President Biden and his fellow Democrats need to learn to talk about inflation if they hope to maintain congressional majorities in this year’s midterm elections. They can’t deny that costs for consumers are rising at a jarring rate—up 7.5 percent compared to a year ago, according to the latest figures. But they can, and must, make the connection between surging prices and surging corporate profits.

The US Department of Commerce reported at the end of December that corporate profit margins had hit the highest level in 70 years. You’ll hear a lot of complex, and often conflicting, explanations for why this is happening now.

But recent news stories speak for themselves.

From CNBC:

Oil giant BP reports highest profit in 8 years on soaring commodity prices

From Reuters:

Cereal maker Kellogg Co. forecast full-year profit growth above market expectations on Thursday, riding on higher product prices that helped overcome labor strike disruptions and soaring input costs in the fourth quarter.

From The New York Times:

Procter & Gamble’s sales jump as consumers brush off rising prices.

From The Ticker:

McDonald’s to raise prices despite record revenue

From Yahoo Finance:

Amazon stock soars 15% after earnings, will hike Prime membership fee

US Senator Elizabeth Warren put the pieces together when Fed chair Jerome Powell appeared last month before the Senate Banking, Housing, and Urban Affairs Committee. Offering a lesson in what she referred to as “Econ 101,” the senator from Massachusetts led Powell through a series of questions related to inflation.

“If you’re a corporation that has eaten up most of the competition and cornered the market, is it easier for you to raise prices on your customers and maximize your profits because you don’t have to worry about losing your business?” asked Warren.

Powell replied, “In principle, if you don’t have competition and you’re a monopolist, yes, you can raise your prices.”

“Okay,” Warren continued. “Over the past year, we know that prices have risen because of supply chain problems, unexpected shifts in the demand for goods, and even higher labor costs. But if corporations were simply passing along these costs in highly competitive markets, would the companies’ profits margins have changed much?”

After mumbling something about varying factors that impact such calculations, Powell concluded, “But, in principle, you could be right.”

With that answer in hand, the point was made:

Senator Warren: Well, it’s very much not what we’re seeing right now. Today, nearly two out of three of the biggest publicly traded corporations in the country are reporting fatter profit margins than they reported before the pandemic which doesn’t sound like they’re just passing along costs. So let me ask you: Does that increase in profit margins, combined with greater market concentration in industry after industry, suggest to you that some corporations may be passing along increased costs and, at the same time, charging more on top of that to fatten their profit margins?

Chair Powell: That, that could be right. It could also just be, though, that demand is incredibly strong and that, you know, they’re, they’re raising prices because they can.

Senator Warren: Well, that’s the point. They’re raising prices because they can, and they’re not being competed down. You know, market concentration has allowed giant corporations to hide behind claims of increased costs to fatten their profit margins. So the consumer pays more both because the corporation faces higher costs and because, as you put it, because the corporation can increase prices. The reason I raise this is that higher prices have many causes, and we can’t overlook the role that concentrated corporate power has played in creating the conditions for price gouging.

Warren made the vital connection that all Democrats should be making as debates about the causes of inflation heat up. Instead of letting Wall Street apologists create the impression that inflation is simply the result of supply chain kinks and pent-up consumer demand after two years of pandemic lockdowns, and instead of letting Republicans suggest that federal and state investments in health care and housing are the problem, Democrats should be speaking like Warren. And like former Ohio state senator Nina Turner, a congressional candidate who declared Thursday:

It’s not “inflation,” it’s price-gouging.

Exxon and other Big Oil corporations are price-gouging us at the gas pump.

Grocery chains are making record profits price-gouging us at the register.

Corporations are bleeding working people dry. Enough.

Progressive leaders such as Warren, Turner, and Senator Bernie Sanders (I-Vt.) understand that “explanations” of inflation that don’t address monopoly abuses and corporate greed fail to speak to the economic and political realities of the moment. As Sanders said last week in response to news of rising food prices:

Corporate greed is Chipotle increasing its profits by 181% last year to $764 million, giving its CEO a 137% pay raise to $38 million in 2020 and blaming the rising cost of a burrito on a minimum wage worker who got a 50 cent pay raise. That’s not inflation. That’s price gouging.

There are still plenty of Democrats who are cautious about calling out corporate greed. A failure to be blunt about profiteering leaves a void that will ill serve their party in 2022.

History makes it clear that midterm elections are tough for the party that controls the White House and Congress. Voters take out their frustrations on those who are in positions of power. And that is doubly true in moments of economic turbulence, as Jimmy Carter and the Democrats learned in 1978, as Ronald Reagan and the Republicans learned in 1986, as Barack Obama and the Democrats learned in 2010.

There have been only a few instances of a president’s seeing his party’s position in Congress improve in a midterm election. Yet, remarkably, one such moment did occur during the Great Depression. In the midterm election year of 1934, President Franklin Roosevelt put the blame for hard times on self-serving speculators, greedy bankers, and profiteering CEOs. Said FDR, “The fault lies with Wall Street.”

Instead of letting corporate spin form the narrative of the Great Depression and the New Deal response to it, Roosevelt used his 1934 State of the Union address to speak “of those individuals who have evaded the spirit and purpose of our tax laws, of those high officials of banks or corporations who have grown rich at the expense of their stockholders or the public, of those reckless speculators with their own or other people’s money whose operations have injured the values of the farmers’ crops and the savings of the poor.”

Throughout 1934, FDR never let up when it came to calling out speculators, monopolists, and price gougers. He promised that New Deal Democrats with increased congressional majorities would hold the bad actors to account. Voters approved. In November, they gave Democrats nine more seats in the House and nine more in the Senate, where the party achieved a rare supermajority.

For years, Bernie Sanders has been arguing that Democrats should take more cues from FDR. That’s what the senator is doing now, as he responds to news of rising prices—and Republican attempts to blame them on modest wage hikes for workers and even more modest government interventions.

Employing language that Democrats should emulate, Sanders said: “The problem is not that a low-income worker got a 50 cent raise two weeks ago and a $1,400 check last year. The problem is that corporations are using ‘inflation’ as an excuse to jack up prices so that they can make record-breaking profits to enrich CEOs and wealthy shareholders.”