Memo 07.09.2021

Biden’s Anti-Budget

President Biden And Attorney General Garland Deliver Remarks On Gun Crime Prevention

The President seeks a larger government, not a larger economy.

Media outlets on both the left and right have paid remarkably little attention to the Biden budget. It’s true that it contains all the usual numerical and analytical density that make budget analysis so impenetrable, but the Biden budget deserves attention for the unprecedented direction it clearly intends to take the country.

Biden plans to enlarge Washington’s role in the economy to new levels, not as an emergency measure but fundamentally and permanently. Even more unsettlingly, the Biden budget planners seek no economic growth either from the ambitious programs the White House has proposed or the more fundamental expansion of government. Every previous president—Republican or Democrat—has justified his agenda as a way to increase the country’s prosperity; Biden’s lack of interest in future growth raises questions about what the administration hopes to accomplish beyond enlarging government for the sake of doing so.

The Biden budget projections show government receipts rising from the 16 percent to 17 percent of the economy averaged in the recent past to 19 percent by 2024. Effectively, one dollar in five of the income of all Americans will go to Washington. This level of taxation is not unprecedented—during the technology boom of the late 1990s, for instance, so many people were making money so fast that the nation’s progressive tax schedule raked in more than expected. Washington’s revenues also took a larger share of earnings during the recession year 1981 and in 1969, when Lyndon Johnson imposed a special tax surcharge to pay for the Vietnam War. And, of course, Washington took more of the economy’s product during the existential emergency of World War Two, though even then, receipts barely exceeded 20 percent of the economy. If the Biden administration were expecting some sort of unusual economic surge or emergency, the projected rise in Washington’s take would meet an historical norm. But there is no such extraordinary event predicted in the budget’s economic projections.

Plans for government growth are still more evident in the budget’s projected outlays. Federal spending in this budget settles fundamentally after 2023 at a steady 25 percent of the gross domestic product (GDP)—one dollar in four of national output will be directed by Washington. To be sure, that figure is lower than last year when federal spending constituted some 31 percent of GDP, but 2020’s extreme was clearly the consequence of an emergency that demanded more spending, even as it depressed output and income. Aside from the great recession of 2009 and its immediate aftermath, and World War Two, there is no historical precedent for government spending to rise this high. The White House clearly intends to take America somewhere it has never been.

Moreover, the Biden Administration projects annual real growth of less than 2 percent through the end of this decade and beyond, a pace far below the country’s long-term average of slightly better than 3 percent. A slowdown, even a dramatic one, may be reasonable or even likely, but it is strange that the White House would make such a tepid projection given the great claims the president has made for his infrastructure and “American Families” proposals. Since these projections assume the implementation of his grand plans, one would think the budget forecasters would be more optimistic.     

By the standards of past administrations, this is a strange juxtaposition of rhetoric and expectations. Usually, when a president proposes extraordinary new programs, he claims that the effort will pay the nation a return in more rapid future growth rates. But now Biden is promising massive spending that will have no positive economic impact. Either the administration has less faith in the effectiveness of its proposed programs than it has publicly claimed, or the plans to enlarge Washington’s role in the economy have other objectives than the usual desire to improve American living standards.

A cynic, taking his cue from big-city Democratic practice, might think that the purpose is simply to increase opportunities for government patronage, enlarge the bureaucracy, garner more lobbying opportunities for the political class, and secure gains for favored interest groups. A less cynical but perhaps more frightening interpretation might see in this budget the triumph of a progressive impulse that want big government for its own sake, whether it benefits Americans or not. Either way, the revelations of this budget deserve attention.

The American Mind presents a range of perspectives. Views are writers’ own and do not necessarily represent those of The Claremont Institute.

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