Since the economy suffers when tax rates go up and the burden of government spending increases, there obviously are plenty of awful features in President Biden’s newly released budget.
If I had to select a worst feature, though, I’d be tempted to pick the proposed spending hikes that Biden is seeking for some of Washington’s most-wasteful bureaucracies.
Here’s a chart from a story in today’s Washington Post (based on Table S-8 in the budget), which summarizes how much additional “discretionary spending” Biden is seeking.
Why am I upset about these proposed spending increases?
From a big-picture economic perspective, it’s bad fiscal policy to allow the burden of government spending to grow faster than the private sector.
And since Biden is projecting that real GDP will grown by 2.8 percent next year and inflation will be 2.1 percent during the same period (see Table S-9 of the budget), he obviously wants all these bureaucracies to enjoy big increases (unlike families, who are losing ground compared to inflation).
But I’m also irked from a targeted fiscal perspective. That’s because Biden wants giant spending increases for bureaucracies that should not even exist.
Here’s what I’ve written about some of them.
- Get rid of the Department of Housing and Urban Development.
- Shut down the Department of Agriculture.
- Eliminate the Department of Transportation.
- Abolish the Department of Education.
- Pull the plug on the Department of Energy.
- Phase out the Department of Veterans Affairs.
By the way, “worst feature” is not the same as most economically damaging feature.
There are two other parts of Biden’s budget that definitely will cause more harm.
- Many of the same tax increases he was pushing last year, plus Elizabeth Warren’s “billionaire’s tax” that will force people to pay tax on unrealized capital gains.
- Many of the redistribution programs he was pushing last year as part of his plan to expand the size and scope of entitlements and increase the burden of the welfare state.
These tax increases and entitlement expansions will do considerably more damage than the discretionary spending increases excerpted above.
But it’s still an outrage that Biden is shoveling more money at some of Washington’s most wasteful and counterproductive bureaucracies.
