by Peter J. Thomas
There’s an old saying that figures don’t lie, but liars can figure. That sums up the way that Biden’s massive spending bill was constructed, so as to hide how much it will increase the deficit.
Honestly counting all the spending programs would have overwhelmed the effect of the tax increases and openly added a huge amount to the deficit. However, because the bill’s authors cleverly designed it to take advantage of the way the Congressional Budget Office (CBO) makes its calculations, the CBO had no choice but to provide a misleading report which says that the bill will add no more than $367 billion to the deficit over ten years.
Anyone looking at the CBO summary would notice that the bill adds between $147 and $209 billion to the deficit in each of the first four years, then $119 billion in the fifth year. However, during the final five years the CBO projects it will actually reduce the deficit.
How is this magical transformation accomplished? Only by assuming that much of the bill’s spending will quickly begin -- and then just as quickly fade away, so that it becomes not a spending bill but little more than a tax increase after five years. The new spending will reach $253 billion in 2025, yet we are supposed to believe that by 2031 this will shrink to only $87 billion while taxes will be bringing in an additional $250 billion. Most of those goodies that the bill’s supporters have been boasting about will allegedly disappear forever, leaving only taxes to fight the deficit.
If you believe that, beware of anyone who approaches you with a bridge for sale.
This bill’s supporters have insisted that it will greatly transform America, yet as written it is little more than a brief change of course. The truth is they intend to extend those “temporary” programs, making the spending permanent and vastly expanding the welfare state.
What would this mean? If you simply take the $253 billion of extra spending in 2025 and assume it continues each year through 2031 (ignoring inflation), it adds another $588 billion in spending. The increase in the deficit is almost $1 trillion over ten years.
But the truth may be even worse. The Committee for a Responsible Federal Budget, which has made a detailed study of the bill, concludes that if the programs are made permanent, spending would be much greater and would add $2.8 trillion to the deficit.
And yet, even that may not be the worst-case outcome. It turns out that the bill’s tax increases may fall short of projections. The new minimum tax on corporations, intended to take away the tax benefits for such policies as shifting to greener energy and operations, is supposed to bring in $320 billion in additional revenue. However, implementation may require changes since, as written, the tax would severely undermine the President’s Green New Deal policies. It may also, unless amended, tax corporations on the annual increase in the value of their pension funds. If the tax is revised to avoid such problems, the revenue will be less than expected and the deficit larger.
The President’s welfare state bill is a bad deal for America. He should be focusing on expanding opportunity, not government hand-outs. Congress should scrap this bill and start over.