The Patriot Post® · RNC: The Truth About Bidenomics

By Political Editors · July 28, 2023
https://patriotpost.us/articles/99222-rnc-the-truth-about-bidenomics-2023-07-28

Source:  Republican National Committee

INTEREST RATES CONTINUE TO RISE

• Biden claims that Bidenomics is just another way of saying “restoring the American dream¹,” yet his policies have made this dream increasingly out of reach² for millions of hardworking Americans.
  • In March, Biden Treasury Secretary Janet Yellen confirmed³ that Biden’s inflationary spending set the stage for higher interest rates.
• Because of Biden’s failed agenda, more and more Americans are struggling to take out a mortgage, finance a vehicle⁴, and perform various other financial transactions.
  • Faced with higher interest rates, business plans are being put on ice⁵ and Americans are agreeing to loan terms that would have been unimaginable just a year ago.
• This is a direct result of Bidenomics – Biden fueled inflation, which forced the Fed⁶ to raise interest rates.
  • Including today’s hike⁷, the Federal Reserve has now raised interest rates 11 times⁴ since March 2022 with the goal of lowering inflation.
  • Interest rates are at their highest level in 22 years⁸.
• The cumulative effects⁹ of these interest rate increases are squeezing Americans’ finances and punishing⁵ the cash-poor.
  • 61 percent¹⁰ of Americans said they took a financial hit due to rising interest rates in the past 12 months.

• Bidenomics has cost the middle class $2.4 trillion¹¹ since March 2022.
  • The average middle-class household has lost over $33,000 in real wealth¹¹ in just the past year.

BIDENOMICS IS MAKING IT HARDER FOR FAMILIES TO BUY A HOME

• For many people, including Biden himself, “the aspiration to own a home is connected deeply to the American dream¹².”
• Thanks to Bidenflation, working-class Americans face surging home prices¹³ and rising mortgage rates¹⁴, leaving many unable to afford buying a home.
  • According to Freddie Mac, the average 30-year fixed mortgage rate has more than doubled¹⁵ since Biden took office, increasing from 2.77 percent to 6.78 percent.
  • When a 30-year fixed mortgage still averaged 3.1 percent, a borrower could get a $700,000 mortgage for monthly payments of $2,989 – that same mortgage taken out at a rate of 6.9 percent would equal a $4,610 monthly payment, which is $583,000 more over 30 years¹⁶.
• Rising mortgage rates have caused homebuyers to lose $60,000 in purchasing power¹⁷ in just one year according to a recent report by Redfin.
• Homebuyers are increasingly being priced out of the market¹⁸, denying them the ability to build wealth¹⁹.
  • Retiree Gary Deuvall of Mississippi²⁰ said “We’d hoped to build or buy a house. But interest rates are so high, that’s on pause. Meanwhile, I’ll just rent.”
• On top of higher mortgage rates, the Biden administration wanted to punish responsible Americans²¹ by forcing borrowers with good credit scores to pay an additional fee in order to subsidize riskier²²
  • This was only rescinded²³ after severe backlash²⁴. 
• For families that cannot afford a house, rental options offer no protection from Bidenflation, with rent increasing 8.3 percent²⁵ since last year.
  • 73 of America’s 100 largest cities²⁶ saw month-to-month rent increases in June.

OWNING A CAR IS BECOMING INCREASINGLY UNAFFORDABLE

• The cost of a new car continues to rise, with the number of car buyers paying $1,000 or more a month to finance a new vehicle recently reaching an all-time high²⁷.
  • Roughly one in three⁵ car buyers are now taking out six to seven-year loans on used vehicles to help lower monthly payments.
    • In 2004, only 1 percent²⁸ of auto loans lasted six to seven years.
  • These buyers are forced to pay higher loan rates as a result the Fed’s interest rate hikes.
    • The average loan rate⁹ in May was 7.1 percent for new car loans and 11 percent for used car loans – up from 5.1 percent and 8.2 percent a year earlier, respectively.
    • High loan rates mean higher monthly payments, with the average monthly payment to finance a new car recently hitting the highest on record²⁸.
    • The average used car loan is now 125 percent²⁹ of the car’s value, which can leave borrowers owing more³⁰ on a car than its present market value.
  • Higher rates are causing more drivers, particularly young drivers, to fall behind on their car payments³¹ according to a study by the New York Federal Reserve.
    • According to Cox Automotive data, May’s severe delinquency rate³² was the worst since at least 2006³³.
  • For those who can afford the average monthly payment of $736, they will pay nearly $9,000 in interest⁴ over the life of the average loan.
  • Meanwhile, rejection rates for auto loans are rising – recently hitting their highest on record³² – as lenders become increasingly cautious.
  • Americans who can afford a car must then face additional pain at the pump to fill up their tank, spending an average of over $1 per gallon³⁴ more for gas compared to when Biden took office³⁵.

CREDIT CARD DEBT IS PILING UP

• The Federal Reserve’s interest rate hikes have caused credit card rates to increase³⁶ as well.
  • When the federal funds rate rises, the prime rate follows suit³⁷, which credit card companies then use to set their own interest rates.
  • This means that cardholders who carry a balance month to month can expect higher credit card bills³⁸.
• The average credit card interest rate is now the highest²⁰ since Bankrate began tracking credit card interest rates in the mid-1980s.
  • Credit card rates are one of the fastest ways²⁰ higher interest rates hit consumers, because unlike car loans or mortgages that are fixed-rate, higher credit card interest rates get passed through “pretty much right away.”
• Meanwhile, credit card debt is already at a record high²⁰, and more people are carrying debt month to month.
  • Americans are increasingly relying³⁹ on credit cards to help maintain their spending, and those who aren’t able to make ends meet “are just digging themselves a deeper and deeper hole with the higher interest rates⁵.”

HIGHER INTEREST RATES ARE IMPACTING STUDENT LOANS

• Hardworking Americans who want to pay off their student loans, as well as those thinking about going to college, are getting pummeled by these higher interest rates thanks to Biden.
• Borrowers of private student loans with variable rates have been directly impacted by the Fed’s decision to raise interest rates.
  • Average interest rates⁴⁰ on a 5-year variable-rate private student loan currently⁴¹ sit at 6.74 percent, up from 3.93 percent a year ago and up from a record low of 1.84 percent in 2021.
• While borrowers who already hold federal student loans are not affected by the Fed’s actions, new batches of federal loans will hold higher rates.
  • Borrowers with federal undergraduate loans disbursed after July 1, 2023 will pay 5 percent⁹ – just three years ago, rates were below 3 percent.
  • This is the highest level⁴² that most undergraduate borrowers have faced since 2013.
• Biden wanted to unilaterally cancel up to $10,000⁴³of student debt per borrower, a handout to the rich that would have cost taxpayers who didn’t go to college billions and worsened inflation.
  • According to the Penn Wharton Budget Model⁴⁴, Biden’s student loan bailout “could [have] exceed[ed] $1 trillion,” with the majority of the benefits going to the top 60 percent of earners.
  • The National Taxpayers Union Foundation⁴⁵predicted that Biden’s bailout would have burdened the average taxpayer with roughly $2,500.
  • Experts warn that Biden’s plan would have encouraged⁴⁶ colleges to raise tuition even higher, making the problem even worse. 

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Links

1. https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/07/06/remarks-by-president-biden-on-bidenomics/
2. https://nypost.com/2023/07/04/the-american-dream-is-becoming-increasingly-out-of-reach-poll/
3. https://gop.com/rapid-response/yellen-admits-inflation-broke-the-banks/
4. https://apnews.com/article/federal-reserve-interest-rates-car-loans-cost-4fc4e26e7f8985ca98eef428d9525f29
5. https://www.washingtonpost.com/business/on-small-business/highest-interest-rates-in-15-years-are-derailingthe-american-dream/2022/12/19/2a16b0ba-7f86-11ed-8738-ed7217de2775_story.html
6. https://twitter.com/RNCResearch/status/1636388791756943363
7. https://twitter.com/CNBCnow/status/1684262594989654025?s=20
8. https://www.wsj.com/articles/federal-reserve-raises-interest-rates-to-22-year-high-3c3e499c?st=u81zv9r7cygvot8&mod=e2twp
9. https://www.nytimes.com/2023/06/14/business/interest-rates-consumer-loans.html
10. https://www.foxbusiness.com/personal-finance/high-interest-rates-finances-allianz
11. https://www.bloomberg.com/graphics/2023-bidenomics-middle-class-economic-anxiety-2024-election/
12. https://www.govinfo.gov/content/pkg/DCPD-202100461/pdf/DCPD-202100461.pdf
13. https://www.cnbc.com/2023/07/10/home-prices-hit-new-highs-driven-by-tighter-supply.html
14. https://apnews.com/article/mortgage-interest-rates-housing-loans-real-estate-94dd344bf67ded00f56e078a0fdec667
15. https://www.freddiemac.com/pmms
16. https://fortune.com/2023/07/19/mortgage-rates-housing-market-affordability-borrower-refinance-speculation/
17. https://money.com/homebuyer-purchasing-power-down-mortgage-rates/
18. https://www.realtor.com/homemade/78-of-home-shoppers-expect-to-be-priced-out-of-the-market-if-prices-rates-continue-to-rise/
19. https://www.urban.org/urban-wire/rethinking-homeownership-american-dream
20. https://apnorc.org/credit-card-debt-is-at-record-high-as-fed-raises-rates-again/
21. https://www.usatoday.com/story/opinion/columnist/2023/05/04/biden-mortgage-rule-credit-score-cost-homebuyers-more/70179031007/
22. https://mast.house.gov/2023/4/biden-continues-to-punish-hard-work
23. https://www.nar.realtor/magazine/real-estate-news/nar-fhfa-heard-industry-loud-and-clear-on-proposed-fee
24. https://www.youtube.com/watch?v=HlR4wLrPXlM
25. https://twitter.com/byHeatherLong/status/1679113543499620355
26. https://www.apartmentlist.com/research/national-rent-data
27. https://www.freep.com/story/money/cars/2023/07/03/car-payments-inventory-interest-rates/70378655007/
28. https://www.cnn.com/2023/04/15/cars/car-loan-interest-rates-2023-dg/index.html
29. https://www.autoblog.com/2023/06/22/average-car-loans-are-now-much-bigger-than-the-vehicles-are-worth/#:~:text=A%20new%20study%20from%20J.D.,the%20same%20period%20in%202021.
30. https://www.kbb.com/car-news/study-average-used-car-loan-now-125-of-cars-value/
31. https://libertystreeteconomics.newyorkfed.org/2023/02/younger-borrowers-are-struggling-with-credit-card-and-auto-loan-payments/
32. https://www.usatoday.com/story/money/personalfinance/2023/07/19/car-loans-harder-to-get-lenders-cautious/70425646007/
33. https://www.coxautoinc.com/market-insights/auto-market-weekly-summary-june-26/#:~:text=Auto%20Loan%20Performance%20Deteriorates%20to%20Pre%2DPandemic%20Levels,-Auto%20loan%20performance&text=In%20May%2C%201.68%25%20of%20auto,back%20to%20at%20least%202006.
34. https://gasprices.aaa.com/
35. https://web.archive.org/web/20210121050022/https:/gasprices.aaa.com/
36. https://www.cnbc.com/2023/06/20/credit-card-rates-stand-at-a-record-20point69percent.html
37. https://www.experian.com/blogs/ask-experian/how-rising-interest-rates-impact-credit-cards/
38. https://www.cnbc.com/select/how-credit-apr-is-affected-when-fed-raises-interest-rates/
39. https://apnews.com/article/inflation-federal-reserve-system-business-afc9a9db9df9e2b5efd5dc74d1962909
40. https://www.forbes.com/sites/adamminsky/2023/05/16/student-loan-interest-rates-set-to-skyrocket-for-many-borrowers/?sh=5030a0a4114c
41. https://www.credible.com/blog/student-loans/student-loan-interest-rates/
42. https://www.politico.com/news/2023/05/10/student-loan-interest-rates-increase-00096237
43. https://www.nytimes.com/2022/08/24/us/politics/student-loan-forgiveness-biden.html
44. https://budgetmodel.wharton.upenn.edu/issues/2022/8/26/biden-student-loan-forgiveness
45. https://www.ntu.org/foundation/detail/cost-of-student-debt-cancelation-could-average-2000-per-taxpayer
46. https://twitter.com/jasonfurman/status/1562503996270845953
47. https://gop.com/research/bidenflation-brings-surging-interest-payments-rsr/

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