House Budget Committee Republican Leader Jason Smith (MO-08) issued the following statement after the Federal Reserve raised interest rates another 0.75 percentage points – the fifth rate increase since March and the fastest pace in 40 years. So far, interest rates have risen a cumulative 300 basis points in less than 7 months, making this the largest cumulative rate hike in 15 years:
“The Democrat agenda of more spending and higher taxes has been a disaster for the American people. The blame for a recession created by the one-two punch of rising prices and interest rates lies squarely with Washington Democrats’ $10 trillion spending spree,” said House Budget Committee Republican Leader Smith. “The steady rise in interest rates is having a direct impact on American families. Mortgage rates have more than doubled since Biden took office. If families can find a house on the market, the average mortgage payment is now 42 percent higher than one year ago. Higher interest rates mean higher credit card balances. The weight on the economy caused by Democrats’ spending will make it that much harder for small businesses to grow and create new jobs, strangling an economy already in a recession.”
“The Federal Reserve is forced to raise interest rates to fight the inflation created by Washington Democrats’ $10 trillion spending spree. Even after the $2 trillion American Rescue Plan sparked inflation, of which economists warned, Democrats continued to spend hundreds of billions more. When Democrats passed the Inflation Act, inflation had already increased 13.7 percent since Biden took office. The Congressional Budget Office has confirmed the bill adds $60 billion to the debt over its first five years and, according to economists, will cause inflation to rise until 2024. The President’s student loan cancellation cost – a massive transfer of debt from the wealthy to the working class – is another at least $500 billion charge to America’s credit card, further accelerating inflation. Higher interest rates may help to ultimately turn the tide of Biden’s inflation, but it cannot undo the damage one-party Democrat rule in Washington is causing American families.”
Biden’s Inflation Recession
- Inflation is at a forty-year high of 8.3 percent.
- Inflation has increased 13.7 percent since President Biden took office.
- Real wages have decreased 4.3 percent since President Biden took office.
- Gas prices have risen 55 percent since President Biden took office.
- When Biden took office, CBO projected real GDP would grow 2.9 percent in the first quarter of this year. Real GDP fell by 1.6 percent.
- When Biden took office, CBO projected real GDP would grow 2.2 percent in the second quarter of this year. Real GDP fell by 0.6 percent.
- To combat the President’s inflation crisis, the Federal Reserve is raising interest rates, most recently by another 0.75 percentage points – the fifth rate increase since March with others expected on the horizon. In total, the federal funds rate has risen by 3.0 percentage points, the fastest cumulative rate hike in 40 years, as well as the largest rate hike in 15 years.
- The average mortgage payment is now 42 percent higher than it was one year ago.
Democrats’ Spending Agenda
President Biden and Washington Democrats have embarked on a massive spending spree, blowing up the taxpayer credit card. Under their watch, spending has increased by nearly $10 trillion including:
American Rescue Plan: $1.9 trillion
Infrastructure Investment & Jobs Act: $625 billion
Inflation Reduction Act: $745 billion*
*Only after Democrats failed to increase spending by an additional $5 trillion as part of their Build Back Better agenda
Biden’s Executive Actions: $1+ trillion
Increase in interest payments on growing federal debt: $2.5 trillion