Biden’s Big Spending Plan Will Hurt Jobs and Growth

Posted: Jan 30, 2021 12:01 AM
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Biden’s Big Spending Plan Will Hurt Jobs and Growth

Source: AP Photo/Alex Brandon

When facing difficult times, the left’s kneejerk response is painfully predictable: spend more money. Joe Biden’s COVID-19 government “stimulus” plan follows suit. It calls for spending $1.9 trillion on liberal priorities like bailing out irresponsible states and cities, and expands an unemployment insurance program that subsidizes welfare over work.

The plan calls for spending $1.9 trillion, even though Washington has already spent $4 trillion in COVID-19 relief which has gone toward the Paycheck Protection Program (PPP) for small businesses, provided unemployment insurance during the worst of the crisis, funding for hospitals, and vaccine distribution. Biden is calling for this new spending even though Congress passed a $900 billion COVID-19 relief package a little over a month ago.

This additional spending appears to be less about helping individuals and businesses, and more about instituting leftist pipe dreams into law.  

The $1.9 trillion price tag is half of what the United States government spends in a year. Even so, this spending could be the tip of the iceberg, as Biden has promised $11 trillion in spending for healthcare, infrastructure, Social Security, education, family leave, and housing. This new plan comes at a time when the United States can least afford multi-trillion dollar spending proposals.    

Not only is the topline $1.9 trillion cost prohibitive, but the specific proposals would do nothing to help the economy recover and could even prolong the economic downturn.

One of these programs would give $160 billion in direct aid to state and local governments which would bailout the most irresponsible states and localities.  

The states that are most “in need” had serious budget problems before the pandemic ever hit. It is not a coincidence that the most economically restrictive states are the ones getting hit the hardest. Struggling states have alternatives to a federal bailout as explained by the Heritage Foundation: “A one-year pay freeze, for example, could save states about $50 billion, and suspending pension contributions and accruals (so as to not further exacerbate existing shortfalls) for one year could save up to $234 billion.”

In addition, they could repeal several burdensome economic restrictions on individuals and businesses. However, their dedication to leftist dogma keeps them from taking these actions.  

Many states have not seen significant budget shortfalls. In fact, some states have found themselves in the unexpected position of having budget surpluses. In response, they are passing their own COVID-19 relief bills. As noted in Bloomberg, Maryland Governor Larry Hogan is taking steps to provide one-time checks of as much as $750 to lower-income families. Michigan Governor Gretchen Whitmer is pushing to provide $225 million to small businesses. In California, Governor Gavin Newsom has proposed providing $600 checks for some residents and $4.5 billion of grants and tax credits to businesses.

Biden’s COVID-19 relief plan also proposes expanding unemployment insurance by providing $400 per-week to recipients, which would come in addition to the unemployment benefits they already receive. This benefit disincentivizes Americans from returning to their jobs, which will prolong the economic downturn.  

Analysts from the New York Federal Reserve estimated that the unemployment rate would have been 2.2 percentage points lower in 2011 and 3 percentage points lower in 2010 if President Obama hadn’t expanded the unemployment benefit. Louis Woodhill, in Forbes, awarded President Obama the gold medal for the worst, slowest economic recovery in history. As Woodhill said, “Obama was victorious in this trial by producing an increase in jobs during the first 36 months of his economic recovery of only 1.72%.”

Joe Biden’s proposal is even more extreme than Obama’s, as Obama simply extended the period of time that people could receive unemployment insurance benefits. Even so, the country saw significant negative effects on employment. Presumably, the effects of this Biden policy could be even more severe. It is best not to follow the Obama administration’s approach to “recovery.” 

While leftists would argue that the government can simply raise taxes to pay down our incautiously accrued debts, increasing taxes is the least effective, most destructive way of eliminating massive debt. Tax hikes will slow the economy, and harm workers and businesses as the country tries to recover. The answer is very simple: we must spend less.  

Biden’s $1.9 trillion stimulus plan should be rejected. This irresponsible proposal spends money we don’t have on a bailout to states and localities and includes new programs that will prolong the economic downturn. Joe Biden has made countless calls for unity, yet his first proposal is a wish list of the radical Left.

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