Not surprising, when he plans to spend enough per household to buy every family in the country a new BMW every year, and accrue enough debt for a new Ferrari after 10 years. What’s not to like about doubling the size of the government from just before the pandemic? It’s historic and just what the country needs, except for economic growth, which he expects to be paltry. What am I missing?
There’s an old trick in politics: If you are hoping some news passes without notice, drop it on a Friday afternoon before a holiday weekend. The media will pick up the story Friday evening when no one is paying attention and then likely move on by the start of the following week, essentially burying bad or unflattering developments. This practice has been pretty standard procedure in both parties for document dumps, either those requested by Congress or as part of a Freedom of Information Act inquiry. It’s also been used to yank unpopular nominations, or release reports the powers-that-be would rather we didn’t really take notice of.
To my knowledge, however, it’s never been used by a President for something as important as the budget. By law, the President is supposed to submit their budget blueprint by the end of February, and yet President Joe Biden waited until Friday, May 28, at the start of the Memorial Day weekend to unleash his priorities on an unsuspecting populace. Then again, the proposed budget itself is so ridiculously bloated and built on so many convenient gimmicks, perhaps he would truly prefer no one noticed it.
What else are we to make of a $6 trillion dollar monstrosity that would average $1.45 trillion in deficit spending over ten years and produce only anemic growth in the 2 percent range?
To put the sheer size of the thing in perspective, the last budget before the coronavirus pandemic, as in way back in 2019, was $4.4 trillion with a $984 billion deficit. Less than 2 years later, however, and Biden wants to increase government spending by 36% and the deficit by 32%. Has your salary gone up 36% in the last two years? This is after the federal government has injected somewhere around $5 trillion into the economy, $1.9 trillion passed in March alone, to combat the pandemic, all paid for with borrowed and printed money. The numbers are starting to become undeniable and inconceivable. The deficit in 2020 was $3.2 trillion. In 2021, it’s expected to be another $3 trillion. This has sent debt as a share of the economy to a record high 110%, shattering the previous record of 106% set in 1946.
Of course, these aren’t the sort of records one wants to break, but according to Biden, “We must seize this moment to reimagine and rebuild a new American economy – an economy that invests in the promise and potential of every single American; that leaves no one out and no one behind; and that makes it easier for families to break into the middle class and stay in the middle class.”
Nice words, but at what cost?
$6 trillion comes to an incredible $45,000 per household, enough to buy every family in America new BMW every year. For the first time in recent memory, non-defense spending would outpace defense spending, $770 billion to $753 billion, as part of a total $1.52 trillion for discretionary spending alone. The large sum of extra money is said to go to education, public health, clean energy, and more. In addition to down payment “investments” in infrastructure and American families, Biden plans a binge of epic proportions, the large and the small:
- $36 billion in “additional” “discretionary climate investments”
- $6.5 billion for a new agency to cure cancer and the “largest budget authority increase at the CDC in nearly two decades”
- $2.1 billion for the Justice Department to address “the gun violence public health crisis”
- $1 billion in additional funding for the IRS
- $861 million to “invest” in Central American countries
- $345 million in immigration services
- $220 million for an anti-drug trafficking fund
- $73 million for USAID’s Central America division (up from $5 million)
- $131 million for a new State Department Central American regional economic support fund (up from $1.5 million)
Social Security, Medicare, and Medicaid take another $4 trillion to fund for a single year, the so-called non-discretionary spending. There’s also $305 billion just to service the current levels of debt. Given that we plan to add another $14.5 trillion over 10 years, bringing our debt up to a whopping $39 trillion, that figure will seem modest at some point in the very near future. To put that in perspective, that’s $300,000 in debt per household, enough to buy every family a Ferrari. According to Shalanda Young, the acting White House Budget Director, however, “Failing to make these investments at a time of such low-interest costs would be a historic missed opportunity that would leave future generations worse off. This budget does not make that mistake.”
Of course, she failed to mention that inflation is also at the highest level in decades, clocking in at 3.8% year over year, meaning interest rates are low right now, but they will almost certainly rise, meaning we’ll be paying a lot more than a mere $305 billion if they have their way. For the record, the budget makes the almost magical assumption that inflation dramatically falls to 2.3% for some completely unspecified reason, another in a convenient set of calculations to make this farce seem reasonable..
Amazingly, Biden plans to maintain these massive deficits even as he asks Congress for equally massive tax hikes of $3.6 trillion. Ultimately, he plans to increase total spending by a whopping $4.9 trillion dollars over 10 years, on top of the trillions he wants for separate items like infrastructure, the Green New Deal, and his families plan. Yes, you read that correctly. Other priorities would be funded separately, as in $6 trillion still isn’t enough in Biden’s opinion. Even worse, his budget announces loudly and clearly that he fully intends to break his pledge to not raise taxes on anyone who makes under $400,000 a year.
Remember when he said this, “Nobody making under 400,000 bucks would have their taxes raised, period, bingo.” Does it sound like there’s any wiggle room there?
For the record, he repeated the claim as recently as April 28, but now we learn it’s not true. $2.3 trillion of the desired $3.6 trillion increase comes from new corporate taxes, leaving another $1.3 trillion coming from personal taxes. In addition to tax hikes on the rich, he plans to get the rest of the money by letting the Trump tax cuts and simplified deductions for individual earners expire in 2025. As reported by Jim Tankersley in The New York Times, “the documents forecast that Mr. Biden and Congress will allow tax cuts for low- and middle-income Americans, signed into law by President Donald J. Trump in 2017, to expire as scheduled in 2025.” Some 90% of Americans saw their taxes lowered under the law; the middle one fifth of income earners saved over a thousand dollars, money Biden now wants to take out of your pocket, after lying to you that he would never, ever do such a thing, period, bingo, and all that.
One should also consider what this budget produces in terms of economic growth. Surely, all of these investments are going to drive the economy forward as Biden claims? Well, apparently not. Biden is expecting around 3.2% growth in 2021, then growth will tumble to a measly 1.8% to 2% through 2031. The good times will not be here again. This stands in stark contrast to the pronouncements of the experts upon Biden’s arrival in office. It’s hard to believe that just a few months ago they were proclaiming we’d see better economic numbers than we had in decades.
According to US News and World Report earlier this year, “The influx of government stimulus and accelerated vaccine distribution could lift growth in the current quarter, ending in March, to 5% or even higher, economists believe.” “As bad as 2020 was, it’s set the nation up for what economists believe will be a very strong rebound. Many project a growth rate of 5% or more in the current quarter or more, with 9% growth headlining some forecasts. For all of 2021, economics are forecasting GDP could grow by 6%. That would be the fastest annual GDP growth since the economy expanded at 7.2% when Ronald Reagan was president.”
Now, they’re saying not so fast, 1.8% might be the best we can do. This also stands in stark contrast with pre-pandemic economic growth. After a slow year of 1.64% when Trump came into office in 2016, 2017 saw 2.37%, 2018 2.93%, and 2019 2.16%. Given the size of the economy, a change of .36% translates into over $77 billion circulating in the market, money that ends up in people’s pockets. Further, growth is compounded every year, meaning lost growth is just that, lost now and forever.
Incredibly, the administration is claiming this budget is exactly what the country needs. Secretary of State Tony Blinken said it “reinvests in education, research, public health, and other foundations of our country’s strength. Enacting this budget this year will strengthen our Nation’s economy and lay the foundation for shared prosperity, while also improving our Nation’s long-term fiscal health.” They arrive at that conclusion due to some nifty accounting gimmicks, more convenient mathematics. The budget and its projections only look out 10 years, but they claim it will be paid for in 15. The theory is that deficits will somehow magically decrease beyond year 10 because the spending is temporary (where have I heard that before?) yet the tax hikes are permanent (of course they are).
I should mention that this is rather difficult to believe given that the budget plan calls for $8 trillion in spending 10 years from now, up from the $6 trillion he wants today, effectively doubling the size of government compared to before the pandemic. Either way, even if Biden is a two term President, he will be long gone by then and have no control at that point. As I said, rather convenient, don’t you think?
Thankfully, it seems people are starting to take notice, though not the mainstream media of course. They fell for Biden’s scam and the budget received barely any coverage, literally not a headline about it on CNN.com all weekend. They were too busy praising Biden for putting the country ahead of party and being an eternal optimist, plus ordering ice cream. Back in the real world, however, a poll from Fox News asked, “Do you think Joe Biden’s positions on the issues are too liberal, too conservative, or just about right?” Before Biden was sworn in, 36 percent said too liberal. Today, 46 percent do, a large swing in less than six months. Likewise, in December 15 percent said Biden’s positions were too conservative. That’s now down to 10%.
This is despite pumped up polls in the media showing practically Obama-like job approvals. This bloated behemoth of a budget dropped practically in the dead of night isn’t likely to improve perceptions, if only the media would actually cover it. Alas, that is far too much to ask these days.