Fed Slashes Rates To Ease Inflation
Biden says Fed made ‘statement of progress’ by cutting rates
In a recent speech at the Economic Club of Washington, President Joe Biden praised the Federal Reserve’s decision as the Fed slashes rates, easing inflation and economic progress while emphasizing that more work is needed for a full recovery. He criticized former President Trump’s economic policies, labeling them as ineffective “trickle-down economics” and highlighting the potential negative impact of Trump’s proposed tax cuts for the wealthy.
In a subsequent debate, Trump countered by claiming that the Biden administration’s actions have led to economic struggles for Americans. Biden defended his administration’s achievements, including job creation and a reduced trade deficit, attributing some economic challenges to Trump’s handling of the pandemic. He also stressed the importance of the Fed’s independence, warning that it could be compromised if Trump were re-elected while clarifying a misstatement about his interactions with Fed Chairman Jerome Powell.
Key Concepts
- President Biden views the Federal Reserve’s decision to lower interest rates as a positive sign of easing inflation and economic progress.
- Biden emphasizes that further efforts are needed for complete economic recovery despite recent advancements.
- The president criticizes former President Trump’s economic policies as ineffective “trickle-down economics.”
- Biden challenges Trump’s proposal to extend tax cuts for the wealthy and warns against tariffs that could raise household costs.
- Trump argues that the Biden administration’s actions have led to struggles for Americans to afford necessities.
- Biden highlights his administration’s achievements in job creation, factory construction, and reducing the trade deficit with China.
- The president attributes ongoing economic challenges partly to the mishandling of the coronavirus pandemic by Trump.
- Biden expresses optimism that lower interest rates could improve consumer affordability despite inflation and supply chain issues.
- He stresses the importance of the Federal Reserve’s independence and warns against Trump’s past pressure on the Fed.
- Biden mistakenly claims he has never met with Federal Reserve Chairman Jerome Powell, later clarified by Jared Bernstein.
President Joe Biden said Thursday that the Federal Reserve’s decision to lower interest rates was a “big sign” that inflation has eased. He said Donald Trump’s economic policies had failed in the past and would surely “fail again” if they were restored.
“Lowering interest rates is not a declaration of victory,” Biden told the Economic Club of Washington. “It’s a declaration of progress, a sign that we have entered a new phase of the economy and the recovery.”
The Democratic president stressed that more work needs to be done. Still, he used his speech to praise his economic legacy while criticizing his Republican predecessor, Trump, who is running for reelection.
“Trickle-down economics failed,” Biden said. “He’s committed to trickle-down economics again. It’s going to fail again.”
Biden said Trump wants to extend tax cuts that disproportionately benefit the rich, cost an estimated $5 trillion, and implement tariffs that could raise prices by nearly $4,000 per household, which Biden called a “new sales tax.”
A spokesman for the Trump campaign did not immediately respond to a request for comment. However, Trump has frequently blasted Biden and this year’s Democratic nominee, Vice President Kamala Harris, over higher costs.
“People can’t go out and buy cereal or bacon or eggs or anything else,” Trump said at last week’s debate. “People in our country are absolutely dying because of what they’ve done. They’ve destroyed the economy.”
Biden dismissed Trump’s claims of being a pro-worker, saying, “Come on.” He said the Biden administration had created more manufacturing jobs, spurred more factory construction, and reduced the trade deficit with China.
Trump’s economic record has been marred by the coronavirus pandemic, and Biden blames him for botching the nation’s response.
“His failure to respond to the pandemic has killed hundreds of thousands of Americans,” he said.
Biden struggled to show people economic progress as inflation spread worldwide as the pandemic receded and supply chain problems multiplied.
He expressed hope that lower interest rates will make it more affordable for Americans to buy homes and cars.
“I think it’s important that the United States recognizes this progress,” he said. “Because if we don’t, the progress that we’ve made will continue to be locked into the fear of a negative mindset that has dominated our economic outlook since the pandemic began.”
He said businesses should see the “tremendous opportunity that’s in front of us right now” by investing and expanding.
Biden defended the independence of the Federal Reserve, which could be threatened if Trump is re-elected. Trump broke with past practice during his presidency by publicly pressuring the Fed and the U.S. central bank to lower interest rates.
“If we lose that independence, it would be hugely damaging to our economy,” Biden said.
Biden inaccurately said in his speech that he had never met with Federal Reserve Chairman Jerome Powell during his presidency.
Jared Bernstein, chairman of the White House Council of Economic Advisers, said in a briefing afterward that Biden meant to say he had never discussed interest rates with Powell.
“That’s what he was saying,” Bernstein said.
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