The first line in President Joe Biden’s budget statement, released Monday, is “Budgets are statements of values, and the budget I am releasing today sends a clear message.”
Biden’s right that his $5.8 trillion budget sends a clear message. The message is that he will say and do anything, no matter how disconnected from reality it is. The rest of his statement is itself full of lies and half-truths.
For example, Biden brags that he’s cut the deficit in half in his first year, making it “the largest one-year reduction in the deficit in U.S. history.” That’s technically true but completely irrelevant.
Deficits ballooned as a result of the pandemic shutdown and the – bipartisan – rescue legislation enacted under President Donald Trump. Biden forgets that he added trillions more to the pile with his “rescue plan” and the bloated infrastructure bill.
Plus, it’s Biden’s own budget that calls for deficits to remain well above $1 trillion – and climbing – over the next decade.
By 2032, Biden’s “fiscally responsible” budget pegs the deficit at $1.8 trillion, or 4.8% of GDP – and still growing. (The post-World War II average is 2.6%.)
That year, debt held by the public will top 106% of GDP.
In Trump’s last budget proposal – issued in early 2020 – he projected a deficit of $261 billion in 2030 and debt held by the public at 66% of GDP – and falling.
Biden also brags that “we spent less money than the last administration and got better results: strong economic growth.” Another BS claim.
Under Biden’s budget, federal spending in 2030 will account for 23.9% of the nation’s GDP. Under Trump’s last budget, it would have been 18.4%.
From 2022 through 2030, Biden proposes to spend $38.8 trillion on entitlements such as Social Security, Medicare, Medicaid, welfare. That’s $5 trillion more than Trump proposed over those same years.
Admittedly, Trump’s last budget proposal was released before the scale of the COVID disaster was known. But even so, there’s no reason why spending has to remain so incredibly inflated for years after.
What’s more, Biden is hiding the true cost of his programs and the real impact on the deficit by basing his spending and revenue forecasts on wildly unrealistic economic projections.
Budget forecasts rely heavily on economic projections. Small changes in GDP growth have major effects not only on revenues but on the massive entitlement programs, where spending automatically grows when the economy slows.
As Bloomberg notes, Biden’s budget “is based on economic assumptions the White House itself recognizes are outdated, including a forecast for inflation to cool next year to about a quarter of its current, four-decade-high pace.”
It goes on to point out that Biden’s budget artificially lowers the cost of financing the debt by assuming rock-bottom Treasury bill rates. “Three-month Treasury bill rates were penciled in at 0.2% this year – less than half their 0.52% current level. Ten-year Treasury yields are forecast at 2.1%; they were about 2.45% as of 12:21 p.m. in New York.”
Biden’s budget projects outsized growth in GDP, as well. He claims real growth of 4.2% this year and 2.8% next year. The median projection among Federal Reserve Board members and Federal Reserve Bank presidents is 2.8% this year and 2.2% in 2023. Biden’s rosy growth forecasts are made all the more fantastical given that this budget also assumes passage of massive, economically ruinous tax hikes.
Biden can’t even tell the truth about his specific plans. That “billionaire tax” you keep hearing about? That kicks in at $100 million. Even more jarring, the tax would include both income and “unrealized capital gains.” In other words, if you bought and continue to hold company stock for a number of years, you’d have to pay 20% on all the gains (not adjusting for inflation) since you bought the shares.
We could go on and on, but you get the picture.
This is quite possibly the most fiscally reckless budget in history. That’s the real message Biden’s budget sends.
— Written by the I&I Editorial Board