October 4, 2021

A "Zero" Dollar Spending Spree?


KEY TAKEAWAYS

  • Wary of public concern about their reckless spending, Democrats have tried to suggest their $3.5 trillion plan will cost “nothing.”
  • Even with all their budget tricks and gimmicks, the Democrats’ plan is estimated to add as much as 16% to the national debt over time.
  • The cost for all this spending will be borne not just by the rich, but by millions of Americans on every rung of the socioeconomic ladder. 

In an attempt to deceive anxious Americans, President Biden has repeated the ludicrous assertion that Democrats’ $3.5 trillion reckless spending spree will cost “nothing.” He claimed, “It is zero price tag on the debt we’re paying. We’re going to pay for everything we spend.” The president’s absurd argument has been picked up by Democrats in Congress. But it fails in at least two basic ways: the actual cost of the plan is likely to be far higher than Democrats claim; and taking money from someone else’s wallet to cover your excess spending does not make it free. Someone always has to pay.

Zero Dollars?

Zero Dollars?

Even to arrive at a $3.5 trillion price tag, Democrats are trying to pull off an “it-could-only-happen-in-Washington”-style illusion. To pretend certain costs over the 10-year budget window are contained, the plan would allow several of their costly new programs to “expire” on paper. Obviously Democrats have every intention of continuing these massive expansions of federal dependence in perpetuity.

Independent analyses provide a more realistic fiscal picture of their reckless scheme. The Committee for a Responsible Federal Budget estimates that Democrats’ plans could cost as much as $5.5 trillion over the first decade. The Penn Wharton Budget Model projects the plan will cause federal debt to increase by 8.4% over the baseline in 2031. Debt will grow by as much as 16.4% in 2050 under the more realistic scenario where the new entitlement programs continue. Democrats have offered no hint of how they would address this additional long-term debt burden.

The other line of reasoning implicit in the president’s claim that his spending spree costs nothing would come as a surprise to most Americans. If someone charges too much on their credit card, they still need to find a way to pay for it. They may get the money from somewhere – and that may involve a sacrifice of some sort – but that doesn’t make it free.

Middle Class Pays Biden’s Bill

Middle Class Pays Biden’s Bill

In this case, middle-class Americans are the ones who will get hit with the bill. Democrats plan to “pay for” their reckless spending with a suite of job-killing tax hikes that will hit people on every rung of the socioeconomic ladder. An analysis from the Joint Committee on Taxation found that Americans at every income level will face a tax increase under Democrats’ plan. In 2023, 17% of all Americans will be hit with a tax increase. By 2027, 38% of Americans will be have higher tax bills to pay for the Democrats’ reckless spending, including many middle-class taxpayers. This is a direct violation of President Biden’s pledge that no one making less than $400,000 a year will pay “a dime more” in taxes.

Issue Tags: Economy, Taxes