Biden’s belated budget proposal is a fiscal nightmare. But there is a better way.
Biden’s belated budget proposal is a fiscal nightmare. But there is a better way.
L ast week, about a month late, President Joe Biden released his ten-year budget, and it is alarming.
For starters, the president pushes for $4.9 trillion in new taxes, expands the Environmental Protection Agency by $900 million and the Department of Energy by $3.6 billion, and creates $82.9 billion in new mandatory spending programs.
With proposals like this, you would think there is a money tree in Washington. Unsustainable budgets are proposed, the government spends more than it takes in, which causes deficit spending, and all this spending keeps adding to our ever-growing debt. And the convoluted process means that the terms budget, deficit, and debt are often misused, misunderstood, or completely ignored.
The Budget and Accounting Act of 1921 established the president’s role in the budget process. Under current law, the president must submit a budget to Congress by the first Monday in February, which, as seen again this year, rarely happens on time. This budget is merely the president’s recommendations for spending and taxes.
The Congressional Budget Act of 1974 outlines the current process for the House and Senate to take these recommendations and debate a budget that should be the framework for the twelve appropriations bills that actually fund the government. Again, rarely does that happen, and the budget process in itself is riddled with problems. Nancy Pelosi’s Democratic majorities in the 116th and 117th Congresses never passed a budget and used the convoluted tactic of simply “deeming” a budget to be passed.
But here’s what makes Biden’s budget a terrible starting place: Despite raising taxes on Americans, it still spends far more than it brings in, ultimately driving us further into debt.
That difference between what the federal government raises in tax revenue and spends is known as a deficit. Our federal government has been deficit spending nonstop since fiscal year 2002. In fact, in the past 50 years, the government has run at a surplus only five times.
So deficits aren’t new, but their size has increased. In the ten years prior to the pandemic, deficits averaged $0.83 trillion per year. But post-Covid? The fiscal year 2022 deficit was $1.38 trillion, and the FY2023 deficit was up to $1.7 trillion.
In fiscal years 2020 and ’21, there was bipartisan support for aggressively addressing the Covid-19 pandemic, but the response to a once-in-a-lifetime catastrophe should not become the new norm. Unfortunately, D.C. big spenders relished the unrestrained indulgence, and they haven’t taken their foot off the pedal.
Take a look at President Biden’s budget proposal. Over the next ten years, the president is proposing $16.3 trillion in deficit spending. That means the average deficit will still be above pre-pandemic levels, with no attempt to curb the increase.
Contrast that with Republicans’ proposed budget released earlier this month. Our budget balances in ten years, meaning that by FY2034, we’ll be spending only what we bring in. It’s an ambitious goal, but every year that we don’t bend the curve on spending, it makes it more and more difficult to actually balance our budget in a ten-year window.
The continual deficits, in turn, add to our national debt — the total amount our government has borrowed plus the interest. The United States has held debt since our inception, but the rate at which our debt is growing is alarming.
Our first secretary of the treasury acknowledged that borrowing money would be necessary, with a caveat.
“The necessity for borrowing in particular emergencies cannot be doubted, so on the other, it is equally evident that, to be able to borrow upon good terms, it is essential that the credit of the nation should be well established,” said Secretary Alexander Hamilton.
Even Hamilton noted that borrowing in emergencies would be appropriate — and one could argue that there are few greater emergencies than a global pandemic. But our current borrowing isn’t because of a particular emergency; it’s to pay our regular expenses.
Another Founding Father noted the downfall associated with a national debt.
“I go on the principle that a Public Debt is a Public curse,” wrote then–U.S. representative James Madison, the father of the Constitution and our fourth president.
It really is appalling that 234 years after Madison wrote that, our debt is $34,486,220,026,285 — and growing. This keeps us from spending on things we really need, weakens our international standing, and burdens the next generation. And with President Biden’s proposed deficits, the debt is projected to climb to $52.7 trillion by 2034.
The national debt is growing each year in large part due to the deficits, but it’s not just the spending and borrowing that’s a problem — we have to pay interest on the debt, too. The interest on President Biden’s massive proposed debt is a whopping $12.2 trillion. Over the ten-year budget window, President Biden’s budget plans to spend $2.5 trillion more on interest from the national debt than it spends on defense programs.
Congressional leaders need to exercise fiscal restraint to end the ongoing cycle of bad budgets and trillion-dollar deficits that has produced $34.5 trillion in debt. And the budget that Republicans passed this month shows that this is possible.