Smith Op-Ed: Biden’s Deficit Deceit
At the beginning of the Biden administration, Washington Democrats insisted it was necessary to spend trillions of dollars to jump-start the economy and combat COVID, despite analysis from the Congressional Budget Office that showed the economy was well on its way to recovery.
In just a few short months after Democrats enacted $2 trillion in deficit spending, prices began to spike, the purchasing power of paychecks shrank, and supply chains crumbled. What the public was witnessing, the White House said, was not the early signs of rampant inflation but a historic economic recovery. But working families correctly sensed something was not right with the economy.
Time and again, when confronted with the truth about how his reckless deficit spending created the inflation crisis, President Joe Biden has tried to flip the script — first denying inflation was a problem and then trotting out misleading charts and graphs to make the absurd claim that he is all about deficit reduction. At a press conference unveiling his most recent budget, the president proclaimed that he valued “fiscal responsibility” and then bragged in his first year in office, the fiscal year 2021, “We cut the deficit by more than $350 billion.”
What Biden conveniently forgets to mention is that the deficit in his first year in office was the second-highest in American history. After Democrats passed their $2 trillion American Rescue Plan, the deficit actually climbed by $517 billion compared to what the CBO had projected it would be in 2021. ARP pushed government spending to a whopping 30.5% of GDP — roughly 10 percentage points higher than its historical average.
The law itself was sold under false pretenses as a solution for ending the COVID pandemic, but less than 9% actually went to public health spending to combat the virus. Where did the other 91% go? Try $17 million for a golf course in Florida; $4 million to build beach parking lots in South Carolina; $2 million to plant trees in New York; or how about $400 billion to pay people to stay at home and not go to work.
Biden claimed it would create 4 million additional jobs. Instead, job creation in 2021 was less than what CBO projected it would be had ARP never been enacted. Biden has blamed inflation on Putin’s war, despite inflation having risen 7.5% before Russian troops even entered Ukraine. The real culprit is closer to home — the $2 trillion American Rescue Plan, which has led to the highest inflation in 40 years.
Just as ARP raised the deficit last year, the president’s budget will raise future deficits to the highest sustained levels in American history. Deficits have averaged $1 trillion each year for the past decade. Under Biden’s budget, supported by Congressional Democrats, average deficits climb to $1.6 trillion each year. The president’s own budget is evidence enough that he lacks any semblance of fiscal restraint and intends to spend even more.
Right now, only two things are saving the Biden administration from an even worse fiscal outlook. The Republican-passed Tax Cuts and Jobs Act — which lowered rates and provided tax relief to the public — is generating record revenue for the federal government. Last year, tax revenues grew by 18%, the highest in almost 50 years, outpacing what CBO had projected for 2021 under the TCJA. Revenues for 2022 so far have surged 29%, putting it on pace to be the largest growth since 1951 and the largest share of GDP ever. Revenues for 2022 are outpacing not only what CBO estimated for 2022 after the enactment of tax relief but also higher than what CBO projected before TCJA.
The other thing saving Biden from posting even higher annual deficits is the defeat of his Build Back Broke agenda, which CBO confirmed would have cost $5 trillion and added $3 trillion to the debt.
Neither the TCJA nor the failure of Build Back Broke was done by Biden. In fact, the Biden administration wants to undo TCJA tax relief and push through piecemeal the items that were in Build Back Broke. A recent study showed that 64% of families are living paycheck to paycheck at a time when real wages have declined 4.2% since Biden took office. The average family will spend $5,200 more this year for the same goods and services, on top of the $3,500 inflation tax they paid last year. A new report out this month shows that households will spend $5,000 this year on gas alone.
Enough is enough. It’s time for Biden to stop with his deficit deceit, and to stop trying to claim his agenda, which would grow deficits, is somehow the cure to the high prices brought on by deficit spending.