In a press briefing last week, White House press secretary Jen Psaki went to great lengths to explain that the Democrats’ reconciliation spending bill is not merely geared toward improving unemployment or sparking economic growth — the goal is to transform America’s economy.
President Joe Biden seeks to “do something historic that will fundamentally change the economy,” Psaki declared. He’s seeking to make “fundamental changes,” she added. She later noted that the president seeks to “make fundamental change in our economy,” “change fundamentally how we invest in our workforce,” “fundamentally change the economy,” and “fundamentally change people’s lives.”
We should take Psaki at her word: Biden believes he has found basic flaws in our economic system, and the solution is to inject trillions of dollars into government programs.
How many trillions will it cost to perfect the free market? We don’t really know. First, the Democrats said the legislation would cost $3.5 trillion, then the amount was raised to over $4 trillion, and then, they suddenly began claiming they’d conjured a miraculous bill that actually wouldn’t cost anything at all. It’s Congress’ first self-financing, multitrillion-dollar spending plan.
And what exactly is this spending spree designed to do? That’s also unclear. The Democrats initially claimed it was for “infrastructure.” After people noted there’s barely any infrastructure in the bill, they called it “human infrastructure.” And when people said they don’t know what “human infrastructure” is, they began calling it “Build Back Better” — settling on a description that’s devoid of any actual meaning.
What’s clear is that the bill will, in fact, fundamentally change America’s economy, though not in the way Democrats claim. Their plan lacks any meaningful incentives for growth, jobs, or entrepreneurship. In fact, nearly everything in the bill works to disincentivize economic expansion.
The bill includes vast new social spending schemes that will discourage work, environmental regulations poached from the “Green New Deal” that will cripple companies’ competitiveness, and destructive tax hikes that will encourage U.S. firms to ship their jobs overseas.
The economy can hardly afford to suffer these kinds of blows. The job creation number in September (194,000) fell far short of projections of 400,000-500,000, the second consecutive bad monthly jobs report. Meanwhile, our supply chain is experiencing severe disruptions, and inflation continues to take a big toll on families’ savings and purchasing power.
The Democrats’ spending spree will worsen all these problems. The new funding will exacerbate inflation, environmental mandates will deepen the supply chain crisis at California ports (which partly stems from state emissions standards on trucks), unemployment will rise when companies move their production abroad, and business start-ups will decline when entrepreneurs are forced to navigate a new thicket of regulations just to operate a small business.
And of course, contrary to the Democrats’ claims, there is no magic fairy that will pay for their agenda. Crippling tax hikes will cover part of the cost, while the rest will be tacked on to the enormous national debt we are accruing for our children and grandchildren.
So, yes, Psaki is correct that the Democrats’ scheme will fundamentally transform the economy.
We won’t be seeing any more of the growth of the Trump years, when congressional Republicans and President Donald Trump passed the Tax Cuts and Jobs Act. That bill cut taxes and simplified the tax code (in other words, the precise opposite approach of the Democrats’ plan) and ushered in historic gains in real living standards, especially among those on the lowest rungs of the economic ladder. The average real income for the bottom 20% of wage earners grew at nearly 4.9%, faster than any other income group. As a result, wealth inequality fell, and incomes for Hispanic, black, and Asian Americans hit historic highs as unemployment fell to record lows.
The future under the Democrats’ plan will look fundamentally different than that. The Biden administration will transform our economy into a stagnant morass of inflation, high unemployment, and government dependency.
Economic growth requires policies that incentivize risk and that reward hard work and investment. The Democrats’ bill does none of that. It’s no wonder they can’t agree on a price tag for their gambit or even an honest description of what it does — aside from fundamentally altering the world’s most successful economy.
Devin Nunes, a member of the Ways and Means Committee, represents California’s 22nd Congressional District in the House of Representatives.
