The American president, Joe Biden, has come forth with initiatives aimed at alleviating the financial stress of Americans which, according to some experts, serve to divert attention from the real issues plaguing the country’s economy such as soaring inflation. Recently, the Consumer Financial Protection Bureau decreased the cap on credit card late fees from $32 to $8, a move purported to save the public over $10 billion annually as part of Biden’s campaign against unfair fees.
Rather than being seen as a solution, analysts suggest this will have minimal effect on the average American’s financial situation in the long term, and that such actions are more likely to be a smokescreen to distract from the bigger economic issues such as escalating inflation and surmounting interest rates.
Michael Faulkender, chief economist at the America First Policy Institute, spoke candidly to the media and suggested that the administration’s ultimate goal is to deflect blame for the highest inflation rates in 40 years, a result of large nation-deficits caused by an unprecedented surge in government spending.
Despite warnings from leading minds in the financial world, including those from within their own ranks such as Larry Summers, the Democrats have continued down a path that is being labelled as the ‘least responsible’ economic strategy seen in decades, pushing forward with their grandiose visions of more government control in citizens’ lives.
Under Biden’s watch, inflation hit 9.1% in June 2022 marking a year to year increase and thereafter, has struggled to fall below 3%, staying pegged at an uncomfortable 3.1% most recently. General prices have escalated by roughly 18% since Biden assumed office in January 2021.
The high inflation prompted the Federal Reserve to increase its interest rate to between 5.25% and 5.50%, the highest it has been in almost a quarter of a century, applying pressure on interest rates across all sectors of the economy.
Several economists are attributing the exponential inflation to Biden’s exorbitant government expenses. Biden ratified the American Rescue Plan in March 2021, which allowed for $1.9 trillion in new expenses, and concurrently passed the Inflation Reduction Act, which added an extra $750 billion.
Federal debt has risen exponentially in his tenure, having reached $34.44 trillion, according to the latest data from the Treasury Department. The federal debt hiked a staggering $800 billion only in the last quarter of 2023, showing the aftermath of such policies.
Alfredo Ortiz, CEO of Job Creators Network, is also of the opinion that Biden’s attention is being misdirected to divert from the historical inflation induced by misguided policies. Ortiz believes that so-called junk fees are merely opportunities for clients to select and pay for the services they deem necessary. By extension, he argues, these fees enable businesses to offer cost-effective options for budget-conscious consumers facing a rising cost-of-living.
In his view, if the administration were to ban such fees altogether, businesses would be left with no choice but to include these costs in their base prices, thereby inadvertently raising the overall cost for consumers. Ortiz insists that the President’s zealous focus on ‘junk fees’ is merely a product of flawed economic understanding or as he puts it – ‘junk economics’.
The Biden administration defines ‘junk fees’ as mandatory yet non-transparent charges to the consumers. Additional fees that are optional and for extra services are not regarded as ‘junk fees’. Although a cap has been implemented on credit card late fees, it does not extend to other revenue-generating methods used by these financial institutions. As reported by USA Today, companies may simply resort to increasing fees, costs, or interest rates to offset any lost profits due to these caps.
Recently, Biden unveiled a task force aimed at combating rising prices by focusing on corporations supposedly exploiting consumers through ‘junk fees’ and unreasonable pricing strategies. However, this simplistic approach that points fingers at external factors has drawn criticism. Faulkender, once again referring to recent financial events, notes a series of ‘excuses’ from Biden including attributing inflation to geopolitical tensions or ‘Putin’s Price Hike’, labeling it as ‘transitory’, or citing supply chain issues.
Faulkender strongly believes that the public can see through such attempts at deflecting responsibility. He insists that the current inflation crisis is a direct consequence of economic policies implemented under Biden’s reign or ‘Bidenomics’ as he calls it. He dismisses these feeble explanations as nothing more than ‘pathetic scapegoating’.
The present administration has frequently attributed economic malaise to various factors, most recently attributing inflation to ‘corporate greed’ and ‘shrinkflation’. ‘Shrinkflation’ refers to companies subtly reducing product sizes rather than hiking prices to counteract rising costs. It is often a preferred strategy when costs are rising rapidly, given that consumers are less likely to notice reduced product sizes compared to increased prices.
The White House, however, has yet to comment on these criticisms and claims surrounding their economic strategies and their potential ramifications. While the administration continues to promote various strategies and initiatives aimed at combatting the current economic troubles, these initiatives are under scrutiny by economists and financial experts.
Real News Now
Biden’s Crack Down on ‘Junk Fees’ is a Distraction from the Real Issues appeared first on Real News Now.
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