Of all President Joe Biden’s awful economic policies, none will have as nasty and lasting an impact on average Americans as the sheer growth he’s proposing for the federal government. His newly unveiled budget lays bare once again the Democratic Party’s sharp socialist turn.
Biden’s budget is, in a word, mammoth. It proposes a total of $6 trillion in spending next year, with a budget deficit of $1.8 trillion. That’s a 36% rise above the pre-pandemic spending of $4.4 trillion in 2019. By 2031, the Biden plan sees spending of $8.1 trillion, while annual deficits will remain above $1.3 trillion every year for all 10 years.
Numbers crunched by the Congressional Budget Office show that Biden’s spending plans would add $22 trillion to our deficits over and above current levels in the decade.
That translates into a massive, unsustainable increase in publicly held federal debt, from an estimated $22.6 trillion this year to just under $43 trillion in 2031. For comparison, it took the U.S. more than 210 years to reach $5 trillion in total federal debt. In the 22 years since then, we’ve added 3.6 times that amount.
Put still another way, our debt will go from 108% of our total GDP to over 130%, a level most economists see as fiscally dangerous, even for a country as well-off as the U.S.
“In just a little over 100 days in the White House Biden has won the mantle as the most fiscally reckless president in American history,” as our friends at The Committee to Unleash Properity put it. “He’s making Barack Obama look like a piker. If his red ink schemes pass Congress, he will have added more to the national debt than the previous five presidents combined.”
Democrats like to say, “who cares? We owe it to ourselves.”
Not true. About two-thirds of all federal debt is owed “to ourselves.” The remaining third is obligated to foreign governments and institutions. But the point is, it’s still owed and must be paid. Biden’s spendthrift ways will put us in hock to China and other less-than-friendly nations.
But the debt, which will require massive tax hikes on future generations to pay off, is merely a symptom of the most dangerous part of Biden’s plan: Spending.
That’s because the Keynesian argument that federal expenditures “stimulate” the economy is an entirely false one, intellectually bankrupt. During the Obama era, New York Times columnist Paul Krugman once hailed the “miracle of the 1940s,” as if the economy rebounded due to FDR’s stimulus efforts in the 1930s rather than the end of the most devastating, costly conflict in history in 1945.
Other fatuous public thinkers said much the same thing.
In fact, the federal government is the least efficient part of the U.S. economy, wasting as much as 50 cents of every dollar it spends by “crowding out” more efficient private-sector activity, studies show.
Moreover, government does not create wealth; it merely redistributes it. And it does so based not on economics, but on rank politics and favoritism. So more federal spending inevitably equals less economic output and more political cronyism and corruption, as example after example around the world shows.
In short, Biden’s budget represents a massive transfer of economic power from the private sector to Big Government, a socialist nightmare in the making.
Worse yet, it will “stimulate” nothing: Biden’s own estimates see GDP growth averaging just 2% over the next 10 years with unemployment dropping to 4% or so, which is still higher than the 2019 low of 3.5% reached under President Donald Trump.
That the Republicans can now offer a “compromise” infrastructure bill close to $1 trillion, one of the largest spending bills in American history, and still have both the media and their Democratic Party allies call it “small” and “flimsy,” shows just how low we’ve sunk, fiscally speaking.
Taxpayers beware. The mistaken deep premise behind the idea that government spending boosts the economy is that money spent by the government is somehow “free.” It isn’t.
Money spent by the government either comes from taxing workers and investors, borrowing, or from the Federal Reserve printing money. Nothing else. Government takes money out of private pockets from those who earned it, and gives it to bureaucrats to spend instead.
Put another way, every dollar government spends is a dollar that can’t be spent by you or by businesses for investment, hiring workers or raising pay. It also means more individuals and companies on the dole, dependent on big government for their survival.
In case you’re wondering, last year, government spending hit an all-time high of 44% of GDP, according to Trading Economics, well above the 37% average of the last 50 years.
Americans, be alarmed. Biden’s planned spending boom means stagnant growth, fewer jobs, higher prices, less innovation and lower standards of living. It’s socialism, prettified by its leftist supporters as “stimulus.” So don’t be fooled. Say no to wild wasteful spending, and yes to growth and prosperity.
— Written by the I&I Editorial Board