So much for fiscal responsibility. The Congressional Budget Office (CBO) score of Democrats’ “Build Back Bankrupt” spending spree didn’t stop the House of Representatives from passing the legislation last Friday.
Ironically, House Minority Leader Kevin McCarthy, R-California, did more to delay the vote on the bill, speaking on the House floor for more than eight hours Thursday night and postponing the vote on House passage until Friday morning. But lawmakers who claim to care about our nation’s rapidly growing pile of debt, like Sens. Joe Manchin, D-W.V. and Kyrsten Sinema, D-Arizona, should review the CBO analysis in detail.
Unlike its “score” of many other bills, the budget office did not release a textual narrative describing the legislation’s fiscal impact—at least, not yet. But even the series of spreadsheets CBO has thus far published demonstrate the dangerous impact of Democrats’ sprint towards socialism.
Raises the Deficit
The summary table shows that the bill will increase the deficit by $367 billion over its first ten years. While budgetary scorekeeping provisions prohibit CBO from using new revenue from tax enforcement to offset the bill’s deficit impact, the budget office predicts $207 billion of revenue from increased audits and other IRS-related activities.
The White House claims that Treasury will generate more revenue from tax enforcement than CBO projects, erasing the supposed deficit impact of $160 billion ($367 billion total deficit minus $207 billion from IRS enforcement). But the fact that the IRS has yet to audit Joe Biden’s taxes speaks to the falsity of this assertion. Moreover, the other gimmicks and tricks included in the bill far outweigh a deficit impact of “only” $367 billion, or even $160 billion.
As expected, CBO projected the bill will raise federal deficits—and thus inflation—in the short and medium term. In fact, the bill will exacerbate inflation within mere months. Consider the net fiscal impact by fiscal year:
Fiscal Year 2022 (now through next September 30): $155.1 billion deficit
Fiscal Year 2023 (starts next October 1): $161.1 billion deficit
Fiscal Year 2024: $147.2 billion deficit
Fiscal Year 2025: $209.3 billion deficit
Fiscal Year 2026: $119 billion deficit
All told, the bill will increase deficits by $791.6 billion in its first five years. Only in Fiscal Year 2027 and thereafter will the bill reduce the deficit—at least on paper.
That means that, over the next few years, the gusher of federal spending will continue, on top of the more than $5 trillion in “stimulus” spending Congress has approved since COVID first hit last spring, along with the trillions of dollars the Federal Reserve has printed over the same period as part of its quantitative easing program.
Budget Gimmicks Galore
The CBO tables reveal the many tricks Democrats have employed to disguise the full amount of the bill’s spending. To use but one example, CBO claimed that increased Obamacare subsidies would cost $57 billion—$43.8 billion in government spending (i.e., payments to people who have no income tax liability), and an additional $13.2 billion in reduced revenues.
But a CBO analysis from last year found that increased subsidies would cost $212.4 billion, or nearly three times as much as this year’s estimate. Why the much lower financial impact?
Simple: The Democratic bill would extend the subsidies for three years only—2023, 2024, and 2025. Of course, the left has no interest in letting the subsidies expire at the end of 2025. The early cut-off instead just serves to lower the bill’s upfront cost, and make the bill seem less expensive, and less radical, than it is.
Most of the bill’s major entitlements operate on this premise: The pre-K and child care programs; the Obamacare subsidies; and the child welfare credit, which the bill would extend for next year only. Little wonder then that the Committee for a Responsible Federal Budget said the House-passed measure’s true long-term cost lies at nearly $5 trillion—roughly double the $2.4 trillion estimate for the bill as written.
Tax Increases Ahead
One could easily summarize the CBO tables, and the bill in general, with five simple words: “Hold on to your wallet.” Democrats claim that only “the rich” will pay for the bill’s spending spree, but the $2.4 trillion cost of the bill as written represents only a fraction of the revenue needed to fund the left’s socialist paradise. To even hope of paying for all this spending, taxes will have to sharply rise on every single American.
Economist Herbert Stein famously noted that unsustainable trends are in the long run unsustainable. That maxim applies as much to the notion that middle-class families can get all these new programs “for free” as it does to the fact that America’s creditors may soon weary of funding the $29 trillion (and counting) in debt to pay for them.