May 11, 2022

Smith: Biden’s Focus on Inflation is a Day Late and Many Dollars Short

WASHINGTON, D.C. – House Budget Committee Republican Leader Jason Smith (MO-08) issued the following statement today after the Consumer Price Index showed inflation remaining at a forty-year high of 8.3 percent, and rising 11 percent since President Biden took office:

“President Biden claims to care about inflation now that it is a political liability for Washington Democrats. His interest in the pain his policies are causing American families is a day late and many dollars short. Since the beginning of his Administration, the President has been warned repeatedly that his spending would spark inflation – including by economists in his own party. Instead of heeding those warnings, President Biden pressed forward with a reckless spending agenda that has sent prices soaring. Over the last 15 months since Joe Biden became President, inflation has risen 11 percent. Just this week gas prices hit an all-time high. It is clear that wages and hard-earned savings cannot keep up with the explosive spike in prices caused by the Biden Administration’s agenda. This year alone, families will pay $5,200 more for the same goods and services because of reckless spending by Washington Democrats.

“President Biden has spent his time attempting to avoid responsibility for the failures of his agenda. First he denied inflation existed, then dismissed it as transitory, only to later blame American businesses, our supply chain, and eventually Russia, for the high spike in prices – despite the fact inflation had already risen 7.5 percent before the invasion of Ukraine.

“To combat Biden’s inflation crisis, the Federal Reserve has been forced to raise interest rates, making it more expensive for families to buy a house, small businesses to expand, farmers to buy equipment, and the federal government to function. With the nation’s debt climbing ever higher, the catastrophic consequences of higher interest rates on the federal budget is not a hypothetical problem – it is a looming crisis that will only grow worse. The last time inflation was this high, interest rates were above 10 percent. The higher cost of servicing our debt will crowd out vital government functions like Medicare and Social Security and choke off private investment in the economy.”

Key Points

  • Inflation has risen 11% since Joe Biden became President
  • Inflation rose 7.5% year-over-year before Putin’s invasion of Ukraine
  • Gas prices have risen 87% since Joe Biden became President
  • Real wages have dropped 3.6% since Joe Biden became President
  • President Biden’s $2 trillion so-called American Rescue Plan was the spark that helped ignite the inflation crisis
  • The Federal Reserve raised the Federal Benchmark Rate by 50 basis points last week to combat Biden’s inflation crisis.
Given the Federal Reserve’s plans to increase interest rates to combat Biden’s inflation crisis, House Budget Committee Republican Leader Smith released a report last week examining the impact on the national debt of five different scenarios for interest rates – finding that the debt would rise to unsustainable levels and interest payments on the debt would already become the largest single expenditure in the federal budget under the most subdued scenario of interest rate increases. Were interest rates to rise to the level they were last time inflation was this high – an interest rate of 10.8 percent in 1982 – interest payments on our current debt would rise to $2.5 trillion today and consume 57 percent of federal revenue, equivalent to all spending on Social Security, Medicare, and Medicaid combined.

Read House Budget Committee Republican Leader Smith’s full report here.