Our series on the failure of Bidenomics has touched on four topics.
- Biden’s subsidy agenda will lead to higher prices and economic inefficiency.
- Biden’s inflation policy is mocked even by senior Democratic economists.
- Biden’s so-called Buy America policy hurts taxpayers and means fewer jobs.
- Biden’s statist agenda means families lose as prices rise faster than income.
For our fifth edition, let’s turn our attention to the president’s misguided fiscal policy.
This means analyzing three pieces of legislation.
First, his so-called stimulus was approved last year, adding $1.9 trillion to the nation’s fiscal burden. The president and his team claimed it would lead to four million additional jobs, but the net result was a drop in employment compared to the White House’s own projections.
Second, his costly infrastructure plan also was approved last year, though only a small fraction of new spending was actually for roads and bridges (and even that spending should be handled by state and local governments).
Third, his “Build Back Better” proposal dramatically would expand the burden of government spending – by $5 trillion over the next decade! Along with a plethora of economy-sapping tax increases.
Regarding the third item, the president so far has not been able to convince all Democratic senators to support the scheme. And with the Senate evenly split between the two parties, Biden needs all of their votes to get his plan approved.
With any luck, that will never happen.
So what is the plan wrong? Along with several hundred other economists, I signed on to this letter explaining why Biden’s massive expansion of the welfare state would be bad news for the country.
The most important part of the statement is that bigger government would “reduce the number of people working, badly misallocate capital, and hobble economic growth.”
Based on research from the Congressional Budget Office, the damage would be enormous, reducing worker compensation by $1.6 trillion over the next ten years.
What about the other issues mentioned in the statement, such as debt and inflation?
It’s not good that debt goes up, of course, but that’s a symptom of the bigger problem, which is government consuming a greater share of the nation’s output.
Also, at the risk of being annoyingly pedantic, I don’t actually think Biden’s budget would increase inflation. That only happens if the Federal Reserve adopts bad monetary policy.
That being said, central banks are more likely to adopt bad monetary policy when politicians are following bad fiscal policy. So the core assertion is correct.
P.S. I don’t know whether to characterize this as absurd, pathetic, addled, or dishonest, but Joe Biden actually claimed his budget plan has zero cost.
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