“It’s going to cost nothing,” President Biden said of the Democrats’ massive $3.5 trillion spending binge, which House Speaker Nancy Pelosi is scrambling to pass this week.
Don’t believe it. The bill, which aims to move America closer to a European-style social-welfare state, will shorten the fuse on a debt bomb that’s already set to detonate.
Last year, lawmakers enacted $3 trillion in (mostly) justified deficit spending for a once-in-a-lifetime pandemic. Yet the 2021 spending blowout is set to dwarf those costs. Lawmakers have already enacted a $1.9 trillion “stimulus” bill filled with unnecessary items like unemployment benefits that exceed the wages for many available jobs, and bailouts to states already running budget surpluses. The Senate has passed a $550 billion infrastructure bill that is financed mostly with gimmicks. Biden’s 8.4 percent discretionary spending increase would permanently raise the baseline by $1 trillion over the decade.
And now, Democrats are trying to pass a $3.5 trillion reconciliation bill that would raise deficits by as much as $1.75 trillion. Even those figures understate the bill’s true cost by at least $1 trillion by pretending that policies like the expanded child tax credit will expire within a few years, even though the Democrats’ policy is to make them permanent.
Add it all up, and congressional Democrats are set to commit $8 trillion in new spending over the decade, of which $6 trillion would be borrowed. That is quadruple the net cost of the 2017 tax cuts.
It would be enough money to eliminate the employee side of the payroll tax, or deposit $60,000 into each family’s bank account. Instead, it will be spent on a grab bag of long-standing liberal policies.
All this debt has a permanent cost. If interest rates ever nudge back up past 3 percent, this year’s $6 trillion borrowing spree will cost $180 billion in additional interest costs every year, forever. That’s $180 billion annually that could otherwise provide tax relief, assist veterans, or improve infrastructure. Instead, it will pay interest to bond holders. What a waste of tax dollars.
This year’s Democratic spending binge is not the end of the story. Biden still has $3 trillion in leftover campaign promises covering Social Security, health care, higher education and other issues. If his entire agenda is enacted, the national debt held by the public — which was just under $17 trillion before the pandemic — would reach $44 trillion a decade from now.
By Brian Riedl
