Surprise, surprise: Joe Biden’s budget wasn’t worth the wait.
The administration finally submitted some of its fiscal proposals to Congress last week—seven weeks after the statutory deadline of the first Monday in February. Even then, major portions of the budget were not posted on the Office of Management and Budget’s website last Monday afternoon, with a note saying additional documents would get posted later in the week.
The administration tried to spend the weekend ahead of the budget’s release promoting its plan for a “billionaire’s tax.” The proposal, which some tax experts have criticized as both unworkable and unconstitutional, served one useful purpose: It attempted to distract from the fiscal gimmickry that the administration believes constitutes “deficit reduction.”
Even the press picked up on the “absurd” nature of the White House’s claims, in a Monday morning background briefing with reporters:
My core question is: A lot of the budget experts are saying, you know, look, the reason the deficit is falling is because the expiration of inherently temporary economic programs, and it’s kind of absurd for the administration to be taking credit for the decline from inherently temporary economic programs. Can I get a response to that?
Attempting to take credit for “deficit reduction” because Democrats’ plans to pass even more tax-and-spend legislation have run aground on Capitol Hill doesn’t represent the only gimmick in Biden’s budget—or even the biggest.
Biden’s 10-Year Deficit Baseline Has Increased
The budget includes two separate, but equally important, ten-year budget numbers. The first, the current-law baseline, reflects potential fiscal outcomes if the budget stays on “auto-pilot” absent additional changes. By contrast, the proposed budget assumes all of the administration’s proposals for both tax and spending get enacted into law.
May 2021 budget: Current law deficit of $13.176 trillion; proposed deficit of $14.531 trillion
Monday’s budget: Current law deficit of $15.466 trillion; proposed deficit of $14.421 trillion
Regarding the current law budget—that is, the fiscal policies we already have—Biden’s performance is nearly $2.3 trillion worse than last year. The budget Biden wants would reduce the ten-year deficit by only $110 billion, or only 0.7 percent, compared to what Biden himself proposed just last May.
‘Magic Asterisk’ for Build Back Bankrupt
When it comes to Biden’s floundering proposals to expand the welfare state, the budget includes the following footnote:
The Budget includes a reserve [fund] 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 table. Because discussions with Congress continue, the Budget does not break down the reserve among specific policies or between revenues and outlays.
In other words, the budget just assumes that creating massive new entitlements would be fully paid for. That assumption comes despite Congressional Budget Office analyses showing that extending these entitlements in full over a decade—which Democrats want to do—would total nearly $5 trillion, far more than they have proposed in tax increases to offset that spending.
Ignores the Pork-Laden Omnibus Just Made Law
The budget includes another whopper of a footnote:
Reflects budget deficit reduction compared to a baseline that does not include the Consolidated Appropriations Act, 2022 (Public Law 117-103), which was enacted after the baseline was finalized. Deficit reduction relative to a baseline that incorporated that legislation would be significantly greater. [Emphasis added.]
In other words, because Congress just passed, and Biden signed into law two weeks ago, a bill with billions of dollars of earmarks—to say nothing of other unnecessary spending—practically all of Biden’s supposed “deficit reduction” has already vanished.
Unrealistic Economic Assumptions
The budget assumes inflation will total 4.7 percent for the fiscal year ending September 30, and then fall to a mere 2.3 percent for the fiscal year starting on October 1—estimates that a reporter rightly called “not realistic.”
On the background call with reporters, Council of Economic Advisers Chair Cecilia Rouse revealed that printing and other deadlines meant the budget’s economic estimates were locked in as of last November 10. As a result, more recent developments, like expanded federal spending and the Ukraine invasion’s effects on oil and food prices, obviously did not get taken into account when formulating the fiscal plan.
But Rouse went on to claim that “we expect that…as we continue to work through the challenge of the pandemic, that we will keep economic activity going, supply chain pressures will ease, the extraordinary measures [i.e., the Federal Reserve printing money] will start to roll off as well, and we expect the economy to normalize.” This is exactly what the Biden administration predicted this time last year, but it didn’t happen.
No Meaningful Entitlement Reform
The Medicare Hospital Insurance Trust Fund is already effectively insolvent and faces losses of an estimated $457.8 billion between now and 2030. Yet Biden proposed few if any meaningful reforms either to Medicare or Social Security, other than the typical rhetoric about reducing fraud—an important issue, but not one that will prevent politicians from having to make tough political choices.
Any long-term budget and fiscal proposal, whether by a Republican or a Democrat, that does not tackle our entitlement crisis—particularly Medicare and Social Security—cannot pass the credibility test. On that count, Biden’s budget doesn’t even try.