President Joe Biden unveiled his $5.8 trillion proposed 2023 budget Monday, saying it will reduce the federal deficit significantly through raising taxes, and it will lessen inflationary pressures.
To give some perspective on the size of Biden’s budget, the federal government took in a record $4 trillion in FY 2021, so the administration seeks to spend $1.8 trillion above that.
Nevertheless, the president listed “fiscal responsibility” as a top priority in his plan, along with “safety and security, investments needed to build a better America.”
“The previous administration, as you all know, ran up record budget deficits. In fact, the deficit went up every year under my predecessor,” Biden said. “My administration is turning that around.”
While the statement is true on its face, what Obama did not say is that he and the Democrats in Congress ran the deficit up to over $1.4 trillion first, when it had been $459 billion during George W. Bush’s last year in office.
The same is true now: Revenues are up and emergency spending (for COVID) is down, so it is true that Biden has been able to bring deficits down, simply because of no new pandemic spending.
“Last year we cut the deficit by more than $350 billion. This year we’re on track to cut the deficit by more than $1.3 trillion … That would be the largest reduction in the deficit in U.S. history,” Biden said.
That’s because the Democrat passed the $1.9 trillion American Rescue Plan in March 2021, leading to a deficit of $2.7 trillion last year — the second highest in U.S. history.
Of course 2020 was the largest — $3.1 trillion — when the federal government, on a bi-partisan basis, passed multi-trillion relief packages in response to COVID.
“Compared to 2020, we’re reducing the size of the deficit relative to our economy by almost two-thirds, reducing inflationary pressures, making real headway in cleaning up the fiscal mess that I inherited,” Biden said.
“After my predecessor’s fiscal mismanagement, we’re reducing the Trump deficits and returning our fiscal house to order,” he further stated.
Biden also touted economic growth hitting 5.7 percent in 2021 with him at at the helm, the highest since Ronald Reagan was president in the early 1980s.
“This has led to a substantial increase in government revenues and dramatically improved our fiscal situation,” he added.
Biden sought to change that last fall by raising taxes on businesses and wealthier Americans as part of the $1.9 trillion Build Back Better legislation, but Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona blocked the legislation.
The president said that corporations and the very wealthy must be made to pay their “fair share” in taxes, after just saying shortly before that revenues are up “substantially” under the Trump tax policies.
The Trump tax cuts on corporations worked exactly as advertised, according to a report released by the nonpartisan Tax Foundation in October.
Increased business activity led to higher revenues after the corporate rate was lowered from 35 percent — the highest in the industrialized world — to 21 percent, which is about average.
“In fact, corporate tax collections this year are about 25 percent higher than the $297 billion collected in 2017, prior to passage of [Tax Cuts and Jobs Act]. Likewise, as a share of GDP, corporate tax collections are higher this year (1.63 percent) than in 2017 (1.52 percent),” the Tax Foundation said.
U.S. corporate tax revenue hit an all-time high in 2021 pic.twitter.com/UfKVXXXEZl
— Tax Foundation (@TaxFoundation) October 12, 2021
Biden wants to take the corporate rate back to 28 percent, which when combined with state corporate income taxes will once again make America far less competitive on the world stage.
— Tax Foundation (@TaxFoundation) September 22, 2021
Biden’s plan also calls for a 20 percent “billionaires” tax on those with $100 million or more in assets.
This “wealth tax” will discourage economic growth and likely cause many to transfer their assets overseas and perhaps move themselves to more tax friendly countries, just as Americans currently move to more tax friendly states.
The bottom line is Biden’s budget is nothing more than old-fashioned, discredited tax-and-spend liberalism that led to the economic malaise and inflation of the 1970s.
It should be rejected out of hand.