On September 19, I testified before a House subcommittee on the impacts of Bidenomics – yet it was clear that half the committee members weren’t even listening. That’s disturbing because our lawmakers have played a huge role in making the typical American family about $7,000 poorer in just two and a half years.
Instead of acknowledging the data I presented, the Democrats on the subcommittee only regurgitated their talking points and resorted to espousing falsehoods about the state of the economy. Even if half our leaders won’t listen to the facts, hopefully the American people will, so here’s the truth about Bidenomics.
Under President Joe Biden, the government has spent, borrowed, and created trillions of dollars, and that caused the highest inflation in four decades. This inflation is a real tax on the American people because it transfers wealth from the people to the government. And the size of that transfer has been staggering.
The average American worker today loses more of his hourly earnings through the hidden tax of inflation than in federal income taxes. That means inflation under Mr. Biden has effectively doubled the average American’s federal income tax liability. Nominal pay keeps going up, but real (inflation-adjusted) pay has gone down.
The typical American family with two parents working and with average weekly earnings has seen their weekly pay increase $230 under Biden, but those larger paychecks buy about $100 less. The result is an annual decrease in purchasing power of about $5,100.
Similarly, net household wealth is at a record high today, but only before adjusting for inflation. In real terms, net household wealth is roughly flat since the end of 2020. That means nearly all the trillions of dollars in additional net household wealth have been confiscated by the government under this president through the hidden tax of inflation.
That’s how the government has been financing its massive deficits for the last three years.
To combat the inflation that it helped cause, the Federal Reserve has increased interest rates which have compounded the pain for Americans. Borrowing costs have risen dramatically and are now about $1,800 higher annually for the typical American family. Coupled with their loss in purchasing power, this leaves a family about $7,000 poorer than when Mr. Biden took office.
Yet many people are even worse off than that. If you’re trying to buy a home today, the monthly mortgage payment on a median price home has more than doubled under Mr. Biden. Homeownership affordability is at one of its lowest levels on record, and less than half of American households can qualify for a mortgage. And many who qualify still can’t afford the payments.
The impact of Bidenomics on federal finances has been just as bad, with interest on the federal debt rising at the fastest pace on record. In less than a decade, interest payments will crowd out more than half of existing government spending.
While the Democrats on the subcommittee refused to listen to any facts I presented, nothing I said was about politics, but policy. President Bill Clinton, a Democrat, signed welfare reform and multiple balanced budgets. And the 12 years of low inflation that preceded Mr. Biden were overseen by both a Republican and a Democrat.
The laws of supply and demand are purely apolitical, with both Democrats and Republicans being subjected to them. The sooner today’s Democrats—and some Republicans—realize this, the sooner they can acknowledge the factual outcomes of Bidenomics and hopefully change course.
But if the conduct of the Democrats on the subcommittee before which I testified is any indication, we shouldn’t hold our breath.
E.J. Antoni is a contributor to The Daily Caller News Foundation, a public finance economist at The Heritage Foundation, and a senior fellow at Committee to Unleash Prosperity.
While the White House touts the success of “Bidenomics,” American families are drowning in debt, especially on credit cards. The latest data from the Federal Reserve Bank of New York show Americans ended the first half of this year with over a trillion dollars of credit card debt for the first time ever. At the same time, credit card interest rates are at record highs, pushing many Americans to the financial brink.
How we got here is a lesson in basic economics, something the Biden administration has willfully ignored.
Contrary to the White House talking points, President Joe Biden did not inherit a “reeling” economy and inflation was not “already there.” When he entered the Oval Office, the economy was growing at a $1.5 trillion annualized rate and inflation was 1.4 percent, comfortably below the Federal Reserve’s target inflation rate. But Bidenomics changed all that.
In just a year and a half, Mr. Biden managed to deliver two consecutive quarters of negative economic growth (a recession). Moreover, inflation reached 40-year highs, with prices rising in a single month about as fast as they rose in the entire year before Biden took office.
This is the bitter fruit of the Bidenomics tree. The seed was trillions of dollars in excessive government spending; it was watered with trillions of borrowed dollars and fertilized by the Fed’s printing trillions of dollars. The results are fast-growing prices, a sluggish economy, and family budgets getting squeezed.
Since Mr. Biden took office, prices have risen about 16 percent, but average hourly wages have risen less than 13 percent, and average weekly hours have been cut back. That has left the average American with an effective pay cut of about 5 percent, and families have been using credit cards to make up for that lost purchasing power.
In just two and a half years, outstanding credit card balances have exploded 34 percent, but it gets worse—much worse. The Fed has been steadily raising interest rates to combat the very inflation which it helped cause. That has pushed up borrowing costs, especially on credit cards; their average interest rate is now at an all-time high.
The combination of large balances and high interest rates is a financial death spiral for many American families. When the financing charges on your credit card bill are equal to or greater than what you can afford to pay each month, it becomes impossible to pay down your balance. You are effectively trapped in debt. On top of the higher cost of living, you’re now paying higher financing charges too.
And it’s not just credit card debt that has exploded during Bidenomics. Consumer spending during the last two years has been partly fueled by higher balances for auto loans and mortgages, the latter of which has grown almost $2 trillion in just two and a half years.
Mr. Biden’s false promises of a student loan bailout along with a moratorium on student loan payments have also encouraged young people to take on additional debt for schooling and not pay those loans back. In fact, instead of using the savings from the moratorium to responsibly pay down their debt, most borrowers have been further increasing consumer spending.
American families going deeper into debt is a hallmark of Bidenomics, so much so that even members of Mr. Biden’s administration are beginning to say the quiet part out loud. Vice President Kamala Harris recently claimed that most Americans would go “bankrupt” if they had a $400 emergency expense.
While there is no evidence to support Ms. Harris’ claim, her statement is an indictment of the administration’s economic agenda. For most Americans, a much more likely scenario than bankruptcy is that they would have to put that emergency expense on a credit card—which many families have already had to do.
The squeeze on Americans’ family budgets will continue until we clean up the federal budget. If Washington doesn’t cut trillions of dollars in spending, the bills will keep piling up, both at the Treasury, and in your mailbox.
E.J. Antoni is a contributor to The Daily Caller News Foundation, a public finance economist at The Heritage Foundation, and a senior fellow at Committee to Unleash Prosperity.
