BALTIMORE, MARYLAND – Sit down. Remain calm. Let’s try to figure this out…
The big news on Friday was that the House got together and passed Joe Biden’s social spending program. Nancy Pelosi congratulated herself:
[The package] is a spectacular agenda for the future, with transformational action on health care, family care and climate that will make a significant difference in the lives of millions of Americans.
Here at the Diary, we don’t care much for numbers. We don’t trust them.
We’re talking about numbers used in public policy discussions – which tend to be confected on multiple levels of legerdemain and statistical fuzz.
But the numbers connected to the Build Back Better Boondoggle are especially shifty. How much in tax increases? What’s the final tab?
Darned if we know.
The numbers are all over the place, depending on which lies you believe. The Hill elaborates:
That Congressional Budget Office (CBO) assessment, released Thursday evening, flew in the face of Biden’s promise that the legislation would be fully paid for. It has sparked some debate – and plenty of confusion – over how much the bill will cost overall.
The CBO found that, in total, the package allocates $1.64 trillion in new federal spending over ten years. But unlike the White House, the budget office does not include the tax credits as part of that top-line number. If those credits are added to the CBO’s spending tally, the figure would jump into the $2.4 trillion range – well above Biden’s initial $1.75 trillion framework.
The Wall Street Journal tries to explain further:
The current $10,000 limit on the state-and-local tax (SALT) deduction increases to $80,000 through 2030. In 2031 it would return to $10,000. Penn Wharton says this gimmick would lead to $65 billion in additional tax revenue through 2031 though it would cost about $300 billion through 2025.
Well… we’re glad that’s cleared up!
The Penn Wharton Budget model “scored” Biden’s new Build Back Better Boondoggle at $4.6 trillion over 10 years.
The Committee for a Responsible Federal Budget (which sounds oxymoronic to us) says the cost will go to $4.9 trillion when the feds finally admit that the sun will never actually set on their “temporary” provisions.
But for today’s purpose, let us assume that the Great Cause – whatever it is – will end up taking $5 trillion out of the public purse.
Are you sitting down?
Are you aware that this proposal comes on top of the $1.2 trillion “infrastructure” boondoggle… which came on top of the $2.77 trillion deficit for fiscal year 2021… which is 12% of GDP, considerably more than Argentina’s 8.5% deficit/GDP ratio?
And are you aware that every penny in the public purse must come from the public, in one form or another? And that the purse now holds nearly $29 trillion worth of I.O.U.s that the public will eventually have to pay – most likely, in the form of higher consumer prices?
Are you aware, too, that inflation is on the move… rising at the fastest pace in 31 years? And that the average working stiff is getting poorer (his wages are going up, but about 2% more slowly than prices)?
Elizabeth reported yesterday that her trip to the grocery store cost $100 more than it usually does. She thought the clerk had made a mistake. But it was no mistake; prices are rising.
“Think of those poor families living paycheck to paycheck,” she said. “It must be awfully depressing.”
Almost every penny of the federal deficit is now covered by “printing press” money. So isn’t adding another $5 trillion to federal spending likely to make the situation worse?
And won’t this put voters in a foul mood, in which they will most likely throw out the Democrats in the next election?
So, why on Earth would the feds do such a thing?
We turn to a Democratic senator for a dumb answer.
Senator Mazie Hirono (D-HI) believes that additional spending is good for the economy. Newsweek reports:
I disagree… that Build Back Better is going to add to inflation. In fact, economists rarely agree about anything, but 12 Nobel science economists say that Build Back Better is actually going to not add to inflation and will be anti-inflationary over the long term.
So we need to get on and pass the Build Back Better to lower costs for families and to address climate change and all of the other parts of the bill that will actually strengthen our families and our economy.
So, let’s see if we have this straight…
Inflation is rising in almost all sectors. The rather obvious cause is that the Federal Reserve added nearly $5 trillion to the nation’s monetary base since August 2019.
As we elaborated Friday, fish gotta swim… and money gotta buy something. Buying things caused ships to back up, shelves to empty out, and prices to rise.
And now, there are those among us – including 12 Nobel Prize-winning economists! – who believe that another $5 trillion down the drain will “strengthen our economy.”
How so? Tomorrow… it might be worth looking at these 12 Nobel Prize-winners – or at least one of them – more closely.
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