On Friday, President Joe Biden’s Administration released the details of its blowout budget, asking for $6 trillion in spending next year, about $1 trillion above baseline. The federal leviathan would grow north of $8 trillion by 2030 as Biden seeks to fundamentally transform America into a European-styled socialized democracy. Beyond the arguments of the sustainability of our debt load or philosophical questions about the role of government, Biden’s own budget offers a damning argument against his tax and spending binge: they expect it to worsen our economy.
That’s right, Biden’s official economic projections, not the work of some right-wing think tank, are downright terrible. Tucked in page 60of the official proposal, they project unemployment will never fall below 3.8%. Remember before COVID-19 lockdowns, unemployment reached 3.5% under President Donald Trump and was poised to decline further. Biden is essentially saying: pass my spending proposals and 500,000+ more Americans will be unemployed than if we return to the Trump economy. He is labeling his own proposals as job killers.
After the inevitable reopening bounce in 2021-2022, the Biden Administration forecasts growth of 1.8-2.0% from 2023-2030 despite all the new spending. From 2017-2019 under Trump’s America first policies, we grew 2.5% on average. 0.5% may not seem like much, but it adds up over time. Over eight years, it amounts to about $1 trillion in annual GDP or about $2,950 for every single American.
However, it’s even worse. Over the next eight years, Biden’s spending proposals in his “infrastructure” and “families” plans exceed his proposed tax hikes by about $800 billion. He calls the proposals “paid for” because the spending is temporary but increases in taxes are permanent so the higher tax revenue from 2031-2036 can be used to pay back that $800 billion in debt. In other words, there is a risk that his economic projections represent a “sugar high” from temporary spending paid for with slower long-term growth as higher taxes continue to bite. If our sugar rush still results in slower growth and higher unemployment than we had pre-COVID, the question is why bother spending all this money in the first place?
Perhaps, these underwhelming economic results shouldn’t surprise us. Biden’s plans, from greater social spending to higher taxation, make America more like Europe, and their economy has steadily lagged ours. From 2010-2019, Europe’s economy grew 16.5% while ours grew 24.9%. That 8.4% outperformance amounts to an extra $1.3 trillion of GDP—in other words, our economic outperformance over just the past decade is equivalent to the entire economy of Spain.
That the Democrat Party can look at the failures of Europe’s tax and spend policies and think “Let’s be more like that!” borders on incomprehensibility. That is until one realizes the true goal of Biden’s economic policies isn’t to improve economic growth. Obama’s own top economic advisor, Jason Furman, admitted as much, tweeting that these proposals would be an improvement “even if they didn’t add anything to growth” because they’d benefit the “climate” and “inclusion.”
The Democrat Party is seeking to permanently alter the way the federal government interacts with society, making it a larger part of our everyday life, in order to build an economy that redistributes resources to their preferred industries and in accordance with their woke philosophies. The cost is clear: more debt, slower growth, lower national incomes, and fewer Americans employed. As always, this cost will fall hardest on working and middle-class Americans, but apparently, their quality of life must be sacrificed so that our governing class can feel better about the climate, regardless of the fact China emits more CO2 than us. Wouldn’t it be easier to just ask John Kerry to stop flying around in his private jet?
The tragedy here is that if Biden wanted to be the moderate he pretended to be during the campaign, there could be infrastructure projects and social policies that do boost potential economic growth, from better broadband access to school choice. Instead, they are being overwhelmed by trillions of the Left’s pet projects.
Over the next three months as Senator Chuck Schumer and Speaker Nancy Pelosi prepare to ram much of this agenda through reconciliation, conservatives must make clear to voters what the Biden Administration itself is projecting: that these proposals will result in higher unemployment and slower growth than under Trump. Make every Democrat go on the record, explaining why they are comfortable slowing our economy to re-engineer a larger, more onerous federal government.
Hopefully, given razor-thin majorities, this push can result in paring back of these packages. If not, we can ensure voters hold Democrats to account for these economy-hurting policies in the 2022 midterms. The vibrancy of America’s economic future depends on it.