Smith: America Is In A Recession Because of Biden’s Inflation CrisisHouse Budget Committee Republican Leader Jason Smith (MO-08) released the following statement after data from the Bureau of Economic Analysis showed GDP declined for the second straight quarter, falling 0.9 percent. Over the last 75 years, every single time the economy has experienced consecutive quarters of negative growth, America has been in a recession:
“America is in a recession because of President Biden’s inflation crisis. This news is not a surprise to the American people – they have spent the last 18 months living in a dysfunctional economy marked by a decline in their real wages, skyrocketing prices, empty shelves, and Help Wanted signs up and down Main Street. This recession is the predictable outcome of Washington Democrats’ decision to flood the economy with trillions, pay people not to work, and strangle American fossil fuels. The responsibility for this inflation recession lies squarely with President Biden and Washington Democrats. Their $2 trillion ‘American Rescue Plan’ needlessly pumped the economy with money, leading to the second highest deficit in American history. They spent $400 billion to pay people not to work and left a massive trail of waste – with federal tax dollars going to projects like golf courses, beach bathrooms, and luxury apartments while the Biden Administration was doling out stimulus checks to convicted prisoners. And to add insult to injury, within just the past 24 hours, Democrats have once again put forward a proposal to hike taxes as part of a revival of their Build Back Broke agenda.”
“Working-class Americans are now having to live in fear that they will see further wage cuts and the inevitable job loss that accompanies a recession, all while inflation continues to ravage their paychecks. During the last recession, America lost 9 million jobs and 10 million people fell into poverty, including 3 million children. With inflation having risen 13.8 percent since Biden became President, the Federal Reserve has once again hiked interest rates, the fastest pace in 40 years, to deal with an inflation crisis. Buying a home is already unaffordable with the rate on a 30-year fixed mortgage having doubled since Biden took office. Small businesses, currently battered by rising rates, have had to cut jobs during three of the last four months.
“As a result of the President’s inflation crisis, America is now also accelerating towards a federal debt crisis. Recessions can add to the debt by sending revenues into freefall while rising interest rates can explode the cost of interest payments on the debt. President Biden’s spending agenda cost Americans their paychecks through soaring inflation. Now, Biden’s inflation recession will cost Americans again, this time in the form of shrinking retirement savings and lost jobs.”
Biden’s Economic Disaster
- 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. Real GDP fell by 0.9 percent.
- In February 2021, one month before the “American Rescue Plan” was passed, CBO projected economic growth would return to pre-pandemic levels by the middle of last year and unemployment would continue to decline – all without further federal government stimulus.
- The Federal Reserve raised interest rates by 75 basis points yesterday – the fourth such rate increase since March – to combat the President’s inflation crisis. In total, the federal funds rate has risen by 2.25 percent, the fastest cumulative rate hike in 40 years.
- The interest rate on a 30-year fixed mortgage has doubled since Biden took office.
- Republican Leader Smith released a report analyzing the impact rising interest rates will have on the debt and interest payments on the debt. Read the report here.
- Inflation is at a forty-year high of 9.1%.
- Inflation has risen 13.8% since Biden took office.
- Real wages have fallen 5.1% since Biden took office.
- The $2 trillion “American Rescue Plan” raised the FY21 deficit $517 billion above CBO’s projection to the second highest deficit in American history, and was the spark that helped ignite the inflation crisis.
- During the 2007-2009 recession, 9 million Americans lost their jobs and 10 million people fell into poverty, including 3 million children.