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New Study Shows How Overregulating Short-Term Lenders Harms Consumers

We at CFIF have consistently highlighted the peril of federal, state and local government efforts targeting the short-term consumer lending sector.

Less than two years ago, we specifically sounded the alarm on a New Mexico law artificially restricting interest rates on short-term consumer loans.

Well, a new study entitled "A New Mexico Consumer Survey:  Understanding the Impact of the 2023 Rate Cap on Consumers" that surveyed actual borrowers confirms our earlier warnings:

Key findings include:

•Short-term,small-dollar loans help borrowers manage their financial situations, irrespective of the borrower’s income.

•The rate cap has failed to improve the financial wellbeing of New Mexicans, specifically those who had previously relied on short-term, small-dollar loans.


November 27, 2023 • 03:57 PM

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It’s Official: Biden Just Doubled the Deficit in 2023 Print
By Timothy H. Lee
Thursday, October 26 2023
We’re witnessing the consequences, not only in terms of consumer inflation and higher interest rates, but now in surging deficits as well.

It’s official:  Joe Biden is the new deficit king.  

When even CNN and The New York Times lead with headlines of “Federal Deficit Effectively Doubled in 2023,” it’s obvious that Biden’s 2024 reelection prospects just entered more treacherous waters.  

Throughout his presidency, Biden has relished telling audiences that he’s some sort of deficit hawk, even though any reductions occurred due to expiration of emergency Covid spending, and deficits would’ve been significantly higher had his massive “Build Back Better” and “Green New Deal” spending wish lists been granted.  

Well, we’ve now reached the end of the official 2023 fiscal year, and the Congressional Budget Office (CBO) announcement just demolished one of Biden’s favorite talking points:  

The federal budget deficit was $1.7 trillion for fiscal year 2023, the Congressional Budget Office estimates - $0.3 trillion more than the shortfall recorded during fiscal year 2022.  Revenues fell by an estimated $455 billion (or 9 percent).  Revenues were smaller than in fiscal year 2022, particularly for nonwitheld income taxes and remittances to the Treasury from the Federal Reserve.  Outlays declined by an estimated $141 billion (or 2 percent).  

In its report, and to its credit, the CBO makes it a point to note that but for an accounting gimmick at the end of fiscal 2022 amid Biden’s student loan cancellation effort, this year’s deficit would’ve been even worse:  

CBO estimates that if the actions concerning the Administration’s plan for student loan cancellations were excluded from both years, the deficit for 2022 would have been smaller and the deficit for 2023 would have been larger.  The deficit for 2022 was $1.3 trillion, after removing the effects of timing shifts.  Excluding the cost recorded in 2022 for the student loan cancellation plan, the deficit that year would have been $0.9 trillion.  Excluding the savings associated with reversing the effects of that policy, the deficit for 2023 would have been $2.0 trillion, instead of the $1.7 trillion CBO currently projects.  Thus, without the effects of debt cancellation (and excluding the effects of timing shifts), the deficit would have grown by nearly $1.1 trillion from 2022 to 2023.  

Biden’s deficit gets even uglier the closer one looks.  

First, for perspective, the past year’s deficit was the largest in history outside of the emergency Covid spending years.  If “Bidenomics” was working as well as Biden himself claims, then incoming revenues would’ve been higher and the deficit would’ve been lower.  

Second, a leading factor in 2023’s deficit was higher interest rates that resulted from the Federal Reserve’s frantic campaign to reduce inflation that began skyrocketing when Biden entered the White House in January 2021.  

Specifically, the largest single spending item increase in the 2023 budget was payment on federal debt, rising 33% over the past year to $711 billion from $534 billion in fiscal 2022.  American consumers are already familiar with how higher interest rates have made home sales increasingly impossible, but they also increase the amount of money that the federal government must pay on its existing debt.  Additionally and even more alarmingly, that $711 billion in interest payments now nearly equals total defense spending of $774 billion.  

Third, mandatory and entitlement spending on programs such as Social Security, Medicare, Medicaid, income security, and student loan programs now eat up nearly every dollar that the federal government receives in revenues.  Every other dollar is borrowed, to address core federal functions like defense, infrastructure and other things that most people typically consider government functions.  

Fourth, even experts from his own party warned Biden at the beginning of his presidency that his inflated spending schemes would only serve to needlessly bloat the deficit, and were unnecessary because he entered office with an economy rapidly surging in the Covid pandemic recovery.  Biden, Chuck Schumer and Nancy Pelosi ignored those warnings and pressed forward.  

We’re witnessing the consequences, not only in terms of consumer inflation and higher interest rates, but now in surging deficits as well.  

The good news is that we can correct that current trajectory.  But that will require wisdom and willingness to acknowledge straightforward policy cause-and-effect.   Signs aren’t encouraging that Biden or his apologists possess those traits in critical mass.  

Notable Quote   
"Congress just passed -- and President Biden just signed -- the latest short-term government funding bill to keep the government running.The bill, which essentially kicks the can down the road, ensures that taxpayers will continue to pay for a bloated government until January, Senate Appropriations Committee Chair Patty Murray (D-WA) said: '...avoiding a (government) shutdown is so very far from mission…[more]
— Cal Thomas, Syndicated Columnist
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