The Dangers of Biden’s Spending Binge

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In his 1996 State of the Union address, President Bill Clinton said: “We know big government does not have all the answers. We know there’s not a program for every problem.” In short, “The era of big government is over.”

A generation later, President Joe Biden says, in effect, “I’ve got $6 trillion that say otherwise.” That’s the combined cost of his COVID-19 relief program, his infrastructure plan and his American Families Plan. This gargantuan sum would come on top of the nearly $4 trillion authorized in 2020 to deal with the pandemic and its economic fallout. Biden is proposing a vast expansion of government programs that would weigh heavily on our economic future.

Most of the spending last year was an appropriate response to a massive emergency. With the life and health of millions of people in jeopardy, and much of the economy gasping for air, our elected leaders had little choice but to put the nation on the equivalent of a wartime footing. It was no time for governmental austerity, which would have been heartless and self-defeating.

The outlays were far bigger than needed, as documented by Larry Summers, who was director of the National Economic Council under President Barack Obama. But it was prudent to err on the side of doing too much in response to the biggest economic crisis since the Great Depression. The profligate approach worked, in that millions of people were spared severe hardship and the economy contracted less than it might have.

In previous decades, such a frenzied spending binge might have generated widespread anxiety, prompting a return to a semblance of budgetary discipline. That was the reaction to Obama’s far smaller 2009 economic stimulus.

But this time, the effect has been to pulverize any sense of limits. If we can spend $4 trillion in an emergency, why not $6 trillion when the emergency has subsided? Amounts that would have choked an elephant two years ago now go down easy.

This insouciance is partly the fault of Republicans, whose 2017 tax "reform" exposed their disdain for fiscal responsibility. It's hard to make a case against trillions in new spending when you've gleefully shoveled out $1.9 trillion in tax cuts. Nor did Trump curb outlays, which were substantially higher under him than they had been under Obama. Trillion-dollar deficits, once unthinkable, became the norm.

The pandemic spurred a new receptiveness to federal initiatives by aggravating problems that had long festered. Among them: lack of access to health insurance, the disproportionate burden of child care on women, the vulnerability of many people to poverty and more. It raised fundamental questions about the role of government that had long been given short shrift.

Some of the reconsideration is entirely justified. So are some of the remedies -- particularly, extending federal child tax credits to poor parents who were previously denied a benefit available to higher earners. The expansion of the Affordable Care Act offers a way to broaden health care access without succumbing to a single-payer system. Some infrastructure investment is always in order.

What Biden's plan lacks is any recognition that some tasks deserve priority over others. They are all urgent in his mind. He's taking his cue from Oscar Wilde, who wrote, "Nothing succeeds like excess." His tax plans are supposed to pay for this new spending, but does anyone believe Democrats would downsize their ambitions if revenue projections fall short?

They are likely to. A report by the Penn Wharton Budget Model found that increasing the tax rate on capital gains to 39.6% from the current 20% would reduce revenue. Over the first decade, Biden's infrastructure package would cost $600 billion more than it would bring in. In the current atmosphere, however, these projections will not dampen the enthusiasm for spending.

Piling up more federal debt may do little harm in the short run, but over time, it's bound to divert funds that would have gone to private investment, to the detriment of the economy. When interest rates rise, the cost of financing that debt -- already $378 billion a year-- will soar.

The budgetary binge may also lift inflation to levels that Americans have not seen since the 1980s, if not higher. On this front, Larry Summers warns, "We're taking substantial risks."

Right now, Biden and congressional Democrats have the giddy feeling that there are no limits to what the federal government can do or afford. But limits have a way of reminding us that they exist.

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10 thoughts on “The Dangers of Biden’s Spending Binge”

  1. He is out to destroy the dollar at any cost! You got to stop him or capitalism is over’ and the stupid big business and tech got here because of capitalism and believe if and when socialism is dead than the DemocRATs get what the wan, communism and that is when big tech and business loses everything they had done and the state will take over 90% and leave about 10% to their most favorite to get a piece of the action! How stupid are these so called brilliant minds in backing a party that is a user and a destroyer!

  2. My father graduated form college in 1929 and worked for the Chicago Stock Exchange. Need I say what
    happened in October of that year. He never bought stock after that. My mother lived through the Depression
    and her stories have stayed with me. I am not saying this might happen in our age, but being reckless with
    government spending is never a good idea. It seems when Democrats are in power, we have this situation
    of big spending and I seriously wonder what Biden is thinking when he comes up with these spending plans.
    Let us hope that wiser minds will come forth and bring some sense into these projects.

  3. His doubling of the capital gains tax will actually DECREASE tax revenue from that source. Bing “Laffer curve.” A Democrat once reduced that tax rate and the revenue INCREASED. His name was Bill Clinton.

  4. How do you make any kind of respectful comment about people whose main objective is to control and destroy you?

  5. Biblically, it doesnt look good for the world not just America or Mystery Babylon
    Jonathon Cahn has alot of it figured out and his last video PLUS! the eclipse before Trump was elected and 7 years later another Xing the US… a super blood moon with meteor showers the 15th ish this month! Its all but God poking us in our chest saying “STRAIGTEN UP” or Come back to me because judgement is upon you!

  6. Is it socially acceptable to publish a letter written to a public figure [void of personal address] ?
    Jim Carter
    May 4, 2021

    Larry P. Ann OPEN LETTER
    President, Hillsdale College

    Dear Mr. Ann,

    Your plea for support to educate the public on the adverse affects of Socialism has been noted. It is respectfully submitted the adverse affects are not from the manifestations of Socialism but from the method of financing the government enforcement of imposed social benefits.

    The benevolence of homo sapiens is visible in every natural tragedy. The physical involvement to assist the victims, and the received financial gifts freely offered witness the love and compassion for unknown victims of tragedy. But when government becomes involved, with forced extractions to fund the benevolence, the methods of financing become extortion with corruption and not love.

    Governments have developed methods of confiscation of the public’s wealth without touching the pocketbook of each individual. One such method may be called deficit spending. Ginsberg has identified the forefathers of the USA system resulted in chaos and social ruin for more than 800 years. Tayyab Mahmud’s lengthy analysis has concluded financial entities consistently receive great benefits from recent financial collapse. Let us turn to the financial structure imposed on the USA some 100 years ago.

    A cabal of gentlemen, consisting of a powerful senator, a European financial mogul, and several Wall Street financiers secluded themselves on Jekyll Island for a week and developed a format of what became the Federal Reserve. (Fed) The operation of the Fed requires the U.S. Treasury issue a deficit spending Treasury security to it and the Fed will enter credit to a government account in that amount which the government can spend. The Fed magician will then palm the deficit spending Treasury security from public view.

    The writing pasted below traces the path of wealth from the palmed security. That amount, one trillion dollars annually at 2020, which amounted to $3000 for every man, woman, and child in the USA, has been multiplied by a factor of seven in the past 100 days. That value is analyzed to be received by select Primary Dealers in violation of a charter provision that all profit of the venture belongs to the government. That would appear to be embezzlement.

    Your institute has extensive expertise in business, accounting, law, public exposure, and a unique awareness of oppressive government. Is the investigation of this theory, to avoid a catastrophic social collapse and impoverishment, of interest to you ?

    Respectfully,
    James Carter
    proliberty@fairpoint

    Pasted: https://genzconservative.com/the-federal-reserve-for-dummies/#_ftn3.

  7. Whatever one may think of its substance one way or the other, this is a very well-written article. Kudos to the author!