Editor,

Congressional Democrats precluded the Congressional Budget Office from showing that the $2.4 trillion entitlement spending bill is realistically a $4.6 trillion bill that will stoke inflation, reduce GDP growth, jobs and incomes. This sleight of hand was mostly achieved by assuming new entitlement spending would only last a few years. Name one entitlement program that hasn’t become permanent.

If the $2.4 trillion bill passes, total government spending bills in the past year would exceed  $6 trillion on paper but more likely $12 trillion on a permanently scored basis. This is an unprecedented passage of spending equal to 50% of our GDP in a 12-month period. Add in future contingencies for recessions, pandemics, etc. and we are in uncharted waters 

When will people learn that what the government giveth with one hand, it taketh away with increased prices and recessions. Unions know this which is why they’re getting huge cost of living increases cranked into every negotiation. This is the beginning of a wage/price spiral like the 1970s with mothers demonstrating in the streets against rising food prices. To stop the 13.8% inflation then the Federal Reserve had to raise interest rates to 20% which caused two recessions in a row. It seems Americans prefer learning the hard way instead of from history.

Ed Kahl

Woodside

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(4) comments

Rel

Ed, the only sleight of hand is owned by you in your gloom and doom prognosis based on incorrect statistics. The U.S. GDP was $21T in 2020. The infrastructure and Build Back Better bills both will total near $2.9T which would represent 13.8% of GDP on an annual basis. However, this ignores two important elements. One, the bills represent payments over the next decade and are not paid out all at once in one year. Two, the bills will, if estimates hold, will be paid entirely by new tax rates on the wealthy and by IRS enforcement of existing tax laws. So, the net effect will hardly effect GDP spending figures at all. Finally, these bills will act contrary to your opinion by creating jobs, increasing incomes, and fighting inflation.

Ray Fowler

Thanks, Ed, for your LTE...

I am not the numbers guy and plenty of other DJ readers (from both sides of the aisle) can speak with more authority on economic issues. My take on the administration's spending plans is from the 30,000 foot view.

The administration's view that its spending plans are already paid for seems to be quite a stretch, and its position that increased spending can lower consumer costs may be Joe's version of "voodoo economics."

However, there are some cold hard facts where we can find some agreement. First, the government has no money of its own, and secondly, the government acquires revenues through confiscation of others' wealth. That confiscation comes in the form of taxation.

Joe's spending plan reminds me a lot of Milt Friedman's description of spending someone else's money on someone else. That's what's behind the Congressional progressives' spending agenda. As a result, the progressives will not be very careful about how the taxpayers' money is spent on their programs, and there will not be much thought about the value taxpayers can expect for the things the taxpayers money will be buying,

Build Back Better is really Build Government Bigger.

Rel

Ray, you are not a numbers guy and apparently not an economist either. Biden's programs cannot be construed as "voodoo economics" in any form. This economic practice of lowering taxes on the rich with the idea money will trickle down to the low and middle class was espoused by Ronald Reagan, and to a degree Milton Friedman. Historically, this theory has never worked in practicality. What has worked is the Keynesian model of increased governmental spending to prime the economic "pump" especially when the funds are spent on the working class which is precisely what the two Biden bills will do.

As to your opinion that progressives will not give much thought to how much value taxpayers can expect from their spending, on what premise is this based? And, how precisely, have conservatives done better in this regard historically?

Ray Fowler

Rel

Yes, "voodoo economics" was popularized by George H.W. Bush when he described Ronald Reagan's "trickle down" economic policy. I'm sure you would agree that Reagan's policy was ill advised, and that is the comparison I am making to the current administration's spending plans. Joe's spending plans are also ill advised, and that's why I described them as Joe's version of voodoo economics.

When it comes to Keynes' advice re: governments spending their way out of economic calamity, it didn't really work the way FDR intended. Nearly 15 years earlier, the country was facing the onset of the Great Depression. At that time, the White House did not increase spending and taxes a la FDR. Just the opposite... spending and taxes were cut, and within months not years, the economy rebounded.

The cold hard reality is that no matter what Joe says... his spending plans are not already paid for and they will not reduce the costs of consumer goods. You don't have to be an economist to figure that out...

I posted to Terence, "I have decided to avoid engaging a couple of lefties who appear regularly in these pages," in the comments section following Jorg's LTE published last Saturday. You are one of the lefties I intend to avoid.

I sincerely hope you enjoy Thanksgiving this week with close friends and relatives. Good-bye.

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