The White House on Tuesday is highlighting new efforts to lower Americans’ everyday costs, just as the latest Consumer Price Index – a key marker for inflation – showed signs that the temperature is dropping.
The new steps, the result of funding through legislative efforts signed into law by President Joe Biden since taking office, are aimed at lowering out-of-pocket costs come as broad concerns about the economy and the possibility of a recession loom. A White House official detailing the new measures to CNN said they are aimed at lowering the price of health care, home heating, and broadband access, adding that they will impact “tens of millions of seniors, students, and families month-over-month.”
The latest CPI data released Tuesday morning shows that inflation remains elevated but the temperature is coming down, showing that annual price increases continued to slow in February. CPI measured 6% for the year ended in February, down from January’s 6.4% and in line with economists’ expectations.
The Federal Communications Commission will release additional funds this week to support the Affordable Connectivity Program, according to the official. The program, a provision of the bipartisan infrastructure law, provides eligible households a $30 monthly credit toward the cost of their internet service plan, or a $75 monthly credit for households living on Tribal land. The program helps deliver affordable broadband to over 16 million households.
The Department of Health and Human Services is also releasing over half a billion dollars in Low Income Home Energy Assistance Program funds to states to cover American families’ home heating costs. The Biden administration last November announced the distribution of $4.5 billion in federal assistance to help lower many Americans’ heating bills through the program, which received an additional half a billion in funding through the infrastructure law. According to the official, the program “has helped over 5.3 million households on heating and cooling bills, and on weatherization services” over the past year.
The department is also announcing new details on which Medicare Part B drugs – expensive medications administered by doctors – hiked their prices faster than inflation since the Inflation Reduction Act went into effect. They will be subject to inflation rebates for excessive price increases, and some beneficiaries will start seeing lower copays next month, the official said.
HHS will also release new data showing how many seniors and people with disabilities are likely to have started seeing cost-savings on free recommended vaccines because of a provision of the Inflation Reduction Act that went into effect in January.
While the latest CPI data showed inflation is slowing, recession concerns still continue to hover over the US economy, heightened recently by a hotter-than-anticipated jobs report and the second-largest failure of a financial institution in US history.
For the past year, the Fed has enacted a series of interest rate hikes aimed at chilling demand and cooling historically high inflation.
But February’s net job gains surpassed economists’ estimates for a more modest month and showed resistance to the Fed’s interest rate hikes.
The Fed’s campaign has also come under scrutiny in the wake of the collapse of Silicon Valley Bank, which provided financing for almost half of US venture-backed technology and health care companies.
Those rate hikes contributed to the collapse of Silicon Valley Bank late last week in at least two key ways. First, higher borrowing costs rocked the frothy parts of the US economy, especially the tech industry that SVB catered to. Secondly, the hikes undermined the value of the Treasury bonds that banks rely on as a central source of capital.
Before SVB’s collapse, investors were anticipating a major interest rate hike of a half percentage point at Fed meeting next week. But Sheila Bair, the former chair of the Federal Deposit Insurance Corporation, told CNN on Sunday that a hike of that size would not be “well advised” given the bank’s collapse. Similarly, Goldman Sachs told clients late Sunday that “in light of the stress in the banking system,” the bank no longer expects the Federal Reserve to deliver a rate hike next week.
Biden on Monday sought to assuage Americans’ concerns and laid out his administration’s sweeping efforts to protect small businesses and workers in the wake of the recent bank shutdowns. Specifically, these actions include backstopping depositors’ funds at SVB and Signature Bank – while stressing that taxpayers are not on the hook for those moves – declining to extend relief to investors of SVB and holding those responsible accountable.
“Americans can rest assured that our banking system is safe. Your deposits are safe,” Biden said on Monday. “Let me also assure you we will not stop at this. We will do whatever is needed on top of all this.”
CNN’s Alicia Wallace, Matt Egan, Phil Mattingly and Betsy Klein contributed to this report.