House Ways and Means Committee Chairman Jason Smith has expressed concern over the high interest rates that are negatively impacting families and small businesses, attributing them to President Biden's inflation crisis. Following the December meeting of the Federal Reserve's Federal Open Market Committee, Chairman Smith stated, "Even the Federal Reserve remains concerned about inflation, deciding to keep interest rates at levels that have locked families out of buying a house and small businesses from expanding. This is not a win."
Despite the Federal Reserve raising rates 11 times in an effort to combat the spike in prices, inflation continues to rise. Chairman Smith pointed out that prices have increased by 17.4 percent since President Biden took office, and real wages and benefits have fallen by 3.7 percent during his presidency. This has put a significant burden on small businesses, with many struggling to access capital due to high interest rates.
According to recent data, small businesses are paying an average interest rate of 9.3 percent on short-term loans, the highest in 17 years. This has led to a significant increase in small business bankruptcies, with 1,659 businesses filing for bankruptcy under Subchapter V in 2023 so far, compared to 1,553 for all of 2022. A survey also revealed that only 29 percent of small businesses can afford to take out a loan at current rates, and 78 percent are worried about their ability to access capital.
Furthermore, small businesses spend approximately 6 percent of their revenue on interest, compared to only 2 percent for larger businesses. This makes them more vulnerable to interest rate hikes and further exacerbates the challenges they face.
Chairman Smith emphasized the detrimental impact of high interest rates on small businesses, stating, "Small businesses, like farmers or manufacturers, are paying through the nose just to buy the equipment needed to stay in business, and small business bankruptcy is quickly outstripping last year’s pace." He also highlighted the fact that Americans are paying more and are increasingly concerned about their financial future.
The consequences of President Biden's inflation crisis are not limited to small businesses. Mortgage rates have reached a 23-year high of 7.8 percent, causing the average monthly mortgage payment to increase by $1,051 and be 93 percent higher than when President Biden took office. Additionally, credit card interest rates are at their highest level in nearly three decades, and consumer credit debt has reached an all-time high of just over $1 trillion. This has resulted in a significant number of Americans struggling to pay their credit card bills.
In conclusion, Chairman Smith firmly believes that the persistently high interest rates are a direct consequence of President Biden's failed agenda. The impact is felt by families who are unable to afford homes and small businesses that are struggling to expand and stay afloat. Urgent measures are needed to address the inflation crisis and alleviate the financial burden on American households and businesses.
For additional details, please follow this link: https://waysandmeans.house.gov/chairman-smith-high-interest-rates-harming-families-and-small-businesses-are-consequence-of-president-bidens-inflation-crisis/
