Joe Biden initially tried to campaign as a centrist. But since capturing the Democratic nomination, he has been eager to accommodate the demands of the far left by rolling out a sweeping list of big-ticket proposals. And the coronavirus and resulting economic devastation have provided him an excuse for doing so.
The problem is, should he win, Biden will be taking office facing the largest debt in American history, and all he can think to do is add to it like there’s no tomorrow.
Back in April, the Congressional Budget Office projected that this year, as a result of the response to the coronavirus and the economic devastation it was causing, the federal debt held by investors would exceed the size of the economy. By the end of next year, it is expected to surge to 108% of the gross domestic product, exceeding the previous record achieved from World War II. And this estimate doesn’t even take into account the massive spending package that Congress is likely to pass this summer before going into recess.
The big difference is that back in the 1940s, once the war was over, spending dropped dramatically. As people returned from the war and the economy boomed, the debt fell precipitously. However, the United States entered the current crisis in a dire state financially thanks to the long-term cost of entitlements. President Donald Trump chose to cut taxes and boost military spending without offsetting the deficit effects, which he could have done by addressing these long-term problems. Now, Biden wants to throw caution to the wind.
Several weeks ago, Biden outlined a $700 billion economic plan. Last week, in an effort to appease the co-chairwoman of his climate panel, radical Rep. Alexandria Ocasio-Cortez, Biden announced an initiative to spend $2 trillion over just four years to address the issue. The plan, which revives the failed “green jobs” mantra from the Obama administration, was even more profligate than the plan he outlined during the campaign, which was $1.7 trillion over a full decade.
On Tuesday, Biden released yet another $775 billion plan — this one for more federal subsidies for child and elder care.
In case you’re keeping score, that’s nearly $3.5 trillion in spending proposals in just a few weeks. And he’s not finished. The campaign has announced plans to roll out four major plans heading into the Democratic National Convention, meaning he still has at least one more massive plan to unveil.
Biden has been vague about plans to pay for the proposals, beyond talking about raising taxes on the wealthy and increasing enforcement. The latter idea is a joke, as the CBO has estimated that even a significant increase in the IRS enforcement budget would only net $35 billion over a decade — which wouldn’t pay for a single year of any of these proposals.
Whether directly or indirectly, Biden’s disregard for fiscal responsibility reflects the influence of Stephanie Kelton and an emerging left-wing economic school. The former adviser to socialist Sen. Bernie Sanders, Kelton joined Biden’s economic advisory panel in May. Kelton, author of a book titled “The Deficit Myth,” is one of the leading proponents of Modern Monetary Theory. The idea behind this theory is that no government that issues debt in its own currency can actually face a financial crisis because it can always issue more currency to pay for whatever it wants. As for inflation, Modern Monetary Theory holds that it can be contained after the fact by moves such as tax increases.
The philosophy, though widely rejected by economists, has an appeal for the left because its adherents discourage politicians from engaging the question, “How do you pay for it?” in favor of making the case for the underlying policy goal, regardless of the cost.
Biden seems eager to embrace this reckless line of reasoning and add to the already unsustainable debt. So much for the idea of running as the responsible adult in the room.