The White House doesn’t have much good economic news to report these days, so sometimes it pretends that the straw it’s selling is really gold. That was the case Friday when President Biden and his economic advisers claimed that a $1.4 trillion budget deficit for fiscal 2022 was a great fiscal and economic success.
“Today my administration announced that this year the deficit fell by $1.4 trillion—the largest one-year drop in American history—$1.4 trillion decline in the deficit,” President Biden said in remarks at the White House. Readers who are dieters will appreciate his logic: Gain 100 pounds, but then lose 50 and you can qualify to be a contestant on “The Biggest Loser.”
The President is technically correct, but he leaves out a few salient details. One is that the deficit would have been less than $1 trillion if not for his unilateral student loan cancellation. The $426 billion present value cost of his loan forgiveness, which he declared without the consent of Congress, was added to the deficit in the month of September. Taxpayers will be paying for it in higher borrowing costs and taxes for years to come.
Mr. Biden also didn’t stress that the biggest savings came not from spending restraint but from the expiration of pandemic emergency programs—some of which he wants to extend forever. The $1.9 trillion American Rescue Plan in March 2021 expanded child tax credits to $3,000 ($3,600 for a child under age six) from $2,000, but the expansions expired at the end of 2021, as emergency programs should when the emergency ends.
Democrats tried to make them permanent, and they would have if not for Sen.
opposition. But the White House and Democrats will try again if they keep Congress, or even in the lame duck session after the election if Republicans are dumb enough to go along. The Tax Foundation estimates that making this permanent would cost $1.6 trillion over 10 years.
Mr. Biden also neglected to give any credit to the hard-pressed American taxpayers who kicked in an additional $850 billion in revenue in fiscal 2022. Individual income-tax payments rose 29%, or nearly $600 billion. And that was all despite the 2017 tax cuts that Mr. Biden claims had gutted the federal fisc.
Far from it. Under the tax code as reformed by the GOP, tax revenues have risen to a near-record 19.6% of GDP. Revenues have reached 20% only twice in history: 20.5% in 1944 when a war was on, and 20% in 2000 amid the dot-com bubble. Yet Mr. Biden continues to claim millions of Americans somehow don’t pay their fair share. Is turning over one in every five dollars of national income to politicians to spend not enough?
Apparently so because on Friday he attacked Republicans for wanting to make permanent the Trump tax rates that expire in 2025. In other words, he still supports a tax increase despite record tax revenue.
Mr. Biden also said “we’re starting to see some of the good news on the economy. Gas prices are down sharply in 46 of the 50 states because of what I’ve been doing. We’re moving in the right direction, and there’s more to come.” He didn’t say over what time period he is measuring that decline in gas prices, and that’s also understandable. It can’t be from the start of his Administration when the national average was $2.49 a gallon. It’s now $3.82.
We know this is an election campaign, and extreme spin is in season. But if Mr. Biden wants to play Rumpelstiltskin in the classic fairy tale, spinning straw into gold, he might recall that it had an unhappy ending for the spinner. That could also be the fate of Democrats as voters render a verdict on Nov. 8.
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Appeared in the October 22, 2022, print edition.
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