The President Who Doesn’t Know Up From Down

Well, if you think President Biden’s response to the Chinese balloons and other flying objects is baffling, wait until you get to the part about the budget deficit, and spending in general. Mr. Biden keeps telling people that Republicans are going to cut Medicare and Social Security — which is an untruth, because Speaker McCarthy has ruled that off the table. You know that. Then, Mr. Biden has this made-up number about Republicans wanting to add $3 trillion to the deficit, which is basically focused on the Trump tax cuts — cuts that, as we have already learned, paid for themselves with a $250 billion revenue surplus after the first two years. You probably know that, too. Now, today, the White House press secretary, Karine Jean-Pierre, said this: “The president has been very clear. You see it in his record, $1.7 trillion. Then you’re going to see it again when he puts his budget on March 9. … I’m just saying what he laid out to all of you yesterday, $2 trillion he’s going to do. He’s going to lower the deficit and that shows fiscal responsibility. And that’s something that the president has talked about as vice president, as senator, and he’s shown it. He has the receipts.” If you can figure out what she actually said, or what it means, well then you’re a very smart person. I think the basic point here is that Mr. Biden is trying to take credit for the lower deficit in fiscal year 2022, which is by all accounts — including that of the Committee for a Responsible Federal Budget — a function of expiring emergency Covid spending. That’s all. But if you then look at the CBO report out yesterday, you see that deficits go up, not down. In fact, they go way up: all the way to $2.85 trillion in 2033 from $1.4 trillion in 2023. They go up steadily year after year after year, and they total $20 trillion. That’s right, $20 trillion of new deficits on the CBO scorecard. This is not down, Mr. President. This is up. We have a fundamental directional disagreement: $20 trillion is up, not down. Just saying. Meanwhile, debt held by the public goes to $46 trillion in fiscal year 2033 from $24 trillion in FY 2022, according to CBO projections. Or, put another way, it goes to 118 percent of GDP in 2033 from 97 percent last year. That’s up, not down, sir. Up. Of course, the fundamental cause of the rising deficits and debt is excess federal spending, which is seen rising to nearly $10 trillion in 2033 from $6.2 trillion last year. The 10-year total for spending is just short of $80 trillion. Yes, $80 trillion. Now, as a share of the economy, spending is seen continuing at 24 percent to 25 percent of GDP. Historically, federal budgets have tended to run no higher than 20 percent to 21 percent of GDP. So, when we talk about big-government socialism, Mr. Biden’s left-wing central planners must be very happy, because they’re right on target running the economy from Washington, D.C. By the way, estimates have been made that suggest federal, state, and local spending runs upward of 44 percent of GDP. So, Uncle Sam’s running about a quarter of the economy, and when combined with states and localities, the central planners are running nearly half of the economy. Just to connect the dots, with all this federal spending, it’s no wonder that the CBO economic estimates — which are really mainstream economics — show another decade of secular stagnation. In other words, all this spending and borrowing gets you nowhere in terms of true prosperity. I mean, a good Keynesian, or a good socialist, should be arguing that all this spending will stimulate the economy to grow 3 percent, 4 percent, 5 percent — but they show less than 2 percent. In other words, socialism, as always, doesn’t really deliver the goods, does it? That’s because all that spending distorts the economy. It comes with many regulatory strings — think Steve Forbes’s “modern socialism through the regulatory state” — and plenty of taxation to blunt employment, production, and investment incentives. Around the world, have these socialist models ever delivered the goods? Think historically. Is Venezuela growing at a rapid rate? Iran? Nope. Even China, which has thrown away much of its market reforms: It’s come down to less than 3 percent growth from 15-20 percent. This radical economics doesn’t work, doesn’t deliver the goods, doesn’t make people happy. If I were the Bidens, I would want to proudly exclaim to the country what a great success our big-government policies have produced, but the only thing they’ve produced is high inflation, which makes people very unhappy. This is not the socialist paradise we’ve been promised. Enough already. Let’s summarize: Save America. Spend less. Tax less. Regulate less. Inflate less. Restore free-market capitalism. From Mr. Kudlow’s broadcast on Fox Business News.

The President Who Doesn’t Know Up From Down

The President Who Doesn’t Know Up From Down

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