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Chairman Smith: High Interest Rates Harming Families and Small Businesses Are Consequence of President Biden’s Inflation Crisis

December 13, 2023

“Interest rates remaining this high are an indictment of President Biden’s failed agenda.”

WASHINGTON, D.C. – House Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement after the December meeting of the Federal Reserve’s Federal Open Market Committee:

“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 rates rising 11 times since President Biden and Washington Democrats opened the floodgates of inflationary spending, prices are still rising too quickly by the Fed’s own standard. 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. Compared to when President Biden took office, Americans are paying more and are more worried about their financial future. Interest rates remaining this high are an indictment of President Biden’s failed agenda.”

Small Businesses Bearing the Brunt of Biden’s Interest Rate Hikes

  • Small businesses are paying an average of 9.3 percent interest on short-term loans, the highest rates in 17 years. 
  • 1,659 small businesses have filed for bankruptcy under Subchapter V in 2023 so far, compared to 1,553 for all of 2022.
  • Only 29 percent of small businesses can afford to take out a loan at current rates and 78 percent of small businesses are worried about their ability to access capital, according to a recent survey. 
  • Small businesses spend roughly 6 percent of their revenue on interest versus only 2 percent for larger businesses, making them more sensitive to interest rate hikes. 

Key Background:

  • The Federal Reserve has raised rates 11 times to combat the spike in prices.
  • Prices have increased 17.4 percent since President Biden took office.
  • Real wages and benefits have fallen 3.7 percent since President Biden took office.
  • Inflation outpaced wages for 26 straight months of Biden’s presidency.
  • Mortgage rates reached a 23-year high of 7.8 percent in October. The average monthly mortgage payment has increased by $1,051 and is 93 percent higher than when President Biden took office in January 2021.
  • Credit card interest rates are at the highest level in nearly three decades, while consumer credit debt has reached an all-time high of just over $1 trillion and the number of Americans struggling to pay credit card bills has increased sharply.