts won't, either.
    As it was with President Carter, history will not treat 
kindly the Biden Administration and a Democratic-controlled 
Congress' policies of 2021-2022. They are robbing hardworking 
American men and women of their wages and hurting their 
families.
    The constituents I hear from on a daily basis consider the 
increased cost of living a very serious problem. The buck stops 
at President Biden and his Administration, who has had missteps 
from day one. He destroyed America's energy independence by 
closing the Keystone Pipeline, pulling our own petroleum 
reserves, and then, selling the oil to China--until last week, 
stopping oil leasing in Alaska and the Gulf of Mexico, and 
then, blaming the oil industry and the local service stations 
for price gouging.
    It is worth taking note that this week gas prices hit 
another record high. You can't make this stuff up. At the end 
of the day, President Biden and his policies did this. I love 
the title of this hearing, ``Rebuilding America's Economic 
Leadership.'' If we are to rebuild America's leadership, it is 
up to our President and the Democratic Party to own up to their 
own disastrous decisions and change their ways.
    Mr. President, it is time to show true leadership and stop 
the blame game. Pointing the fingers at everybody else for 
every chaos, a self-created chaos, is not working.
    Ms. Onwuka, it seems like, first, in Utah we had prices of 
gas down to $2, a little bit more. In California, it has always 
been high, $4-5 more. Is it because they are price gouging in 
California, and they are not doing it in Utah? I am trying to 
figure out what the difference is there. Is it policies or just 
because these bad oil companies are doing in the California 
people?
    Ms. Onwuka. I think, at the State level, policies around 
taxes on gas, on gasoline, come into play. Regulations, when it 
comes to the gas and oil industries, also come into play. So, I 
suspect that is what is going on in the different locations.
    Mr. Owens. Do you have anything else you want to add to the 
fact that it appears that those who were taking risks, 
providing services, and doing it at a much cheaper price just 
about two or three years ago, why they are now the enemy of the 
other side of the aisle here? Any comments? Any thoughts?
    Ms. Onwuka. I think that it is sad that we are at the point 
where our Federal policy seems to do a disservice to those 
people who are risk-takers, who are willing to invest, to start 
companies. We are talking about antitrust. So, when small 
companies that provide great value build itself up to a point 
where it can be bought, acquired by another larger company, and 
then, create added new value to the consumers, who raise higher 
prices and new kind of products. So, I do think it is a 
disservice that we are doing to these companies.
    Mr. Owens. I look forward to the day that we educate our 
young people again the way the free market works.
    Ms. Onwuka. Yes.
    Mr. Owens. The more competition, the lower the price, the 
better the product--that is the way that has been the American 
way. Envy has never worked for building a nation.
    I just want to let the other side of the aisle know that 
Robin Hood is a good movie, but it doesn't work. It never has. 
You look to the Robin Hood attitude of taking from the rich and 
give it to the poor. It is what has happened in Cuba. It is 
what happened to Venezuela. It is what happened to Russia. Any 
place there is tyranny, you have this idea: You take away from 
the risk-takers, the builders--by the way, by people who have 
never built a thing. Those who have never built a business 
never understand the risk that it takes and how it is to 
reinvest. Those who reinvest and look for a vision and a 
future, they will do it in a very smart way. Unfortunately, 
those who have never done it will never get it.
    So, I look forward to being in a position, as we get into 
this new Congress, that we are going to start teaching our 
young people the free market once again, be proud of who we 
are, and to applaud the risk-takers and the builders in our 
country that make our country great.
    Thank you so much, and I yield back.
    Mr. Cicilline. The gentleman yields back.
    I now recognize the distinguished Chair of the Democratic 
Caucus, the gentleman from New York, Mr. Jeffries, for five 
minutes.
    Mr. Jeffries. I thank you, Chair Cicilline, for your 
continued leadership with respect to making sure that we can 
right-size our economy, free market economy, well-regulated, 
but one that works for everyday Americans, not against them, 
and appreciate your continued leadership in the context of 
these hearings.
    I think what we hope to accomplish, generally--certainly, 
my perspective--is not to take from the rich to give to the 
poor, but to stop the rich from taking the productivity gains 
from everyday Americans, particularly, over the last four 
decades, and basically, hoarding it for themselves in a manner 
that has undermined the great American middle class and those 
who aspire to be part of it.
    Secretary Reich, thank you for your service over the years.
    Would it be fair to say that, effectively, while the 
productivity of the American people has increased dramatically 
over the last four decades--I think in excess of 275 percent--
basically, less than 10 percent of those productivity gains 
have actually been received by everyday Americans, by working-
class folks, and by the middle class or those who aspire to be 
part of it? The overwhelming majority of those productivity 
gains have gone to the privileged few?
    Mr. Reich. Yes, in the short answer, Congressman. I think 
that what we are talking about here in terms of markets that 
are rigged, that are, essentially, noncompetitive, in which a 
handful of companies can easily coordinate, and do coordinate, 
to raise prices, and are doing it even more under the cover of 
inflation, is another way, another symptom, of the underlying 
problem that you are pointing out.
    We have not seen this degree of inequality in terms of 
concentrated income and wealth at the top of America in over 
100 years. The result is that, although the country is much 
more productive than it used to be five, or 10, or 40 years 
ago, the typical American is not doing that much better, 
adjusted for inflation.
    To make this a partisan issue, to blame one party or 
another, does a disservice to the United States. We have got to 
get and adapt the structure of our economy, and the laws and 
regulations governing the economy, particularly antitrust, to a 
new era in which we have a record degree of corporate profits, 
corporate concentration, and corporate buybacks.
    Mr. Jeffries. Well, thank you for that clarification. I 
think, foundationally, we shouldn't have this particular 
discussion at this moment in isolation as it relates to the 
profit-taking that is occurring and clear evidence that certain 
corporations are taking advantage of an inflationary moment 
that may exist for a variety of reasons, and they will be 
connected to supply chain dynamics emanating from the pandemic, 
to continue to pad their profits, to the detriment of the 
American consumer. So, there is not an isolated situation. We 
have actually seen a march in this regard for 40 years.
    No one is suggesting that the American people should 
somehow have a windfall. The American people's productivity has 
earned them a raise; they just haven't gotten it. Instead, what 
they have actually gotten in this moment are higher prices by 
individuals seeking to take advantage of the moment.
    Dr. Mabud, corporations are seeing record profits, 
including oil companies and some of the meat processors, and 
others. These savings, these profits, aren't being passed along 
in any way toward the consumer. Can that be explained?
    Ms. Mabud. Absolutely. Groundwork has been listening to 
hundreds of earnings calls. I believe that we should listen to 
what the CEOs are telling us, right, which is that they are 
really eager to jack up prices on consumers, all while bringing 
in record profits and issuing stock buybacks for their 
shareholders.
    I mean, EPI has done some great analysis here that shows 
that 54 percent of the price hikes that consumers are seeing 
are due to corporate profits, whereas, only 38 percent and 
eight percent, respectively, are due to input costs rising and 
wages. So, the delta here, the difference between prices and 
profits is going straight into the pockets of CEOs and 
shareholders.
    Mr. Jeffries. Thank you very much to all the Witnesses.
    I yield back my time.
    Mr. Cicilline. The gentleman yields back.
    I now recognize the gentleman from Georgia, Mr. Johnson, 
for five minutes.
    Mr. Johnson of Georgia. Thank you, Mr. Chair.
    In the beef-processing industry, four dominant companies 
control 85 percent of the market. Wall Street has consolidated 
into five banks, and airlines have merged into just four major 
airlines. We have three major cable companies controlling 
broadband and three dominant baby formula companies controlling 
95 percent of the market.
    This widespread consolidation throughout the marketplace 
has allowed these dominant firms to set the rules of the game, 
and this has created an interconnected and very inefficient 
supply chain that has endangered the lives and strained 
America's wallets during this pandemic--all in the name of 
profit.
    So, I want to thank you, Mr. Chair, for holding this 
hearing, and I look forward to an answer to this question from 
Ms. Onwuka. Ms. Onwuka, you would not disagree with me that 
there is a correlation between rising gas prices and rising oil 
company profits, correct?
    Ms. Onwuka. Thank you, Congressman.
    When inflation happens--
    Mr. Johnson of Georgia. Is that correct? Is that correct--
    Ms. Onwuka. Sorry, I was just going to--
    Mr. Johnson of Georgia. --that there is a correlation 
between rising gas prices and rising oil company profits?
    Ms. Onwuka. Profits and inflation go hand-in-hand.
    Mr. Johnson of Georgia. Well, profits and rising costs go 
hand-in-hand, too, do they not?
    Ms. Onwuka. Profits and inflation can go hand-in-hand, and 
when the prices fall, sir, also, you see profits fall. Thank 
you.
    Mr. Johnson of Georgia. Well, Ms. Onwuka, let me ask, since 
you don't want to answer that question, let me see if you will 
answer this question. To what degree has oil company price 
gouging contributed to the spike in gas prices?
    Ms. Onwuka. I don't think that there is evidence that you 
can point to, or anyone can point to, to say that it is price 
gouging that is leading to--
    Mr. Johnson of Georgia. Well, let me ask Mr. Reich the same 
question. What do you think, sir?
    Mr. Reich. I am sorry, Congressman, could you repeat that 
question?
    Mr. Johnson of Georgia. To what degree has oil company 
price gouging contributed to the spike in gas prices?
    Mr. Reich. Well, it has contributed substantially in the 
sense that, if we define gouging, price gouging, as using your 
market power, your power to raise prices when you don't have to 
raise prices, when you are, basically, having enough profits 
that you could easily absorb the increase in cost of inputs, 
which in the oil company we are talking about crude oil prices 
going up, that is price gouging--taking advantage of an 
inflationary environment to hide the fact that you are raising 
your prices and costing consumers more, when, otherwise, you 
would not; you certainly, in a competitive system, you would 
not be doing that. That would be my definition of gouging, 
absolutely.
    Mr. Johnson of Georgia. Thank you.
    The Economic Policy Institute recently observed that, since 
the onset of the pandemic, nearly 54 percent of the spike in 
the cost of goods and services can be attributed to increased 
corporate profit margins. Mr. Reich, if our markets were truly 
competitive, it stands to reason that companies would keep 
their prices down to prevent competitors from stealing 
customers, correct?
    Mr. Reich. Absolutely. That is kind of a principle that I 
think is easily understood. If you are in a competitive market, 
you are going to do everything you possibly can do to keep your 
prices down. Otherwise, competitors are going to grab market 
share away from you.
    That is what we see in the competitive parts of our 
economy. Too much of our economy right now, though, is 
uncompetitive, dominated by big companies that don't have to 
worry about raising prices and losing market share.
    Mr. Johnson of Georgia. Thank you.
    My colleagues on the other side of the aisle have said that 
these price hikes are due to inflation, but, Mr. Reich, you 
have written extensively on this, and you disagree. Why do the 
increases that we see have less to do with inflation and more 
to do with corporate power to raise prices?
    Mr. Reich. Well, they have to do with corporate power to 
raise prices in the sense that corporations now--and we know 
this--have a higher degree of profitability than they have had 
in 70 years. Now, where are those profits coming from? The 
profits are coming partly from an increase in pent-up demand 
after the pandemic, but also from the fact that they don't have 
adequate competition.
    If they had adequate competition, they would keep their 
prices down. They have the power to raise their prices. They 
have been saying on earnings calls, again and again, they have 
been crowing about it; they have been boasting about their 
ability to increase, maintain and increase their profit margins 
using the cover of inflation. I think that is the critical 
point here. They don't want to be seen as raising their prices 
to increase their profitability, but they are using inflation 
as an excuse for raising prices and increasing their 
profitability.
    Mr. Johnson of Georgia. Thank you, and I yield back.
    Mr. Cicilline. The time of the gentleman has expired.
    I will now recognize the distinguished Ranking Member of 
this Subcommittee, Mr. Buck from Colorado, for five minutes.
    Mr. Buck. Thank you, Mr. Chair.
    Mr. Lynn, first, thank you for talking about mining--a 
difficult subject for folks on one side of the aisle to talk 
about and a little bit easier on my side of the aisle, and 
really a head-scratcher sometimes when we think about rare 
earth metals and the fact that many of those are no longer 
mined here in the United States. Most of those have been 
transferred--and I think you mentioned this with silicon--have 
been transferred to China. Most of the production has been 
taken up in China.
    Any guess whether we do a better job of mining in a clean 
way here in this country or whether China does a better job of 
mining in an earth-friendly way?
    Mr. Lynn. This is pure speculation, but I actually would 
assume that mining in the United States will be more highly 
regulated and will result in a cleaner outcome.
    Mr. Buck. I would make the same assumption. I am not a 
miner, and so, I am not sure, but that would be my assumption.
    The baby formula plant, the Abbott plant, was closed on 
February 17th. You have mentioned that Abbott has a 40 percent 
market share, and I think that we can all agree that that plant 
produces substantial amount for Abbott Labs. I don't think 
anybody is disagreeing with closing the plant, given what 
happened. Was it foreseeable that, if you close a major 
producer like that, we would have a shortage at some point in 
the future, whether it is a month or three months?
    Mr. Lynn. Yes, it was absolutely foreseeable. We have seen 
this many times in the past. I mean, actually, in my book 
Cornered, I spent a long time looking at what happens with the 
shutdown of a single cat food facility. This was 2007, and it, 
basically, stripped out all the cat food across the entire 
nation. It was a shutdown of a single facility, but almost 
every single brand was purchasing out of that one facility.
    Mr. Buck. Ms. Onwuka, I want to ask you a question. You 
mentioned--and I am hoping, I wrote this down, and I hope I got 
it right--you don't hear a lot about solutions for demand. I 
think that is what you said. I have got one, and I am just 
wondering if you would comment on it.
    Ms. Onwuka. Yes, Ranking Member. I mean, I think if--
    Mr. Buck. Well, let me ask you the solution that I have, 
and then, ask you to comment on it. My solution is that the 
Federal government stop spending so much darn money.
    Ms. Onwuka. I think that is a great solution.
    Mr. Buck. There you go. We agree. Why?
    Ms. Onwuka. Because we have a track record, and we can look 
back over the past year, in particular, to see that, when the 
economic conditions of the country are improving, that is not 
the time for excessive stimulus--whether that is expanding 
entitlements, whether that is in expanding direct payments to 
American families--because it becomes a disincentive to work, 
particularly if it is unattached to work requirements.
    So, that is what we saw driving the labor shortages, but we 
also saw a demand, not just return to pre-pandemic levels, but 
exceed that. So, demand is driving, is chasing after too few 
goods being supplied by the country.
    Mr. Buck. I want to get to another line here. My daughter, 
son-in-law, and daughter-in-law are all in the oil and gas 
industry. If I don't come to their defense, Thanksgiving dinner 
will be a very quiet, quiet dinner.
    An oil and gas company, from the time they apply for a 
permit to the time they put a drill bit in the ground is about 
one year. Once that drill bit is in the ground and they start 
producing, they have a life--and it varies--but the lifetime of 
a well, the production actually starts decreasing dramatically 
after the one-year point.
    So, to say that oil and gas companies have some control 
over the profit, when the oil is flowing, a certain amount of 
oil is flowing, and the price is more determined on a world 
market, especially by OPEC and other countries, I think is 
unfair. I just wanted to give you the opportunity to comment on 
that, understanding my Thanksgiving dinner dilemma.
    [Laughter.]
    Ms. Onwuka. Thank you, Ranking Member. I don't want you to 
get into any trouble with your children.
    I think it is very interesting when we talk about signals. 
Federal policy can send signals to industries about the 
intentions when it comes to, in this instance, energy, and what 
the approach should be to treating different types of companies 
within industries differently than others. I think the signal 
has been sent when it comes to oil and gas and natural gas, 
that this is not going to be a friendly environment for them to 
continue to produce.
    So, when you talk about cancelling leases to be able to 
drill, when you talk about cancelling pipelines, when you 
increase the regulations to make it so onerous to go into 
production, then, obviously, that is going to have a negative 
impact, both in the short term, but also in the long term.
    As I mentioned earlier, we should be in a position of 
energy strength, not of energy vulnerability, particularly to 
other countries.
    Mr. Buck. I thank you.
    I yield back.
    Mr. Cicilline. The gentleman yields back. Thank you.
    Secretary Reich, critics of the Biden Administration have 
tried to use inflation and supply chain disruptions, and even 
Russia's attack on Ukraine, to score some political advantage. 
Sadly, I think you saw some of that during this hearing.
    So, I am going to ask you very directly, because of your 
extraordinary experience and scholarly work, are government 
spending, taxes, regulation, and workers causing the inflation 
and supply chain fragility that we are facing? If not, what 
factors are contributing to the current crisis?
    Mr. Reich. Mr. Chair, the largest factors have to do with 
the pandemic, the end of the pandemic, and the sudden increase 
in pent-up demand for goods, and second, with the end of the 
pandemic, all sorts of supply chain issues, both domestically 
and internationally, because it is very difficult to crank up 
an economy relatively suddenly. Maybe not, it doesn't feel like 
relatively suddenly. When you look at the complexity of those 
supply chains, it is relatively sudden.
    Now, where does that leave the issue of concentration? 
Undoubtedly, concentration in terms of corporations that are 
not competitive is adding to the problem. It is not, in my 
judgment, the core problem or the first or only problem, but it 
is a large and growing problem. It is a large and growing 
problem for the economy overall.
    As we see with the baby formula problem, it is not just 
with regard to increasing prices; it is also with regard to 
vulnerability to plants that have to be shut down or supplies 
that have to be in some way constrained. If we are dependent on 
fewer and fewer big corporations, we are more and more 
vulnerable.
    So, realistically--and putting the politics aside--this 
Committee, and also the Senate Antitrust Subcommittee--really 
does have a lot of work to do to bring antitrust laws up-to-
date and make sure that we have bold and strong antitrust 
enforcement and laws that enable our antitrust enforcers to 
break up the big monopolies that now dominate the American 
economy.
    Mr. Cicilline. Thank you very much, Mr. Secretary.
    Dr. Mabud, I want to respond very directly to the claim 
that was made by Ms. Onwuka about there being a lot of 
competition in the oil industry. Over half of the world's oil 
supply and 90 percent of the world's oil reserves are 
controlled by a cartel of nationalized oil companies known as 
OPEC--OPEC Plus, actually--which is led by Russia and Saudi 
Arabia.
    In the private sector, super-major oil companies are 
vertically integrated at every level of the supply chain; thus, 
exerting influence far beyond what their market share in any 
single market might suggest. The oil and gas industry are 
hardly, in my view, a model of competition, as demonstrated by 
the fact that big oil has seen its highest profits in decades.
    So, I would like you to respond directly to that claim that 
there is lots of competition in the oil industry, and what is 
the principal cause of the increase at the gas pump?
    Ms. Mabud. What you point out is exactly correct. This is a 
deeply, deeply concentrated industry, and each of these 
companies have enormous amounts of market power that they are 
using in this moment, right?
    I mentioned before crude prices are starting to come down; 
prices at the pump are still high. What we are seeing is that, 
in Q1, BP posted its highest quarterly profit in a decade. 
ExxonMobil doubled its profits from last year to $5.48 billion, 
and Chevron reported a quarterly profit of $6.26 billion, which 
is over four times its earnings of $1.4 billion over the first 
quarter of last year. So, keeping gas prices sky-high is easy 
for these companies because they have such market dominance and 
are able to assert that market dominance.
    Mr. Cicilline. Thank you so much.
    Mr. Lynn, you testified that just a generation ago the 
United States boasted the most advanced, robust, and thriving 
industrial system in the world, thanks to antimonopoly policy 
and other competition tools. In my home State of Rhode Island, 
manufacturing is really written into our DNA--the birthplace of 
the Industrial Revolution, where good-paying manufacturing jobs 
helped build our middle class, but over the years we have lost 
these jobs to other countries.
    So, beyond reviving our competition system, what reforms do 
you recommend for reclaiming America's identity as leaders in 
manufacturing and innovation?
    Mr. Lynn. The use of trade policy to break all 
concentrations of power and control and capacity in places like 
China that do two things. They threaten us because we become 
dependent on an antagonistic nation for fundamental supplies. 
It also allows them to jack up prices. There is a vitamin C 
antitrust case which focuses on the way that the Chinese 
vitamin cartel has jacked up this fundamental supply.
    So, trade has always been one of the most important tools 
that we have used to deal with concentration of power and 
create opportunity for manufacturers here in the United States 
to compete. We should have a robust protectionist trade policy 
that protects the American people from concentrations of power 
and protects the international system on which we depend for 
promoting a peaceful international set of democracies.
    Second is corporate governance. We need to use corporate 
governance to, basically, ensure that the corporations work for 
us.
    Mr. Cicilline. Great. Thank you so much.
    I want to thank the Witnesses for their testimony today and 
my colleagues on both sides of the aisle.
    This hearing has made clear that with concentrated power 
comes concentrated risk, whether it is America's energy supply 
or the availability of baby formula. We have heard this story 
over and over again.
    Earlier this year, this Subcommittee examined the harms 
caused by high levels of economic concentration in America's 
food supply chain. We heard compelling testimony from Witnesses 
that monopoly power was leading to high prices and food 
shortages for consumers. Supply chains are brittle or broken. 
Farmers and ranchers are struggling to survive, but the largest 
meat packers and distributors have raked in record profits.
    All options must be on the table. We need to update and 
modernize our antitrust laws, and then, give enforcers the 
resources they need to stop anticompetitive conduct and ensure 
the marketplace is competitive.
    We need to pursue criminal charges for corporate executives 
who engage in cartel activities, such as price fixing, and we 
need to prohibit price gouging and explore whether tools like 
price controls can be used to address inflation and corporate 
profiteering.
    We must bring other policy tools to bear as well. We need 
to incentivize investment in the United States and discourage 
outsourcing. We need to reorient our tax policies towards long-
term economic growth and sustainability, not short-term profits 
and share buybacks. Most importantly, we need to strengthen 
worker protections and protect the rights of workers to 
organize.
    Finally, we should utilize the Defense Production Act to 
ensure that we have sufficient supplies of essential goods and 
to crack down on bad-faith hoarding of scarce products to 
resell at exorbitant prices.
    Again, thank you to the Witnesses.
    This concludes today's hearing.
    Without objection, all Members will have five legislative 
days to submit additional written materials, additional written 
questions for the Witnesses, or additional materials for the 
record.
    I believe I have a unanimous consent request to include 
into the record a letter from the National Retail Federation. 
Without objection.
    [The information follows:]

                    MR. CICILLINE FOR THE RECORD

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    Mr. Cicilline. With that, this hearing is adjourned.
    [Whereupon, at 3:46 p.m., the Subcommittee was adjourned.]

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