The president’s budget for fiscal year 2022 proposes the largest structural expansion of government in America since the War on Poverty began in 1964. The first budget out of the Biden White House is a full frontal ideological assault on the values of economic freedom, self determination and limited government that were cornerstones of America’s founding.
As I explained in my podcast yesterday, any conservative who refuses to recognize this nature of the budget is making a foolish, fatal mistake. The expansion of government now proposed is so consequential in nature that it marks a point of no return in terms of the American welfare state: up until now, it has been possible to reform away the welfare state and return America to its founding values. Albeit difficult, it could still be done under the banner of hard work, long-term commitment and ideological determination. Should the FY2022 Biden budget become law, it is practically impossible to find a path back again.
There are a host of reasons for this highly consequential nature of the budget. I don’t think I need to delve into the intricacies of excessive government borrowing and unsustainable sovereign debt, but it does not hurt to remind ourselves of the fact that this year alone – the calendar year 2021 – the federal government is en route to borrowing $3.7 trillion. Should the Biden budget pass Congress, as Chris Edwards over at the Cato Institute points out with a pedagogically astute example, this is not only more than half of total federal spending, but also a ridiculously insolvent fiscal proposition.
Edwards is a rare voice commenting on the president’s budget. There are a couple of others to which I will return in a moment, but the general experience so far is that conservatives are taken aback by the sheer monstrosity of the Biden budget. They are also ideologically aloof in their approach to it.
Which, as I again noted in my podcast, means that they are ill equipped to fend off this ideological assault on America’s founding values. Hopefully, they will step up to the plate, get their act together and formulate a concerted line of resistance. If they don’t, well, as I explained in my book The Rise of Big Government, the socialists will have won.
Yes, the socialists. The Biden budget is a socialist policy document. It is a declaration of ideological intent, namely the intent to bring America into the fold of countries defined by democratic socialism. Now, as the well studied citizen knows, you cannot make democracy and socialism cohabit under the same roof without gradually rising conflicts, but that does not mean the American left is not trying. In fact, they have been trying for 57 years, without much resistance from conservatives, so why not try to go all the way?
The socialism in the Biden budget is not exactly buried in the details. It is pretty easy to spot, being first and foremost planted in the American Families Plan. This document, which was floated by White House officials earlier this spring, has now made its way into the first budget of the Biden presidency. Here is how the White House motivates the Plan in the summary of the budget:
To extend the benefits of economic growth to all Americans, the Budget also includes the American
Families Plan—a historic investment to help families cover the basic expenses that so many struggle with
now, lower health insurance premiums, and continue the American Rescue Plan’s historic reductions in
According to the actual budget, by 2024 this plan will have an annual operating cost of $217.8 billion. The first section of the Plan is expanded government-paid schooling. Officially known in the budget as the addition of “at least four years of free public education”, it would cost $42.8 billion. The biggest item is “free community college” at $15.4 billion (again in 2024 as per the Biden budget) followed by in increase in the Pell Grant ($8.6 billion) and universal preschool grants to the states ($6.3bn).
The second section, “education and preparation for teachers”, invests half-a-billion dollars in “teacher credentials”, a quarter of a billion in expanding “teacher quality partnerships” and a few other items. The total bill for this section is $1.2 billion.
Section three is unabashed about its purpose, namely to give out “direct support to children and families”. By 2024 this one will cost $28.6 billion, but its annual tab increases dramatically, doubling every four years until it easily shoots past the $100 billion mark in 2031. The biggest item here is “universal paid family and medical leave”, a fiscal bomb shell that should give every fiscal conservative nightmares. The Biden budget places the cost of this program at an incredibly low $12.4 billion three years from now, but as I have explained elsewhere, that is a drop in the bucket compared to what this program will look like once it is expanded to standard European proportions.
A close second behind paid leave is “a new child care program for American families”. This one is also sorely under-estimated, coming in at only $11.8 billion in ’24.
Under the “support to children and families” section we also find $2 billion for “summer electronic benefit transfer” to “eligible” children. This is a new entitlement program that appears to simply be another way for the federal government to engage in economic redistribution. There is also $86 million in this section for formerly incarcerated individuals to enter the food stamp program, and half-a-billion for “maternal health”, with no further specification offered.
In the fourth and last section, called “support workers and families and strengthen economic security”, the American Families Plan proposes $108.6 billion (agan for 2024) in funding for fully, permanently refundable child tax credits. For $15.7 billion the Plan wants to “make permanent the … expansion of premium tax credits”. There are $11.8 billion set aside to make permanent the temporary EITC expansion under the American Rescue Plan, and $10.6 billion to make permanent another feature from the ARP, namely the “Child and Dependent Care Tax Credit”.
Again, the total cost for the American Families Plan is $217.8 billion by 2024. However, this is a ridiculously small amount given the explosive cost trajectory of some of these programs. I will get to the details on that in later blog articles; for now, let us note the monumental common denominators for all features of the American Families Plan:
- This is economic redistribution. All the benefits will be paid out on ideological terms that reduce – and in some cases eliminate – economic differences between families in America. The choices you make in order to provide for your family and for the future of your children, will matter much less in the future. Your decisions to work hard, build a career and take on more responsibilities at work will come with much fewer, much more marginal benefits in the future. This is by design and by intent: the very purpose behind socialism is to eliminate the economic differences between individual citizens. The American Families Plan makes a big leap in that direction.
- Government will become far more present in the lives of your children than it is today. For every new benefit that government offers, be it paid leave to parents or tax-paid child care and preschool, government will also usurp the authority to determine on what terms you and your family can enjoy those benefits. And when you can be denied them. For example, it is not far-fetched that government will deny to pay out child-care benefits to a facility that is based on confessional principles, or one that refuses to teach the children “critical race theory”.
To mitigate the cost impact of the American Families Plan, the Biden budget includes a few items that supposedly will pay for part of the plan. Largest among these items is a “tax the rich” plan that allegedly will bring in $89 billion by 2024. In total, tougher “tax compliance” measures and an assortment of other items will provide $130.1 billion toward the funding of the Plan. However, even if every penny of this new revenue would materialize – a fantastic proposition in itself – many of the new entitlements that the Plan proposes are of such a nature that their costs will increase exponentially over time. Paid leave alone could quickly double the cost of the Plan.
It is important to note that the Democrats who designed this budget are not too worried about suggestions that it will cost a lot of money and grow the budget deficit. For one, they readily admit that the federal government will have to borrow more than $1 trillion annually for the next ten years. But more importantly, their desire to pass into law these new, and quite major entitlement programs is entirely ideological and therefore impervious to fiscal reasoning. If they have to borrow money on the open sovereign-debt market, raise taxes or print money to monetize their deficit, they will do it.
The only way to fight back against a budget of this ideological nature is – you guessed it – on ideological terms. This means devising a policy strategy to structurally reform government spending, away from its current function as a vehicle for economic redistribution. To do that, in turn, Congress would have to rewrite the ideological architecture of government spending to where it serves another ideological purpose – such as social conservatism – than the one for which it is currently codified.
I do not see that happening. Conservatives in general, and those in policy leadership positions in particular, are almost universally uninterested in reforming government spending. There are a few exceptions, one being the Republican Study Committee (RSC) in the House of Representatives, whose purpose it is to develop broader policy reform ideas. The aim is typically for policy visions too broad to fit within the confines of a single legislative initiative.
Two years ago the RSC developed a nice little health-policy reform proposal, one that would have marked the beginning of a return to market-based health care in America. They have now produced a Republican budget for the 2022 fiscal year. Called Reclaiming Our Fiscal Future, it claims to want to turn the tide on the federal budget deficit. It spreads its ambition across tax and spending reforms.
It is overall a good product, with many good features, but it does not reflect any comprehensive understanding of the reasons why we have a big welfare state in the first place. In fact, the very “welfare state” concept is almost entirely absent from the report. Instead of tackling government spending on ideological grounds, the RSC goes the technocrat route and wants to find a way to make the welfare state operate a bit more efficiently, and a bit less expensively.
As part of its efforts on the cost side, the RSC budget seeks to implement tax reforms parallel with some efficiency-enhancing spending reforms. The tax-reform component has been met with a great deal of enthusiasm, entirely in line with the unending fiscal-policy habit among conservatives to only talk about taxes. As a case in point, consider this discussion on Fox Business between Larry Kudlow, Charles Payne and Maria Bartiromo. Notice the virtual silence on spending reform:
In fairness, the RSC budget provides a long, detailed analysis of reforms for all major welfare-state spending programs, from Social Security and Medicare to SNAP and TANF. There is just one problem: it does not address the root cause of our budget deficit. All the reforms proposed are designed to reduce the operating cost of the programs. However, this only means a delay of the inevitable growth in spending: a program that is designed to redistribute income and consumption between citizens will continue to do so even as its operating costs are somewhat reduced.
The lack of interest among conservatives in structurally reforming government spending will be America’s undoing. It leaves the road open for the left, spearheaded by the Biden administration, to continue to expand government more or less at their own discretion. Unless fiscal conservatives wake up right now, all the resistance they have to offer will be centered in on the Titanic’s deck chairs.