January 1, Biden’s Junk Fee Distraction: Ignoring the Inflation Elephant

President Joe Biden’s recent crackdown on so-called “junk fees” is being criticized by experts as a mere distraction from the real issues plaguing the American economy, such as rampant inflation. The president’s efforts to limit these fees, they argue, will not significantly alleviate the financial strain on American citizens and instead serve to divert attention from more pressing economic concerns.

Earlier this week, the Consumer Financial Protection Bureau reduced the cap on credit card late fees from $32 to $8. This move, according to the Bureau, will save Americans over $10 billion annually. However, experts argue that these actions will not result in long-term financial relief for Americans. Instead, they suggest that this is just another talking point from the administration aimed at diverting attention from larger economic issues such as high inflation and interest rates.

“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,” said Michael Faulkender, chief economist at the America First Policy Institute.

“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.”

Under Biden’s presidency, inflation peaked at a staggering 9.1% year-over-year in June 2022 and has since failed to drop below 3%. Overall, prices have risen by 18% since Biden took office in January 2021.

In response to the soaring inflation, the Federal Reserve has raised its federal funds rate to between 5.25% and 5.50%, the highest rate in 23 years. This move has put upward pressure on interest rates across the economy.

Many economists attribute the skyrocketing inflation, at least in part, to the high government spending under Biden’s administration. 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 the new cap on credit card late fees, other avenues for companies to profit, such as fees, prices, or interest rates, have not been capped or changed, meaning institutions can simply raise these to recoup lost revenue, according to USA Today.

Biden recently announced a task force to lower prices, claiming that corporations are exploiting consumers through junk fees and price gouging. The White House asserts that his plan will save Americans more than $20 billion in junk fees by cracking down on bank overdraft fees, airline fees, 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.

Why It Matters (op-ed)

Biden’s crackdown on “junk fees” is nothing more than a smokescreen to distract from the real issues, like skyrocketing inflation and massive government spending. While the reduction of credit card late fees may save Americans a few dollars, it does nothing to address the root causes of our economic woes.

This feeble attempt to appease the public is a prime example of the administration’s misplaced priorities and failure to take responsibility for the disastrous consequences of their own policies. It’s time for Biden to stop pandering to the masses and face the music: his economic policies are driving our nation towards financial ruin.

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