Source: The Wall Street Journal (behind paywall).
Commenting on the president’s just released budget, WSJ’s editors all but call it insane:
If Mr. Biden gets his way, spending in fiscal 2022 will still be $6 trillion, which is some $2 trillion more than before the pandemic in 2019. Then spending will keep rising and remain a little under 25% of GDP for the rest of the decade. That level has never been reached in a single year since World War II, and the postwar pre-Covid average was 19.4%.
Translation: It is insane to tax and spend at world-war levels when there is no world war.
Even this level of spending is surely understated since much of it will finance Mr. Biden’s new cradle-to-grave federal entitlements for child care, paid family leave, community college and more. These are mandatory programs that don’t require an annual Congressional appropriation.
Spending on new entitlements always starts small and then becomes a huge budget wedge, squeezing out core federal government responsibilities including defense. Transfer payments rose to 70% of federal spending in 2019 from 27.7% in 1964 when LBJ launched his Great Society, while defense’s share has shrunk to 15.4% from 46.2%. Mr. Biden will accelerate this unsustainable trend.
The President’s discretionary priorities also deserve a word. Most executive agencies would get huge budget increases, including Health and Human Services (23.1%), Commerce (27.7%), and the Environmental Protection Agency (21.3%). Apparently, the administrative state will need more money for the vast regulatory buildup the President has ordered.
On the other hand, Defense (1.6%) and Homeland Security (0.2%) budgets would decline after inflation. China is a generational challenge. Iran is arming its proxies across the Middle East. Migrants are flooding the Southern border. Yet Mr. Biden believes the military and border security need to go on a diet.
Translation: It is insane to risk that the core functions of government will break down.
Mr. Biden proposes to finance all this with some $3 trillion in tax increases, the largest tax hike as a share of the economy since 1968, according to Strategas Research Partners. Mr. Biden is pitching his tax-and-spend plans as boosting “inclusive” growth.
But his tax increases would reverse the 2017 tax reform that increased business investment and lifted wages across the income spectrum, especially lower earners. The taxes would also whack the supply side of the economy just when we need more investment to meet the post-pandemic explosion of demand on everything from warehouses to semiconductors.
Translation: It is insane to recklessly ignore the lessons learned of the past.
The budget forecasts that revenue as a share of GDP will average 19.3% between 2022 and 2031. Revenue has averaged 17.3% since 1970 and has only exceeded 19% of GDP in five years since World War II.
The tax increase won’t kill an economy that should boom this year as Americans emerge from their homes and spend again. But the new taxes and burdens of government will erode growth over time as money is diverted to social welfare payments and political projects rather than to increasing economic growth and productivity.
That burden will also include an unprecedented level of new and rising debt. Only two years ago, in 2019, federal debt held by the public as a share of GDP was 79.2%. In 2021 it will rise to an estimated 109.7%, and under Mr. Biden’s budget it would climb to 117% by 2031. As entitlements grow, so will the debt.
Translation: It is insane to pursue a plan that is predictably unsustainable.
We should be cutting spending and reducing debt, not expanding both.
19 thoughts on “Biden Is the $6 Trillion Man”
But it’s all ok, part of the “infrastructure” bill is to plant massive money tree farms, right? Either that or the U.S. will ultimately implode just like the USSR did.
The tree farm proposal was actually of of 45’s more coherent policy choices. Thanks for passing the credit to Bioden.
Wow. Thanks for translating the WSJ for us. You are just so freakin’ smart, I don’t know what to say.
Besides, it is just a blueprint and a proposal. Call it a jumping off point for negotiating a budget. And it would be fine, except the GOP will NOT negotiate because all they want to do is regain power for power’s sake. And even when they do negotiate it is NEVER in good faith. See the House 1/6 commission for the most recent example.
Give more to the rich and the corporations, take away a woman’s right to choose pack the courts with radical conservative judges. Screw the rest of the people.
The GOP as it stands today cannot be trusted. Period.
LikeLiked by 2 people
RE: “Besides, it is just a blueprint and a proposal. Call it a jumping off point for negotiating a budget.”
There’s no point in negotiating with insane people over insane proposals.
You prove that regularly with your defense of mobs trying to overthrow the results of an election.
You calling anyone insane is, in a word, laughable.
And negotiation is not part of the GOP lexicon when they are not the party in power. Obstruction in the name of regaining power over the needs of the country. THAT is all they give a damn about. ANd it’s leader, McConnell, is in love with 45. He said it with 44 and now he says it about Biden.
“Live Free or Die’ has been replaced by “Obstruct and Lie”.
LikeLiked by 1 person
RE: “You calling anyone insane is, in a word, laughable.”
I call Stumble Joe’s budget insane. I don’t see you defending it in any way.
I called it what it ALWAYS is considered: a blueprint, NOT the final budget.
When a Republican president does it, people on the right clamor for it to be passed as is. At least I am saying it is a negotiating start.
And it is the House that control the purse strings. Your fake bravado and illiterate translation shows that those on the right only want to obstruct, not find a way forward for the country.
LikeLiked by 1 person
Well, he only has 2 years.
His budget is what it is for the same reason heroin dealers give you the first dose free.
Well put. The other side of it is: You can’t help a junkie until he hits rock bottom and wants to turn his life around.
If I could convince young people today to understand one simple concept, it would be that every single penny of government spending is a penny not spent by the person who earned it.
and that person might well be them when they reach their prime earning years
Unless that money is spent of a bloated defense budget or to pay off corporate donors and the ultra rich.
If they were truly job creators as is often claimed, they would not have bought back their own stocks in 2018. Or increased dividends to stockholders or paid C-suite bonuses totaling more than what they could have paid 200+ new workers.
LikeLiked by 1 person
Why would it be bad to buy back stocks if there is a windfall and no immediate opportunity for expansion? Doing so puts the company in a better position to expand when the opportunity comes along. The alternative would be to simply increase dividends, which is also a good choice, as investors would then be able to invest where the opportunities are ripe.
Almost anything a corporation does with a windfall is better than giving it to government.
How about putting into R&D or other resources, like PEOPLE? New workers, better wages for current workers, which by extension GROWS the tax base locally.
No, it goes into the pockets of the C-Suite whoo don’t pay a FAIR tax rate on those earnings. And to shareholders who also get preferential tax breaks.
Invest in people and new technologies or improved work flow. That don’t happen when the windfall goes to bank accounts of the rich and slothful
What do you think the rich do with their windfalls that does not benefit the public more than giving it to government for redistribution?
Pass it on to their ungrateful children.Keep it in the family. Some find benevolence and support social causes they believe in.
The rest just keep it in the bank. Or spend it lavishly on themselves. Keeping their employees on their knees.
OK, when they spend it lavishly on themselves, who do they pay? Yacht makers? Mansion builders? Even paying hookers employs people.
Put it in the bank? Where do you think the money for your home or business loan comes from.
And their ungrateful children have the same options. In every case, someone benefits through useful employment.
Only when the money is taken to give it to someone who produces nothing is it wasted.
RE: “Unless that money is spent of [sic] a bloated defense budget…”
All government spending comes at the expense of private spending. Some government spending is desirable, even so. Defense spending is a good example of both.
WSJ makes clear that Stumble Joe’s budget will reduce defense spending in real terms. That’s insane.
“… reduce defense spending in real terms. That’s insane.”
Our defense spending did not prevent Russian intelligence from hacking our highest departments and getting info for over a year during the last administration.
Nor did it stop the hackers that shut down a gasoline supply line long enough to create a minor panic.
Nor did it protect the Capitol from a deadly assault with millions in damage and 100’s of millions in extra protection afterwards.
Nor did it stop or even slow down a pandemic.
We are forever preparing for the last war. when infrastructure weaknesses and cyber security are the real threats.
Now that is insane.
LikeLiked by 2 people
What is insane is the bloat and redundancies in that budget.
And what is so insane about cutting some defense spending? As Len pointed out, it really isn’t spent on true defense. It is spent to keep defense contractors happy and obsolete technology on the front line.