It’s truly frightening how obsessed the Democrats are with spending nearly $5 trillion on infrastructure and social programs. They’re behaving as if our republic would buckle and collapse if their agenda isn’t passed. The real danger, though, are their ideas, which are economic IEDs.
More than 20 years ago, UCLA professors Lee Ohanian and Harold Cole, now a University of Pennsylvania professor, produced a report that showed President Franklin D. Roosevelt’s policies not only didn’t end the Great Depression, they extended the misery by seven years. Simply put, there was too much government intervention in the economy.
FDR’s policies and those of President Joe Biden and the Democrats are not entirely analogous. Ohanian and Cole focused “primarily on the impact of Roosevelt’s early policies that allowed for monopolies and too much union power to increase prices and salaries.” The Democrats’ bills are mostly, but not exclusively, about spending other people’s money.
Another difference: We are not in a depression. The country is recovering from a downturn caused by officials foolishly locking down the economy, which they told us was necessary to beat the pandemic.
However, we can expect at best a sclerotic economy, and depression-like conditions, if the Biden bills become law. The unbridled spending will exacerbate the inflation that’s disrupting the U.S. economy as well as compound the supply chain problems that are blowing “a stagflationary wind through the global economy.”
Citadel professor of ethics and free enterprise leadership Richard Ebeling calls “the fiscal mindset of those in the White House and in Congress who are proposing new federal budgetary expenditure,” and tax hikes “in the trillions of dollars,” a “fantasy land of financial irrationality.”
“At the end of the day,” Ebeling says, Biden’s “policies can only lead to a financial and economic disaster.”
Just as Roosevelt’s policies sharply increased the size of the federal government, so would the Biden spending. Economists Daniel Mitchell and Robert P. O’Quinn say the larger expenditures mean “an additional 1.9% of the economy’s output (GDP) will be absorbed by the federal government.” The “massive” spending growth “will divert resources from the economy’s productive sector, and it will be partly financed by punitive, class-warfare taxes that penalize work, saving, investment, and entrepreneurship.”
At times it seems the U.S. might not even last until the 2022 elections deliver Congress to the Republicans, who could then cut off Biden’s political oxygen. Maybe Democratic Sens. Joe Manchin and Kyrsten Sinema will block their party’s race to recession until then. It seems the only hope.
— Written by the I&I Editorial Board