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Chairman Smith: Americans Need Tax Relief from High Interest Rates to Battle High Prices

”The Senate should consider and pass the Tax Relief for American Families and Workers Act and get families the help they need as soon as possible.”

WASHINGTON, D.C. – Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement after the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditure (PCE) index, showed inflation remaining above the Fed’s publicly-stated target of 2 percent:

“Americans know the reality of President Biden’s economic failures, regardless of his claims. Here are the facts: under Joe Biden, prices have risen almost 18 percent according to the Consumer Price Index. No matter what gauge used, inflation is still stuck above the Federal Reserve’s two percent target. High interest rates to combat Bidenflation are driving up home and auto prices for families and the cost of doing business for Main Street. Americans cannot get relief from the economic pain and hardship quick enough. The bipartisan tax package that was approved by the House of Representatives with overwhelming support builds on the Trump tax cuts to give relief to working parents and small businesses. The Senate should consider and pass the Tax Relief for American Families and Workers Act and get families the help they need as soon as possible.”

Tax Package: Pro-Growth, Pro-Jobs, Pro-America

The Tax Relief for American Families and Workers Act locks in $600 billion of tax incentives from the 2017 Trump tax reforms with a record of creating jobs, raising wages, and investing in America:

  • Research and Development (R&D) investment incentives will…
    • Create over $70 billion in new R&D investment in the United States.
    • Support 2 million direct R&D jobs and over 21 million total jobs – particularly in U.S. manufacturing.
  • Interest Deductibility will…
    • Create 867,000 new jobs.
    • Generate $58 billion in additional take-home pay for American workers.
  • 100% Immediate Expensing will…
    • Increase investment by $400 billion.
    • Create 73,000 new jobs.

Federal Reserve: Not Confident Yet Inflation Will Hit 2 Percent Target

At the most recent meeting of the Federal Open Market Committee, the body that sets interest rates, committee members expressed hesitance about lowering interest rates soon:

  • The Federal Reserve needs “greater confidence” that inflation is moving toward 2 percent.
  • Most participants noted the danger of moving too quickly to lower interest rates.
  • Inflation is still hurting most families: “elevated inflation continued to harm households, especially those with limited means to absorb higher prices,”

Key Background:

  • Prices have increased 17.9 percent since President Biden took office.
  • After inflation, wages have fallen 4.4 percent since President Biden took office.
  • Inflation has become so deeply ingrained in the economy that core inflation (2.8 percent) is even higher than headline inflation.
  • 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 $1,082 and is 95 percent higher than when President Biden took office in January 2021.
  • The average monthly payment on a new car reached a record $739 in the latest calendar quarter, according to Edmunds, up nearly 30 percent since Biden took office. Down payments also exceeded $7,000 for the first time, up from $4,729 in Q1 of 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 more than $1.1 trillion and the percentage of Americans struggling to pay credit card bills is now back up to the same level as during the worst part of the COVID-19 pandemic.