by Peter J. Thomas
While all Americans should be concerned about President Biden’s extravagant plans for taxes and spending, those of us who are seniors have special reason for worry.
For four years we have enjoyed the benefits of the previous administration, in which the economy experienced a boom that was reflected in the rapid growth of retirement accounts and pension funds. Even the brief recession caused by COVID was followed by a quick recovery, quicker than many thought possible.
Likewise, inflation was on the low side, an important consideration for those on fixed incomes. The hidden tax of inflation is always a major concern for those in retirement.
But now all that is changing for the worse, and the changes are only likely to continue in the wrong direction.
President Biden’s plans for taxes, spending, and regulation, begun in the already enacted spending bills and with more to come in the proposed infrastructure and $3.5 trillion reconciliation bills, are a recipe for slower economic growth and rapid inflation.
Increased taxes and regulations on businesses will be felt by those who depend on the stocks in their retirement plans. As stock values level off or even decline, it will become more and more difficult to afford the necessities of daily life. The nonpartisan Congressional Budget Office has projected that the President’s budget proposals would result in permanently reducing the Gross Domestic Product by 1%.
Slower growth will also mean less collected in Social Security taxes. Given that Social Security is already running a deficit, less growth and less employment will push forward the day when the Trust Fund assets will be exhausted and benefits may be cut. That day may be inevitable, given changing demographics, but we should not be in a hurry to get there.
Meanwhile, the inflationary spiral already underway continues, perhaps bringing us back to the double-digit inflation of the Carter years. Those of us old enough to remember those times surely have no desire to go through them again.
It’s a gloomy picture, but it does not have to happen that way. Congress could still put the brakes on, refusing to pass the $3.5 trillion spending bill now being written. Indeed, we see that the Democrats in Congress are themselves sharply divided, with the party’s left wing hoping for much more spending while the more moderate liberals express concern that the bill spends too much, taxes too much, regulates too much, and goes where government need not go. If provisions to include amnesty for illegal aliens are included in the bill (which is intended, according to the budget resolution passed last month), divisions may become even more difficult to overcome. It is possible that disagreements among House Democrats may go so far as to sink the bipartisan infrastructure bill that passed the Senate overwhelmingly after such lengthy negotiations.
With the reconciliation bill facing such hurdles, it would not require much public outcry to create a bipartisan majority coalition to block passage or force the bill to be scaled down. Such an outcry appears likely given the clear evidence of the public mood in our nation.
Polling shows a steady decline in President Biden’s approval rating and a sharp decline since his inauguration in the number of people who say the country is on the right track. This was true even before the recent disaster in Afghanistan. Inflation polls as the nation’s number one economic concern. Even 55% of Democrats told a Monmouth poll that they feared Biden’s spending would bring inflation.
The Democrats remember what happened in 2010 when they pushed through ObamaCare despite public opposition. Perhaps this time they will get the message and pull back. However, that will only happen if we, especially seniors, make our voices heard in the weeks and months ahead.