President Joe Biden’s colossal $5.8 trillion spending blueprint deserves more attention, specifically for the wholly unrealistic assumptions upon which it stands and its historic tax hikes.
Mr. Biden’s budget proposal seeks a massive 31 percent spending increase over the most recent pre-pandemic plan. It would represent a 100 percent increase in federal outlays in just 15 years. But the gushing red ink is much worse than many realize because the budget — which empowers the bureaucracy over job creators and entrepreneurs — rests on a foundation precariously constructed atop sand.
In particular, the administration’s economic growth estimates under-represent how damaging the president’s spending increases and tax increases would be to long-term revenue collections and growth. Mr. Biden also continues to insist that his spending binge will be an antidote to inflation, when even some left-leaning economists now concede that the opposite is true.
“The actual policies laid out in the budget … would reduce economic growth and create unsound fiscal policy,” William McBride and Alex Durante of the Tax Foundation concluded last week, “with no real evidence provided to support claims to the contrary.”
The most promising recipe for growth and prosperity depends upon leaving as much capital as possible in the hands of the private sector, not engineering a massive transfer of wealth to administrative central planners. Yet the Biden budget makes no bones about doing the latter. The Wall Street Journal noted last week that White House proposal includes $2.5 trillion in tax hikes over the next decade. That would be the largest tax hike in history in terms of actual dollars, Fox Business reported.
All this comes as inflation soars to levels not seen in 40 years. That may make debt more palatable, but it doesn’t bode well for the president’s growth projections, particularly with the Fed poised to ramp up interest rates, which has the potential to curtail job creation. Stagflation, anyone?
Mr. Biden promised that he wouldn’t raise taxes on those earning less than $400,000 a year. That was a crock. While the tax ambitions contained in his spending blueprint are ostensibly targeted at the wealthy and U.S. corporations, average Americans will pay the long-term price. The confusion and contradiction of the Biden plan is readily apparent in the administration’s proposal to wallop oil and gas producers with nearly a dozen new taxes at a time when gasoline prices are soaring. Who does the president think will ultimately pay the price?
The Biden budget must run the gantlet through Congress, where it currently takes only one moderate Senate Democrat to put up a stop sign. And in part because of this administration’s economic incoherence, after the midterms it will almost certainly be DOA.