Joe Biden finally got around to submitting budget proposals to Congress seven weeks after the legal deadline, although substantial parts of his fiscal plan were not included in the initial disclosure. Christopher Jacobs wrote an article published in The Federalist on Friday detailing some of the major ways Biden’s claims about reducing the federal budget deficit are bogus.
The White House worked hard to spin the news of the budget release as a story about “deficit reduction.” The centerpiece was the proposal for a “billionaire’s tax” which turns out to be both impractical and unconstitutional.
Biden’s budget claims are based on a 10-year projection that includes the best case outcomes of all his plans for tax and revenue increases. His best-case projection would provide a 10-year reduction of just 0.7 percent. However, the “current-law” baseline is the projection based on projected revenues without additional changes. That projection shows an expected deficit increase of $2.3 trillion over last year alone.
Biden’s budget also assumes that enacting brand-new massive entitlement programs will be “paid-for” spending. The reality is that the Congressional Budget Office has said that if Democrats get every spending measure they want to be enacted, the cost will be nearly $5 trillion, far exceeding proposed tax increases to pay for the additional spending.
Another footnote to Biden’s budget involves the Omnibus spending bill that was just enacted. That pork-laden spending spree was not included in the administration’s deficit reduction calculation. The hundreds of billions of earmarks and unnecessary federal spending that are part of that bill mean in reality that Biden’s claimed reduction in deficit spending has already evaporated.
Further, the White House has assumed consumer inflation will end up at 4.7 percent for the fiscal year that ends this September. After that, the assumption is that inflation will fall all the way to 2.3 percent for the next fiscal year. Those estimates have been charitably described as “not realistic.”
The best the administration has been able to do in regard to the fanciful inflation projections has been to say that the budget was locked in last November, before the Russian invasion of Ukraine. Even so, the spin remains that economic recovery from the pandemic, resolution of supply chain issues, and tightening of fiscal policy by the Federal Reserve will lead to “normalization” of prices. Suddenly, inflation is “transitory” again.
The proposed budget also fails to make any meaningful reductions to entitlement programs. As things stand, the Medicare Hospital Insurance Trust Fund is insolvent and will lose almost another half-trillion dollars by 2030.
The best that Biden has done with regard to correcting the problems with Medicare and Social Security is to promise to continue fraud reduction. That is an important mission, but will not fix entitlements and is little more than a way to avoid difficult political decisions.
However the budget process plays out, it appears all but certain the Biden administration will continue to attempt to dress up massive new borrowing and spending in a costume of “deficit reduction.”