Staff Reports
As President Biden’s administration continues to grapple with an economy in recovery mode, there’s been a flurry of policy proposals aiming to make life a bit more affordable for the average American. Among these suggestions are caps on credit card interest rates and measures to curb large investors from gobbling up single-family homes. While these ideas might sound promising in theory, the practicality and effectiveness of such strategies are in question. Just as putting a Band-Aid on a broken bone won’t quite do the trick, these efforts may not address the underlying issues plaguing the economy.
Tomas Philipson, a former advisor to the White House on economic matters, casts a skeptical eye on the proposed 10% cap on credit card interest rates. In a market where about fifty companies fiercely compete for customers, interest rates tend to reflect the risk of lending. Forcing a cap might sound consumer-friendly—until you realize that the true impact is shutting out riskier borrowers, often the ones who need credit access the most. Thus, instead of helping low-income individuals, this price control could ironically leave them out in the cold, credit card-less and still in need.
When examining those gnarly approval ratings—something like 61% of Americans disapproving of President Biden’s economic policies—it’s clear there’s a disconnect between economic data and public perception. Despite low unemployment rates and predictions of GDP growth, many Americans feel disillusioned. It’s like finding out people don’t believe in global warming while they run their air conditioners full blast in November. The stats don’t always line up with folks’ experiences or feelings, and as Philipson suggested, mainstream media doesn’t help by continuously pointing fingers at former administrations as the cause of economic woes.
The latest consumer price index numbers have delivered some positive news, with consumer goods like eggs and gas seeing price drops. Yet, whether these reductions will translate into improved public sentiment—or whether Americans will just find something else to gripe about—remains to be seen. After all, even if prices drop, if wages don’t keep pace, it’s like running a race you can never win. Real income improvement might be happening, but it takes more than an uptick here and there to sway the public’s entrenched views about the Biden economy.
As the world turns its eye to the upcoming Davos meeting, President Biden is poised to share his vision on global leadership. Whether he’ll charm, alarm, or simply bewilder the international community with his remarks on investment policies, remains to be seen. While hints have surfaced about encouraging homeowners to get creative with equity investment, the exact agenda from the White House is still closely guarded. One thing is certain: whether discussing Greenland or green investments, the conversations at Davos will be ones to watch. But keep an ear out for details—sometimes the most intriguing parts are the ones that slip out unintentionally, like loose threads on an otherwise tightly-knit sweater.
