Elizabeth Warren has fierce clash with CNBC host on Harris' price control plan: 'A fool's errand'

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Sen. Warren clashes with CNBC host over Harris' price-control proposal

Sen. Elizabeth Warren, D-Mass., got into a fiery debate with CNBC host Joe Kernen on Friday over Vice President Harris' proposal to impose federal controls on the prices of food and groceries.

Sen. Elizabeth Warren, D-Mass., was grilled on CNBC over Vice President Kamala Harris' plan to impose federal price controls on food and groceries in a nearly 20-minute-long debate on "Squawk Box" on Friday.

Harris announced last week that if elected, her administration would impose federal controls on the price of food and groceries to keep corporations from exploiting consumers. The plan has received widespread criticism from economists on the left and right, who argue that artificial controls have been tried in communist countries and they do not work; in fact, they may actually increase prices for consumers, critics say.

CNBC host Joe Kernen confronted Warren on her support for the "flawed idea" that even liberal papers like The Washington Post have called a "populist gimmick."

"Competition doesn’t come in," he said. "If the price of beef is too high, people don’t move the chicken. Competitors don’t come in to undercut where the beef prices are. Nothing works when you try to artificially control prices. It’s just a supply and demand issue. It’s a flawed idea."

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"Squawk Box" co-host Joe Kernen confronted Sen. Elizabeth Warren on her support for Vice President Harris' price-control plan. (CNBC/Screenshot)

"It’s not price gouging that’s the issue," he said, asking her when she was going to propose a policy that would "really help" the middle class.

"I understand if you wanted to do a lecture about this, but let's just start with where have you been?" Warren shot back at Kernen.

Warren argued that anti-price gouging laws have been effective in the dozens of states that have passed them. The federal plan is meant to combat corporations from taking advantage of consumers, as she claimed they did during the pandemic by driving up costs to increase profit margins.

"Remember we all talked about egg prices. You end up with something like a giant egg producer, Cal-Maine. And Cal-Maine raises the price of eggs. Their profit margins increased by 718%. That’s not just passing along costs," she argued.

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Sen. Warren used the example of egg prices to argue that there needed to be price controls on food and groceries. (AP/Terry Chea)

The interview remained heated as Warren accused Kernen of not letting her speak and Kernen accused Warren of giving misleading examples and not accurately presenting how the market works.

"This is a way you never lose an argument, Senator, because no one can ever say anything back to you. It's frustrating," Kernen told Warren, as she repeatedly asked the anchor if he invited her on the program "just to lecture" her.

"Let’s go back to Cal-Maine," Kernen said later. "Avian flu caused the destruction of 40 million eggs. They have 20% market share. But they don’t control the market. It’s like oil. When oil prices go up for whatever reason, or they go down, when they go down, the price is set for oil. The reason that Cal-Maine made that money was because that’s what happened to the price. The next quarter, they went down in half. They lost 50% of the profits from — they don’t set that price. And neither does Exxon. Exxon does not set the price of oil. So when Exxon is $80 or $100 a barrel, yes, they make record profits. When there was a pandemic, their profits went to almost zero."

"It’s just the way it is. And to think that the government can decide when prices are too high or too low — the grocery chains have a 2% profit margin. How about Apple with 50% or 40%? How do you decide?" he pressed the senator. 

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The Harris campaign has argued that federal price controls would keep grocery prices from spiking due to corporate greed. (iStock)

"This is not the government’s place to do these things. It’s a fool’s errand, and you're using it to divert from the real cause of inflation over the last four years," he said, blaming the pandemic's supply chain issues and stimulus spending.

The two continued to spar over the issue for several more minutes, with Warren doubling down on her defense of Harris' price-control plan to combat the ongoing price-gouging "problem."

"It is not price controls. This is about when the market itself is not functioning. Sometimes markets don’t function because of a localized emergency. A hurricane. A wildfire. Flooding. And so in states that have these price gouging laws, they can come in and say, look. You can do some price increases, but if you’re going above a certain level, you have to be able to justify it. You have to show what you’re doing in passing along costs," she argued.

"The whole point is to get markets that are more competitive," she continued. "That’s the job of the FTC. That’s something state attorneys general work on. We just want to put one more tool in the toolbox when CEOs are going on the phone saying, ‘Boy, inflation is great. Because it gives us a chance to raise our prices.'"