On March 28, the Biden administration unveiled its FY 2023 budget, which calls for the federal government to spend a whopping $5.8 trillion over the next fiscal year.
A few years ago, before the federal government unleashed the spending fire hose in response to the COVID-19 pandemic, a budget this big would have been laughed out of the room. However, in post-pandemic Washington, DC, budgets of this magnitude are the new normal.
In defense of his gargantuan request for $5.8 trillion, President Biden even had the audacity to claim his budget proposal “sends a clear message that we value fiscal responsibility.”
If spending $5.8 trillion to keep the national government operational for 365 days is the definition of fiscal responsibility, we are in very big trouble.
In his budget rollout, Biden also claimed, “My Administration is on track to reduce the federal deficit by more than $1.3 trillion this year, cutting in half the deficit from the last year of the previous Administration and delivering the largest one-year reduction in the deficit in U.S. history. That’s the direct result of my Administration’s strategy to get the pandemic under control and grow the economy from the bottom up and the middle out.”
So, Biden now fancies himself a fiscal hawk. Give me a break.
The sole reason that Biden can claim he reduced the federal deficit is only because the federal government increased spending during the pandemic to levels unseen in U.S. history.
Consider.
In 2018, the first full year of the Trump administration, the federal government spent $4.1 trillion. In 2019, this increased to $4.4 trillion.
Then, in 2020, the pandemic reached U.S. shores and federal spending increased to $6.5 trillion. In 2021, total federal spending increased even more, hitting an all-time record of $7.2 trillion.
By 2022, the federal government’s pandemic spending binge had decreased substantially. In FY 2022, the federal government only spent $6 trillion. Thus, Biden inherited a deficit reduction of $1.3 trillion by doing absolutely nothing.
He did not actually reduce spending, it just so happens that the temporary pandemic programs lapsed by the time he entered the Oval Office.
Biden went on to pat himself on the back yet again when he said, “My budget will continue that progress, further reducing the deficit by continuing to support the economic growth that has increased revenues and ensuring that billionaires and large corporations pay their fair share.”
Mr. President, this is simply not true.
This year, the federal government is estimated to collect about $4.2 trillion in revenue. Also, this year, Biden’s budget calls for $5.8 trillion in spending.
One need not be a mathematician to understand that under this scenario, the deficit will grow by $1.2 trillion, not be reduced.
Furthermore, Biden posits that raising taxes on corporations and so-called billionaires will result in a flood of new funds to the federal government coffers. But, as any economist can tell you, that is not guaranteed at all.
For many reasons, raising taxes does not always produce more revenue for the government. As Arthur Laffer pointed out in his Laffer Curve, there comes a point when raising taxes results in diminishing revenue.
Unlike American families, who must balance their budgets or face bankruptcy, the federal government has the unique ability to spend whatever it wants, regardless of whether or not it can afford to do so.
Perhaps the time has come for the American people to demand that the federal government spend only what it has on hand, like they must do. A balanced budget amendment, which is gaining momentum, could be one solution to the mess we find ourselves in.
Yet, that will likely not occur for years to come. In the meantime, it would be nice if our elected leaders were honest about their reckless fiscal stewardship instead of treating we the people like utter fools by telling us everything is hunky dory on the economic front when it obviously is not.
Chris Talgo (ctalgo@heartland.org) is senior editor at The Heartland Institute.
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