President Joe Biden has made it a key part of his economic agenda to crack down on “junk fees” that he claims are causing Americans’ woes, but experts told the Daily Caller News Foundation that this push is to distract from the real causes of American economic turmoil, such as high inflation.
On Tuesday, the Consumer Financial Protection Bureau lowered the cap on credit card late fees from $32 to $8, claiming that it would save Americans more than $10 billion a year as part of Biden’s attack on “junk fees.” The president’s actions on junk fees are unlikely to save Americans money in the long run and are ultimately one of the many talking points pushed by the administration that are aimed at distracting from larger economic problems like stubbornly high inflation and high interest rates, experts told the DCNF.
“The administration is looking for any and every way possible to deflect responsibility for the 40-year high inflation that the American people incurred resulting from Biden’s massive increase in government spending, financed by the largest deficits our nation has ever seen outside of a national emergency,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF. “Despite warnings from people on the left as esteemed as Larry Summers that Biden was implementing the ‘least responsible’ economic policy in 40 years, the Democrats proceeded with their progressive dreams of government controlling ever greater parts of our lives.”
Inflation peaked under Biden at 9.1% year-over-year in June 2022 and has since failed to decelerate below 3%, measuring most recently at 3.1%. In total, overall prices have risen 18% since the president first took office in January 2021.
In response to the high inflation, the Federal Reserve has hiked its federal funds rate to a range of 5.25% and 5.50%, the highest rate in 23 years, placing upward pressure on interest rates across the economy.
Many economists point to skyrocketing inflation being caused, at least in part, by high government spending under Biden. The president signed the American Rescue Plan in March 2021, which authorized $1.9 trillion in new spending, and the Inflation Reduction Act, which authorized another $750 billion.
Federal debt has continued to surge under Biden, totaling $34.44 trillion as of Wednesday, up from $34 trillion at the start of 2024, according to the Treasury Department. The federal debt rose by more than $800 billion in just the fourth quarter of 2023.
“As with ‘shrinkflation,’ President Biden is focusing on ‘junk fees’ to distract from the historic inflation that his bad policies have caused,” Alfredo Ortiz, CEO of Job Creators Network, told the DCNF. “In many cases, so-called junk fees are nothing more than offering consumers the opportunity to pick and choose the features they want to pay for. This keeps prices low for cost-conscious consumers experiencing a cost-of-living crisis. By seeking to ban junk fees, businesses will have no other choice but to build these costs into the underlying price offered to all consumers, raising costs for many people looking to scrimp and save in today’s inflationary environment. Biden’s focus on junk fees is nothing more than junk economics.”
The Biden administration defines junk fees as those that “are mandatory but not transparently disclosed to consumers” and says that optional fees that are for additional services do not fall under the moniker.
Despite a cap being placed on credit card late fees, caps are not being changed or added to other ways that companies profit, meaning the institutions can simply raise fees, prices or interest rates to recoup lost revenue, according to USA Today.
Biden announced a task force Thursday to bring prices down, claiming that corporations are ripping off consumers using junk fees and price gouging. The White House claims that his plan will save more than $20 billion for Americans in junk fees by cracking down on bank overdraft fees, fees related to airlines and more.
“When that approach predictably caused inflation, we got a series of excuses from President Biden, including ‘Putin’s Price Hike’ (except that the inflation started almost a year before Putin invaded), that it was ‘transitory’ — a word Chairman Powell suggested no longer using because it wasn’t, that it was supply chain issues (then prices should have come back down once resolved), etc.,” Faulkender told the DCNF. “Now the blame goes to ‘greedflation’ and ‘junk fees.’ The American people see through this pathetic scapegoating and know that the inflation was the direct result of Bidenomics.”
The Biden administration has a number of talking points to blame poor economic factors on, most recently blaming inflation on corporate greed through “shrinkflation,” where companies will shrink product sizes instead of raising prices. Companies often resort to shrinking product sizes when costs are rising too quickly, as consumers are less likely to notice a decrease in product size as opposed to an increase in price.
The White House did not respond to a request to comment from the DCNF.
Will Kessler on March 10, 2024
