The release of the Biden $6 trillion, biggest-ever and latest-in-a-century fiscal year 2022 budget proposal is a good time to reflect upon the implications of the fiscal and regulatory tentacles of today’s federal government.
It’s also a good time to rebuke Republicans’ own proposal to cut a deal to spend $1 trillion on infrastructure in a political environment of overspending—the already enacted American Rescue Plan, and the “Jobs” and “Families” follow-up plans, even as recovery, economically and health-wise, is already well underway.
One finds nothing much “American” about such national top-down spending and regulatory schemes. In nominal terms, America progressed from the Framers until Ronald Reagan before experiencing a $1 trillion budget. George W. Bush gave us our first $2 trillion and $3 trillion budget; Trump ushered in $4 trillion. That’ll double to $8 billion under Biden by 2031.
Deficit spending has been the norm for generations, with the national debt having topped $28 trillion this year in March, up $10 trillion in less than 10 years. Adding to that, Biden’s budget anticipates a deficit exceeding $1.3 trillion each year of the next decade.
Initial pushback includes Sen. Minority Leader Mitch McConnell’s fretting that Biden’s taxing and spending would “shortchange” the supposedly woke military that McConnell himself should be shortchanging.
Biden’s cyclopean proposal is interesting to compare to former president Donald Trump’s kickoff budget proposal. That was fiscal year 2018’s A New Foundation for American Greatness boosting defense but proposing to cut spending $3.6 trillion over 10 years (with nearly $1 trillion of the cuts coming from Medicaid and the SNAP program).
Back then federal spending was already crossing the $4 trillion level, exceeding heights attained during the 2008 downturn/stimulus era. Trump’s blueprint would purportedly have balanced the budget in 2027 (alas, after five federal elections), but by imputing a high annual economic growth rate of 3 percent, driven by tax policy changes and speculative regulatory reforms.
Such concepts are null now, and there is no whisper of ever balancing the books again.
Overall, $48.9 trillion would have been spent under the original Trump vision over 10 years, with annual spending at the horizon of $5.7 trillion; that’s more “frugal” than Biden’s 10-year vision of $8 trillion, but hefty nonetheless.
Even under an earlier Republican fiscal year 2016 vision document called “Balanced Budget for a Stronger America,” optimistically seeking surpluses in 2026, spending would reach the once unthinkable spending level of $5 trillion in the new Roaring 20s. Let’s just say those old promises to repeal Obamacare are now gone.
Incidentally, a newly released Republican Study Committee budgetary and regulatory reform document called Reclaiming Our Fiscal Future calls for $4.735 in outlays in the coming 2022 fiscal year, compared to Biden’s $6 trillion. While this figure stands a trillion higher than Republicans called for just five years ago, the new alternative keeps the sanity flame alive by projecting a spending program allowing for a $130 billion surplus in 2026.
Alas, the last surplus was 20 years ago, when the federal budget balanced between 1998 and 2001 under President Clinton. The last balanced budget before that was 1969, when Alvin Lee and Ten Years After played “I’m Goin’ Home” at Woodstock.
The upshot of all this is that we regularly indulge in debate over the federal government’s relative expenditures on entitlement, military, and discretionary categories (and now add pandemic “recovery” to the list) when they are each excessive on their own merits. We’re not going home to fiscal normalcy anytime soon.
A big part of the reason why is that much of the time, Republicans surrender to fiscal and regulatory progressivism. The gargantuan Biden spending proposal appears amid several weeks of House and senate debates over a misguided bipartisan “Endless Frontier Act” on alleged science and tech “investment” that would amount to endless regulation instead.
In addition to shelving that, Republicans should put to rest their offer to “invest” nearly $1 trillion on infrastructure and replace it with privatization, the breaking down of the regulatory silos between infrastructure sectors, antitrust rollbacks, and other regulatory liberalization to maximize the private sector role in creating new infrastructure wealth and jobs. As it stands, Republicans’ infrastructure vision is as stunted as the Democrat version is: It entails only spending, and badly at that.
Even Trump would have put some $200 billion into leveraging infrastructure. All contemporary presidential and congressional visions of infrastructure lend themselves new strings and regulations rather than leaps forward in large-scale competitive enterprise. As CEI’s founder Fred Smith would say, these amount to the government steering while the private sector rows.
Ask any politician what is the plan to get NASA out of space travel and turn it over to private enterprise rather than “public private partnerships.” The regulatory costs of blurring government and business roles, especially in today’s era of untethered government, are incalculable.
A better approach on concerns like transportation infrastructure—as well as for Biden’s mangling of the English language to include education, health, job training as categories of “infrastructure”—is to transform federal grant programs (now topping $600 billion annually) by leaving the dollars in the states and getting the federal government out of the way. That’s not in the Biden plan, but it’s not in leading Republican proposals either.
Furthermore, there has been no resolution of the deterioration in federalism that led, during COVID, to excessive emergency measures like state bailouts, federal payments to not work, and payments to those who didn’t need them.
Spending hundreds of billions now on infrastructure without resolving the creation of this new custodial administrative state compounds the government-centric vision of infrastructure planning with a non-preparedness that will make our descendants poorer and worse off when the next crisis hits. An Abuse-of-Crisis Prevention Act should precede any new spending program in my view. Otherwise, we will have stolen tomorrow’s wealth and resilience.
No matter whether the numbers come from Democrats or Republicans, the bulk of federal spending is on autopilot. While Republicans in the 1990s promised to get rid of entire departments like Energy and Education, nothing of the sort is to be found under consideration, nor was it even found under Trump’s executive branch restructuring.
Today’s era is thoroughly dominated by big (government) science, big infrastructure, big energy, big “homeland security,” big cybersecurity, big health care, and plenty else. This is the framework within which Republicans compromise with Democrats on so-called infrastructure.
When interest rates ever do rise, interest on the accumulated dozens of trillions in debt can send things into a tailspin. Red tape and regulatory relief have macroeconomic effects that feed back into the fiscal statistics can give some breathing room. Some ambitious proposals have been introduced in the 117th Congress, and are underscored in the aforementioned Reclaiming Our Fiscal Future document.
Capping federal spending is important, but so is capping what the government can force the private sector to spend. May that one day, again, become common knowledge and policy.
Plenty other countries’ spending eats up a greater share of their national output compared with the ongoing near-20 percent for the U.S. Still in gross terms, ours is the biggest government on the planet, and under Biden’s proposal, it will grow to be a lot bigger.
Somewhere, there need to emerge stirrings of a movement to not just allow but expect Americans to able to help themselves, their families, and provide for their own secure retirements and health care, and to pass down intergenerational wealth instead of intergenerational federal debt.
That is especially important before another crisis occurs that will send both parties on another spending and regulatory spree.