[Congressional Record Volume 168, Number 106 (Wednesday, June 22, 2022)]
[House]
[Page H5742]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE INFLATION CRISIS

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Pennsylvania (Mr. Smucker) for 5 minutes.
  Mr. SMUCKER. Madam Speaker, on September 1 of 1980, inflation was at 
almost 13 percent. On that day, then Governor Ronald Reagan said: 
``Recession is when your neighbor loses his job. Depression is when you 
lose yours. And recovery is when Jimmy Carter loses 
his.'' Unfortunately, today is looking a lot like 1980, and the Carter 
and the Biden Presidencies share far too much in common.

                              {time}  1045

  President Biden has unnecessarily spent trillions of dollars, spiking 
inflation into a 40-year high of 8.6 percent. As a result of this 
inflation, American households will pay an additional $7,620 as they 
buy gas, food, and other things over the next 12 months--$7,620 
annually.
  Since Biden became President, real wages are down 4.2 percent while 
mortgage rates have doubled, have gone up 2.4 points. Our economy 
shrank 1.4 percent last quarter, and many economists now agree that 
these signs point to an imminent recession.
  The President now points to the Federal Reserve to get him out of the 
inflation mess that he created. Today, I will point out what that may 
mean and talk about the challenge that the Fed faces to rein in 
inflation.
  I have a chart here with me that compares the Federal funds rate, 
which is its benchmark interest rate, and inflation rates over the past 
60 years. If you look at the chart, you will see two lines on the graph 
showing inflation and the Fed rate. Each time that the Fed looked to 
reduce inflation, they increased the interest rate, and they have 
increased the interest rate each time above the current inflation rate.
  So, for example, in the early 1980s, which I mentioned earlier, 
following President Carter's era of stagflation, the Fed raised rates 
to a record high of over 16.5 percent to reverse what was 13 percent 
inflation at that time. So once again, this would suggest that for the 
Fed to do its job and rein in inflation, it will need to increase 
interest rates above our current rate of inflation.
  So far this year, the Feds have raised the Federal fund rate three 
times, most recently with a .75--or \3/4\ percent--increase, which is 
the highest increase since 1994, but the Federal funds rate still only 
sits between 1.5 and 1\3/4\ percent.
  Current rates are 1\3/4\ percent, and again, inflation is 8.6 percent 
and climbing. This suggests that the Fed has a long way to go in 
raising interest rates, and has a lot of work to do ahead. What isn't 
shown in this chart--and sometimes I am not sure if the Biden 
administration understands--are the consequences that come with raising 
rates.
  Our economy will slow down, and it will be harder for Americans to 
start small businesses and to purchase homes. We are already seeing 
that happening. The cost of living will increase, and Americans will 
see hard times. This did not have to happen.
  President Biden overinflated an already recovering economy by 
spending trillions on the American Rescue Plan, which included market-
distorting policies that unnecessarily subsidized demand while 
restricting supplies by paying people to stay home.
  Now, as I said, the President is relying on the Fed to fix it but, 
unfortunately, it is the American people who will be paying the 
consequences.

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