Biden’s Looming Inflation Recession
WASHINGTON, D.C. – Biden’s inflation crisis is pushing America closer toward a painful recession. A recession will mean job losses, fewer opportunities, foreclosures, and lower wages while prices keep surging for American families on everything from eggs to electricity.
The Democrats’ $2 trillion American Rescue Plan was the spark that ignited the highest inflation in 40 years – now at 9.1 percent year-over-year and 13.8 percent since Joe Biden took office – leading the Federal Reserve to raise interest rates at the highest pace in 40 years to combat the ongoing spike in prices. As a result, the economy shrank 1.6 percent during the first quarter of this year and economists now predict that GDP may have shrunk during the second quarter, as well. With recession looming over the country, Washington Democrats are attempting to revive their Build Back Better reconciliation bill that would authorize hundreds of billions of new inflationary Washington spending and levy $1 trillion in new taxes on families and businesses, decimating the economy.
“A Biden recession will only add to the pain and misery the American people are experiencing from the rising cost of everyday goods and services brought on by the Washington Democrat spending agenda,” said House Budget Committee Republican Leader Jason Smith (MO-08). “Just like with his inflation crisis, the American people can sadly expect President Biden to pass the buck for a looming inflation recession. Right now, instead of working to prevent a recession, Washington Democrats are trying to guarantee one by attempting to ram through a partisan bill that continues Washington’s harmful inflationary ways and raises $1 trillion in new taxes on small businesses and families.”
An Economy on the Edge of Recession
- In its February 2021 baseline, the Congressional Budget Office (CBO) predicted real GDP growth for the first quarter of 2022 would be 2.9 percent. Instead, real GDP declined by 1.6 percent.
- The Federal Reserve Bank of Atlanta’s GDP forecast shows that GDP during the second quarter declined by 1.2 percent.
- Wells Fargo Investment Institute forecasts that the U.S. economy entered into a recession during the second half of this year.
- Larry Summers, a former Obama economic advisor who correctly predicted the American Rescue Plan would ignite inflation, projected back in March that the Federal Reserve’s approach to inflation will lead to a “major recession.”
- Last month, the Federal Reserve was forced to raise interest rates by 75 basis points – the third such rate increase since March – to combat the President’s inflation crisis. In total, the federal funds rate has risen by 1.5 percent, the fastest cumulative rate hike in 40 years.
- Since President Biden took office, inflation has risen 13.8 percent and real wages have declined 5.1 percent.
Build Back Broke Again?
When Washington Democrats first proposed Build Back Broke, it was a disaster:
- $5 trillion in new spending
- $3 trillion in new debt
- $1.5 trillion in new taxes and would increase the average tax rate for every single income category, as confirmed by the Joint Committee on Taxation
- $270 billion tax break for the wealthiest Americans
- $550 billion in Green New Deal programs
Since that time, inflation and the economy have only gotten worse. The last thing Washington Democrats should be doing with a looming recession is to revive an agenda of reckless spending and higher taxes.