Biden’s Dishonest Budget

By Philip Klein

Thursday, March 31, 2022

 

At a time of historically high debt, President Biden spent the first year of his presidency pushing for $6 trillion worth of new spending on a host of liberal priorities, of which (thanks to Senator Joe Manchin) he was limited to about $2.5 trillion. Now, in proposing another massive budget, Biden is trying to portray himself as some sort of legendary fiscal hawk.

 

Do not believe him.

 

In unveiling the Biden budget this week, the White House released a “fact sheet” that was filled with misleading claims.

 

Up front, the administration makes the claim that “the deficit fell last year — by around $300 billion.” What this leaves out is that it only fell relative to the historically high levels in 2020, when the Covid pandemic hit, and that deficits are higher than they were projected to be when Biden took office.

 

Specifically, in February 2021, weeks after he was sworn in, the Congressional Budget Office estimated that deficits would be about $2.3 trillion during the fiscal year that ended on September 30. But under Biden, the actual deficit for the year came in at nearly $2.8 trillion. Put another way, even though the deficit declined relative to historically elevated 2020 levels, it actually ended up about $500 billion higher than what CBO was expecting before any Biden spending policies went into effect. CBO has noted that the 2021 deficit was “nearly triple the shortfall incurred in 2019.”

 

The Biden budget document also boasts that, “as our historic economic and labor market recovery continues, the President’s Budget projects that the deficit in 2022 will be more than $1.3 trillion lower than last year’s—the largest ever one-year decline in our country’s history.”

 

Again, this is deceptive. Before any of Biden’s policies went into effect, the CBO anticipated that deficits would decrease as the country emerged from the pandemic. In the same February 2021 report, CBO projected a $1 trillion deficit for 2022. But the Biden budget projects a deficit of $1.4 trillion — or 40 percent higher than the trajectory before he came it into office — and then touts it as an incredible achievement.

 

The document also asserts, “The Budget improves our country’s long-term fiscal outlook while also delivering on the ambitious agenda the President laid out in his State of the Union address.”

 

This is another ludicrous claim.

 

When discussing the long-term fiscal outlook, what makes the most sense is to talk about overall federal debt as a share of the economy. The debt-to-GDP ratio has been on an upward trajectory for decades because of a combination of fiscal mismanagement by both political parties combining with the retirement of the Baby Boomers and health-care inflation. In 2019, just before the pandemic, debt had risen to 79 percent of GDP. Due to the surge in pandemic-related spending and the drop in revenue from a lockdown-battered economy, debt surged past 100 percent for the first time since World War II. While it is common for debt to rise during national emergencies, in the case of World War II, debt levels receded at the conclusion of the war. But the Biden budget does not anticipate that at all.

 

In fact, the Biden budget expects debt to grow from 102 percent of domestic product in 2022 to nearly 107 percent by the end of the budget window in 2032. That would exceed the World War II record.

 

Though Biden does claim $1 trillion in deficit reduction as a result of trillions in proposed tax increases, his budget relies on what the Manhattan Institute’s Brian Riedl has flagged as a “magic asterisk.”

 

Specifically, at the bottom of Table S-1 on page 119, the budget includes a footnote that reads:

 

The Budget includes a reserve for legislation that reduces costs, expands productive capacity, and reforms the tax system. While the President is committed to reducing the deficit with this legislation, this allowance is shown as deficit neutral to be conservative for purposes of the budget totals. Because discussions with Congress continue, the Budget does not break down the reserve among specific policies or between revenues and outlays.

 

Translated, what this means is that Biden is not including the deficit effects of his trillions of dollars of proposed spending through Build Back Better. And remember, the administration is also claiming that “the Budget improves our country’s long-term fiscal outlook while also delivering on the ambitious agenda the President laid out in his State of the Union address.” In other words, he’s still pushing the same spendthrift policies, but his budget counts them as having no effect on the budget. The idea that these were excluded because they are subject to congressional action is farcical given that the same logic would apply to all the other policies in the budget.

 

The bottom line is that Biden’s reckless agenda has only exacerbated our already terrible fiscal situation, and the only reason we aren’t in even worse shape is that the centerpiece of his agenda has been blocked.