President Joe Biden’s focus on cracking down on “junk fees” as part of his economic agenda has drawn scrutiny from experts who argue that the emphasis on fees is a distraction from larger economic challenges, particularly high inflation.
The Consumer Financial Protection Bureau announced on Tuesday a reduction in the cap on credit card late fees from $32 to $8, citing it as a move to save Americans over $10 billion annually in line with Biden’s campaign against “junk fees.” However, experts caution that while such actions may offer short-term relief, they are unlikely to address the underlying economic issues.
Michael Faulkender, chief economist at the America First Policy Institute, criticized the administration’s approach, attributing the current inflationary pressures to Biden’s expansive government spending policies. Faulkender highlighted the warnings from economists like Larry Summers regarding the potential consequences of such policies, emphasizing the need for responsible economic management.
Since Biden assumed office in January 2021, inflation has surged, peaking at 9.1% year-over-year in June 2022 and remaining above 3% thereafter. The Federal Reserve responded by raising its federal funds rate to its highest level in 23 years, putting upward pressure on interest rates across the economy.
The ballooning federal debt under Biden’s administration, reaching $34.44 trillion as of Wednesday according to the Treasury Department, has exacerbated concerns about economic stability. Despite efforts to address inflation, experts argue that the root causes, including excessive government spending, remain unaddressed.
Alfredo Ortiz, CEO of Job Creators Network, echoed Faulkender’s sentiments, characterizing Biden’s focus on “junk fees” as a distraction from broader economic challenges. Ortiz emphasized that such fees often allow consumers to choose services based on their preferences, maintaining affordability in an inflationary environment.
While Biden announced a task force aimed at reducing prices and addressing alleged corporate “price gouging,” critics argue that the administration’s narrative of blaming inflation on external factors like “greedflation” and “junk fees” fails to address fundamental economic policies.
The White House’s attribution of inflation to corporate practices like “shrinkflation,” where companies reduce product sizes instead of raising prices, has also faced skepticism. Critics argue that blaming inflation on corporate actions overlooks deeper economic issues.
Despite requests for comment, the White House did not respond to inquiries regarding its economic agenda.
As the Biden administration grapples with economic challenges, experts underscore the importance of addressing underlying structural issues rather than relying on short-term measures targeting “junk fees” and corporate practices.
