This week is seeing high intrigue on Capitol Hill as the Biden administration and Democrat lawmakers are trying to figure out a plan for enacting the $1.2 trillion bipartisan infrastructure package and the $3.5 trillion at least, a spending bill that makes up Joe Biden’s “Build Back Better” spending bonanza.
The last few days have seen them roll out a wild, but not surprising, claim that the massive $3.5 trillion budget reconciliation measure will have a “zero” cost. In a speech from the White House, Biden said that “the price tag is zero,” claiming that “we’re going to pay for everything we spend.”
Rep. Pramila Jayapal (D-WA), chair of the House Progressive Caucus, said on CNN that the bill is “zero-dollar” in that it will be “paid for” with higher taxes on the “wealthiest corporations and the wealthiest individuals.”
This week, Speaker Nancy Pelosi told the press that the bill is “not about a dollar amount, the dollar amount, as the president said, is zero.”
Trying to spin $3.5 trillion in new spending as costing zero dollars is among the most shameless, patently absurd attempts to change reality through a talking point ever attempted https://t.co/DlaulhvFTT
— Rich Lowry (@RichLowry) September 29, 2021
The “zero dollar bill” narrative is crafted around the supposed idea that the multiple trillions of dollars contemplated in new spending programs will be offset by sufficient increases in tax revenue. To get to “zero,” of course, the new revenue will have to meet or exceed the new spending.
That claim ignores the reality that the actual costs of new spending plans virtually consistently exceed projections. It also relies on a highly optimistic claim of expected new tax revenues. Deficit neutrality is almost always a pipe dream for new government spending plans, and the nature of the “Build Back Better” package makes the idea ridiculous.
Even if it were true that new revenues would offset the bill’s spending, it is still intellectually dishonest and entirely wrong as a matter of economics to say the cost would be “zero.” Even if the plan added nothing to the nominal national debt, the trillions in new taxes would, directly and indirectly, affect every American.
All new government spending requires getting money from somewhere. Government must either produce the money through taxes, borrowing, or printing. All of those methods impact the bottom line of every American consumer. Every person pays through direct taxation, increased prices, or devaluing the money they have to spend on essential goods.
Anytime a politician tells the public that a free lunch is on the way or something Washington wants to do has a cost of “zero,” every American should grab their wallet.