Investor and Shark Tank star Kevin O’Leary says that the Biden administration’s economic policies have neglected small businesses as rising inflation and interest rate hikes add to their pain.
In a recent Fox News interview, O’Leary says that the CHIPS Act (Creating Helpful Incentives to Produce Semiconductors) and the Inflation Reduction Act (IRA), which President Joe Biden signed into law last year, have only served big corporations.
“The problem with the policy so far and the multiple bills including the CHIPS Act and of course the anti-inflation Act [IRA] (are) just massive spending, but it’s the target of where that spending went.
Here’s the problem: most of it is going to the S&P 500 companies. They’re important. They’re big employers in America. However, they only represent 40% of the economy.”
The Shark Tank star says that while the government is looking after big corporations, America’s small businesses are reeling from the negative impacts of the Fed’s aggressive rate hikes and persistent inflation.
“What we haven’t seen is the unintended consequence. Now we’re seeing that we’re starving small businesses in America. We throw billions to Intel and nothing to a guy in Champaign, Urbana [city in Illinois], who’s running a shop with 58 employees. His cost of capital, because of these rapid rate hikes, has gone through the moon.
It went from maybe 6% or 7% now to 20%. He can’t raise any capital because the regional banks have stopped lending to him as they wait to see what the new liquidity rules are.”
O’Leary also says that although the Consumer Price Index (CPI) has fallen, core inflation remains high, and it’s dealing a big blow to entrepreneurs and small businesses.
CPI is an inflation metric that tracks the average change over time in the prices paid by consumers for a basket of goods and services. Meanwhile, core inflation follows the same formula but excludes the change in prices from the food and energy sectors.
“Core inflation is not down. CPI, yes. But core inflation, the real inflation that hurts a small individual that’s trying to live off $58,000, they’re getting killed.
And this will show up in the polls. This will become political. But we’ve got to save small businesses right now. We have to do everything in our power to make sure they get access to capital.
This is a problem that’s only six to eight weeks old. You talk to anybody running a small business with between five and 500 employees, they cannot raise any money. That’s bad economic policy. And that’s because Biden’s focused only on the big guys.”
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