Just before Memorial Day, the Administration released its long-awaited fiscal year 2022 budget proposal. Having reviewed the proposal, it’s obvious why they chose that timing. They hoped most Americans would be too distracted by backyard barbecues and tributes to fallen heroes to notice.
I have bad news for my Democrat colleagues. The American public won’t have the wool pulled over their eyes that easily. Americans will see this budget for what it is: an unserious political document containing a laundry list of liberal wish list policies unmoored from economic or fiscal reality.
It would be funny if not for the very serious issues we currently face as a country.
In response to the pandemic, Congress understandably took bold actions to help individuals keep a roof over their heads and small businesses keep their lights on. As a result, our national debt exploded. It now exceeds the entire output of our economy.
As we enter a post-pandemic world, we need to address the very real issues rising debt and deficits pose for our country over the long term. Otherwise, to quote the non-partisan Congressional Budget Office, “a growing debt burden could increase the risk of a fiscal crisis and higher inflation as well as undermine confidence in the U.S. dollar.”
The President’s budget completely ignores potential fiscal and economic challenges on the horizon. Taking the concept of “never letting a crisis go to waste” to a whole new level, his budget would put our country in permanent crisis mode in terms of spending and debt levels.
In 2009, at the height of the financial crisis, government spending peaked at 24.4 percent of GDP. Spending proposed under the President’s budget would average 24.5 percent over the next decade.
Moreover, his budget would set a new record for debt as a share of the economy. According to the President’s own rosy assumptions, debt as percent of GDP would reach 112 percent in 2022; shattering the WWII record of 106 percent. By 2031, debt as a share of our economy would hit 117 percent.
At a time when inflation has been rearing its head, proposing sustained spending and debt at these levels is playing with fire. Even long-time Democrat economists and Obama administration alums, Larry Summers and Jason Furman, have begun to sound the inflation alarm. The President would be well advised to start taking notice.
As problematic as the spending side of the President’s budget is, the tax side is equally dangerous. The President proposes enacting the largest tax increase in history.
Incredibly, even with the $3.6 trillion in new taxes he proposes his budget still doesn’t come close to putting our national debt on a sustainable path given the new spending.
This shows his tax hikes aren’t about fiscal responsibility. Instead, they are about punishing success and redistributing wealth.
Ultimately, this will prove disastrous for the economy and all Americans. Job-killing tax hikes will slow economic growth, reduce business investment and result in lower wages and fewer jobs over the long run. As a result, the middle-class is likely to suffer the most.
Higher taxes, excessive spending, and escalating debt are not a recipe for our economy to “Build Back Better.” They’re just a recipe for the government to “Build Bureaucracy Bigger” at the expense of hard-working Americans.