Droves of small-business owners descended on Capitol Hill this week in a bid for congressional support as they brace for a looming recession.
We’ll also look at GOP efforts targeting the Biden administration’s ability to cancel student loan debt, what the strong dollar means for Americans, and more.
But first, don’t forget to play those numbers!
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
Business owners express inflation, recession fears
Thousands of small-business owners descended on Capitol Hill this week in a bid for congressional support as they brace for a looming recession that threatens to wipe out numerous mom-and-pop stores.
Small-business owners, who employ nearly half of all U.S. workers, say they’re being hammered by inflation, hiring difficulties, supply chain snags, child care shortages and limited access to capital. Weathering the storm will get much harder if a recession dents consumer demand for their goods and services.
- Roughly 2,500 small-business owners flew to Washington to meet with more than 400 lawmakers and federal government officials on Tuesday and Wednesday. The two-day summit is hosted by Goldman Sachs’s 10,000 Small Businesses program, which provides education and support to entrepreneurs.
- But it’s unclear to many business owners whether Congress is willing or able to help them overcome a slew of challenges. They point to the fact that lawmakers haven’t reauthorized the Small Business Administration (SBA) in two decades, inaction that has rendered key agency programs outdated and ineffective.
- A recent survey of small-business owners in the Goldman Sachs program found that 38 percent reported a recent decline in consumer demand due to price hikes. Roughly one-third of business owners said that inflation is their top challenge, while 13 percent pointed to supply chain issues.
Consumer prices rose 9.1 percent over the past 12 months ending in June, while wholesale costs soared an even higher 11.3 percent, according to most recent Labor Department data, forcing most businesses to raise their prices.
Forty-five percent of small-business owners said that finding workers was their biggest challenge, with 78 percent reporting struggling to compete with larger employers when it comes to pay and benefits. They say Congress could help small businesses compete in the tight labor market by making it cheaper and less complicated for smaller employers to set up retirement and health care plans.
Karl has more here.
LEADING THE DAY
GOP ramps up efforts to rein in Biden on student debt
Republicans have been ramping up efforts to rein in the Biden administration’s ability to cancel student loan debt, arguing such plans are “wildly inflationary” and would only contribute to climbing prices.
Since the Biden administration extended a nationwide pause on federal student loan payments and interest accrual in the spring, Republicans in both chambers have been introducing legislation targeting the president’s authority on student loans.
- Legislation introduced in recent weeks includes multiple measures seeking to keep Biden from greenlighting mass cancellation of student debt without buy-in from Congress, as well as a bill codifying that the president lacks the authority to “blanket cancel federal student loans.”
- The bills face an uphill climb in the Democratic-led Congress, but Republicans behind the effort say it’s necessary to combat what they argue will be an unfair burden on taxpayers.
- The efforts also coincide with an ongoing push by progressives and advocates for widespread debt cancellation, which has gained steam as the Biden administration has signaled it is closing in on a decision on student debt cancellation.
However, while experts say there’s a case to be made linking the pause on student loan payments to inflation, they largely downplay the moratorium on student debt’s impact on decades-high inflation.
“Anytime you put cash into the hands of Americans, you are affecting their demand for consumption,” said Beth Akers, senior fellow at the right-leaning American Enterprise Institute. However, Akers, who studies the economics of higher education, also said that “the effect on consumer demand is pretty modest.”
“And so, in a greater discussion about inflation, it’s not going to be a huge consequence,” she said.
Aris has more here.
POWER OF THE DOLLAR
What the strong dollar means for Americans
The U.S. dollar is getting stronger amid a global battle with high inflation.
Americans are getting less bang for their buck at home, but a stronger dollar makes foreign goods more affordable and international travel relatively cheaper.
Here’s what the dollar’s power means for Americans:
- Cheaper imports, foreign travel: The dollar’s value has caught up with the euro, making it much cheaper for Americans to purchase goods from and travel through Europe in the middle of a steep rebound in summer vacationing.
- Slowing exports and corporate profits: A strong dollar makes foreign goods and services relatively less expensive compared to U.S. products. While that may give American consumers some relief at the cash register, it is a blow for manufacturers already struggling with supply chain snarls and material shortages.
- Lower inflation, but at a potentially steep cost: Cheaper imports and higher interest rates driven by a strong dollar should help bring down soaring inflation in the U.S.
Sylvan has more here.
House approves more than $400 billion of government funding
The House on Wednesday passed a sprawling spending package for the coming fiscal year, approving more than $400 billion in government spending ahead of the August recess.
The lower chamber voted 220 to 207 in a largely party-line vote to pass the so-called “minibus” package, which contains six spending bills providing fiscal 2023 funding for various agencies, including the departments of Housing and Urban Development (HUD), Transportation (DOT), Agriculture, Energy and Veterans Affairs (VA) as well as the Food and Drug Administration.
- The legislation passed Wednesday includes funding for a slew of Democratic-backed priorities, with a proposed 18 percent boost in spending from the current fiscal year’s levels for the Department of the Interior, the Department of Energy and related agencies, as well as double digit spending increases in areas like military construction and the VA, HUD and DOT.
- But despite speedy appropriations work seen in the House in recent weeks, Senate negotiators have yet to publicly roll out text for any of their dozen annual spending bills. Leaders are struggling to strike a larger bipartisan deal on how to fund the government.
Aris has more on this here.
Good to Know
CEOs of the top 500 companies in the U.S. earned 324 times more money in 2021 than their employees, with executive compensation climbing $2.8 million dollars in the past year on average as worker wages declined, according to an AFL-CIO report.
While the report found that real worker wages fell 2.4 percent in 2021 after adjusting for inflation, the average compensation for the top CEOs in the nation last year was $18.3 million, a more than $5 million increase over the past decade.
Here’s what else we have our eye on:
- Existing home sales declined for the fifth straight month in June, falling
5.4 percent from the previous month, according to data from the National Association of Realtors (NAR) released Wednesday.
- U.S.-based transport service Lyft has reportedly laid off approximately
60 employees amid growing economic concerns within the company.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.