Billionaire Praises Manchin for Saving U.S. From 'Catastrophic' Biden Bill

Billionaire entrepreneur and investor Sam Zell publicly showed appreciation for Democratic Senator Joe Manchin of West Virginia for halting the Build Back Better legislation, citing current rates of inflation and anticipated Federal Reserve interest rate hikes.

In an interview with CNBC's Squawk Box on Wednesday morning, Zell, the 80-year-old chairman of the private investment firm Equity Group Investments, praised Manchin for not supporting the approximate $2 billion legislation that passed the House in mostly partisan fashion in November.

"The Fed controls demand....I've been around for a long time," Zell said. "A piece of legislation used to include...$100 million or $200 million, and then all the sudden it became trillions. And all the sudden we couldn't get the money out fast enough.

"I think the whole country owes Joe Manchin a giant thank you for stopping what really would have been a catastrophic result. That whole Buy Back Better bulls**t is just unacceptable."

The anchor, Becky Quick, can be heard correcting Zell, saying Build Back Better, as Zell continued.

Sam Zell
Billionaire businessman Sam Zell, chairman of the private investment firm Equity Group, on Wednesday on CNBC blamed President Joe Biden and the Fed for anticipated interest rate hikes to combat growing inflation. Above, Zell on the set of Maria Bartiromo's Wall Street at the Fox Business Network Studios on July 17, 2019, in New York City. Steven Ferdman/Getty Images

"Unfortunately, we only had one senator who stepped up to the line when, in fact, everyone should have stepped up and recognized that this was a disastrous policy," Zell added.

In February, Manchin called the Build Back Better Act "dead." Manchin and Democratic Senator Kyrsten Sinema of Arizona were the party outliers in the attempt to get any type of legislation through Congress.

Dozens of economists expressed support for the Build Back Better Act following the House vote late last year, saying the "strain of inflation" on American families could be remedied with lower costs in areas including childcare, healthcare, utility bills, prescription drugs and education.

About seven months later, many economists have changed their tune. Seven out of 10 surveyed in a recent poll expect a recession in the U.S. within the next year, pointing to global tensions including the war in Ukraine and 40-year highs in inflation.

The poll, conducted by the Financial Times and the University of Chicago's Booth School of Business, showed that the majority of surveyed economists predict a recession beginning in the first half of 2023. The second-highest prediction anticipated a recession plaguing the U.S. in the second half of next year.

On Wednesday, Zell, in the same CNBC interview, blamed the Fed for becoming politicized, adding that the expected interest rate increase is actually not high enough.

"If I were running the Fed today, I would raise interest rates a full point," Zell said. "I think the credibility of the Fed has been significantly damaged. The Fed is supposed to be independent of politics. How many times do we have to play this same game where the Fed keeps falling behind reality?

"We have overstimulated the economy by a big factor. We have to take the punch bowl away."

The conversation also alluded to economics during former President Jimmy Carter's four-year term.

"The Carter years were all about trying to blame somebody else, besides themselves," Zell said. "In the same manner, Joe Biden owns this inflation. If he hadn't provided and encouraged the massive amount of liquidity added to the system under the guise of COVID, we wouldn't have this problem today."

The National Association of Realtors (NAR), according to its Housing Affordability Index, said Tuesday that in April, the average monthly mortgage payment increased by 14.5 percent while the median family income increased by just 0.7 percent compared to March data.

According to Mortgage News Daily, a 30-year fixed mortgage rate has risen to 6.28 percent in the past week.

Following the news on Wednesday of the Federal Reserve's interest rate hike, NAR Chief Economist Lawrence Yun said he anticipates "several more rounds of rate hikes" in upcoming months that will affect homeowners and renters in different capacities.

"So far, the short-term fed funds rate that the Fed directly controls has risen by 175 basis points," Yun said in a statement to Newsweek. "But the 30-year fixed rate mortgage has risen even more, by nearly 300 basis points. On the same $300,000 mortgage, the monthly payment has risen from $1,265 in December to $1,800 today.

"That's painful and, consequently, will shrink the buyer pool. Home sales have recently been trending down towards 2019 figures. Sales could fall even further with some inventory sitting on the market for more than a month like in the pre-pandemic days."