Most presidential budget proposals arrive DOA on Capitol Hill, but this one will even deader than most. Joe Biden plans to ask for a six trillion dollar annual budget, according to the New York Times, after a record spending spree over the past year in dealing with the COVID-19 pandemic. The topline budget request is at least a 20% increase in spending over the previous presidential budget request — even as economists begin to worry about inflation based on massive money-printing:
President Biden will propose a $6 trillion budget on Friday that would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion throughout the next decade.
Documents obtained by The New York Times show that Mr. Biden’s first budget request as president calls for the federal government to spend $6 trillion in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. The growth is driven by Mr. Biden’s two-part agenda to upgrade the nation’s infrastructure and substantially expand the social safety net, contained in his American Jobs Plan and American Families Plan, along with other planned increases in discretionary spending.
The proposal shows the sweep of Mr. Biden’s ambitions to wield government power to help more Americans attain the comforts of a middle-class life and to lift U.S. industry to better compete globally in an economy the administration believes will be dominated by a race to reduce energy emissions and combat climate change.
How exactly will Biden pay for this extra spending? Printing even more money, as well as “raising taxes on corporations and high earners,” of course. The problem with those strategies is that neither end up actually paying those higher taxes. “High earners” dispense with income and operate off of wealth instead or capital gains when it works out more beneficially for tax liabilities. And corporations pass on taxes to their consumers in the form of higher prices, which is itself inflationary by definition.
In the meantime, deficit spending would explode. Biden’s projection for FY2022 is a deficit of $1.8 trillion in a single year, while we’re still grappling with the impacts of massive pandemic borrowing. In three years, our debt-to-economy ratio would hit its highest level since World War II — without us being involved in any massive military operations. If for some reason we needed to fight a war, we wouldn’t have the resources or the flexibility to arm ourselves for a protracted fight.
China would, however.
As I argued, this budget has no chance at all of passing in Congress. However, it shifts the Overton window on deficit spending yet again in the money-printing direction. Our fiscal policies have become completely unmoored from reality, and this budget proposal is only the more extreme example of our irresponsibility.