“Too many companies have raised prices to increase their profits, charging more for less and less,” Biden complained in his State of the Union address before Congress this year. “Essentially, the snack companies think that if they change the size of the bag and put in a lot fewer bags of the same size, less chips in it, you won’t notice. No I’m not kidding. This is called contraction inflation. Pass (Sen.) Bobby Casey’s (D-PA) bill and end this. (Laughter and cheers.) I really mean it!”

Biden added, “You’ve all probably seen that ad on Snickers bars. “You get charged the same amount and you get, I don’t know, 10% less Snickers.”

The president’s “degrowth” debate was sandwiched between his administration’s Social Security plans and his war on so-called junk wages. Both of these were now the major highlights of his lame administration; This is an indication of how much Biden hates contraction or believes the issue will resonate with voters.

Snack food companies had different tactics to respond to the president’s accusation. Snickers maker Mars has mostly denied this is true.

“We have not reduced the size of Snickers singles or shares in the United States,” a company spokesman told CNN’s Republican commentator Scott Jennings. “Like many industries, we continue to face high inflation and steep increases in material costs; However, we try to cover these extra costs wherever possible to offer affordable treats and best value. Final prices are always at the discretion of the retailer, but we make every effort to minimize costs to offer a full range of delicious products.”

But Biden also took issue with snack chips and other bulk food purveyors with this criticism. These are the chants from the cheap seats in Congress. He called on both houses to pass a bill titled the Anti-Degrowth Act, according to the bill’s official description; “It would direct the Federal Trade Commission to make regulations to designate shrinkage as an unfair or deceptive act or practice,” according to the official description of this bill.

Pandemic prices or ‘greed’?

The author of the bill withdrew it in late February and tried to implement it immediately. “You can’t wait a year to buy paper towels, buy boneless chicken, buy groceries or buy Huggies diapers,” Casey said. the New York Times.

Casey is running neck-and-neck for re-election this year with veteran, wealthy former asset manager and George W. Bush administration alumnus Dave McCormick. The Pennsylvania senator has invested significant capital in the issue of degrowth, or as he calls it, “greed.”

As chairman of the Senate Health Subcommittee on Children and Families, Casey issued four reports on prices and profits. The third report, “A Greedflation Report – Degrowth: How Companies Are Shrinking Products to Super-Big Profits,” is the most relevant.

Casey’s “Degrowth” report states that between July 2020 and July 2022, “Federal Reserve research shows that 41 percent of inflation during this time was driven by greater corporate profit-taking alone.”

To continue with the president’s favorite example, “Frito-Lay reduced the size of a bag of Doritos from 9.75 ounces to 9.25 ounces,” according to the report. “Frito-Lay blamed the pandemic, but Frito-Lay North America’s operating profit rose 9 percent from 2021 to 2022, while Frito-Lay parent company PepsiCo praised the snack maker’s performance. Prices for Doritos increased as volume decreased and PepsiCo outperformed earnings expectations.”

Both bags list their volume, allowing interested customers to notice the reduction. Casey nevertheless recognizes this as one of many examples of “greed” and deceptive marketing that he would like to see eliminated.

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But the reason for the decrease in sales volume of big brands was probably related to what economists call the substitution effect. According to the Corporate Finance Institute, it is so called due to “a change in the demand for a good as a result of a change in the relative price of the good compared to other substitute goods.”

The example given by CFI is this: “When the price of a good increases, it becomes more expensive than other goods in the market. As a result, consumers are shifting from goods to substitutes.” In other words, rising prices act as a price signal telling customers to look elsewhere.

At least initially, during the wrenching early supply chain disruptions caused by COVID-19, major brands thought they were providing nearly the same amount of product for the same price and believed that to be a good thing. Casey’s report quotes an unnamed Frito-Lay representative: “We took a little out of the bag so we can give you the same price and you can keep your receipts.”

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Most snack makers were upfront about what they did and why they did it, but consumers and congressional observers took it poorly. There has been such a visible backlash among consumers that many brands are now reversing course by re-inflating snack bags, for example. Tostitos and Ruffles announced in October that they would soon add about 20% more chips to what they call a “bonus bag” for the same price.

Despite the president’s public lobbying efforts, the Anti-Degrowth Act has stalled in Congress. It was read twice in the Senate and led to several hearings. The last hearing before the Senate Economic Policy Subcommittee on Banking, Housing, and Urban Affairs took place in late March. Perhaps the extra crisis looming can be some consolation.

Jeremy Lott the author of The Hot Bucket Brigade: The Story of the American Vice Presidency.