As Democrats come together to pass the $2 Trillion Build Back Better Act, the pressure is growing to highlight fiscal responsibility.
Given President Joe Biden’s crashing approval ratings, there is some hint that the American people smell a rat. One sign of the smell of that rat is the alarming escalation of the rate of inflation to where it hasn’t been in more than 30 years.
Let’s start with the announcement from the Treasury Department a week ago that the revenue measures built in to finance the $2 trillion in spending will not only not add to the nation’s existing fiscal deficit, but will reduce it. The headline from the Treasury Department reads: “Preliminary Estimates Show Build Back Better Legislation Will Reduce Deficits.” The document shows an estimate of $2.151 trillion in revenue-raising measures against $2 trillion in spending.
The University of Pennsylvania Wharton School of Business however has its own model. It is managed by a professor who has extensive experience in the Congressional Budget Office as well as the Treasury Department. According to the Wharton model Build Back Better will increase federal deficit by $500 billion
Treasury claims that the Build Back Better reduces the deficit by $151 million. Wharton claims it increases it by 500 billion.
This is not a trivial matter. Who do we believe?
The Congressional Budget Office also will weigh in. We are still left to wonder who to believe. It isn’t about one place having better economists than the other. The problem is that large amounts of money are extremely politicized, making it impossible to make meaningful forecasts.
Anyone who has run a business knows the importance of this topic. I manage a small business that generates a few million dollars per year. It is difficult to project accurately even at a few million dollars per year. It’s not easy to do accurate projections at a few million dollars per year, but at $6.5 trillion, which this year is the federal budget.
Walmart is the nation’s largest corporation by revenue. It’s about $560 billion, or about 10% of the federal budget. I am sure if you ask any analyst in Walmart’s budgeting department, they will tell you how hard it is to project. But aside from the amounts we’re talking about, there is another huge difference between what is going on in any private business, at Walmart, and at the federal government.
Private business means that we spend our own money. In a big corporation like Walmart, they are spending their shareholders’ funds. Every individual who spends or invests these funds is held responsible. If they are irresponsible they get fired. But where’s the personal responsibility for the trillions being spent by the federal government?
The 100 Democratic progressives pushing for $2 trillion in spending have no personal responsibility to ensure that these funds are used in an efficient and responsible manner. It’s all politics.
They create programs that sound so wonderful. These programs are not subject to any individual responsibility. Americans work too hard for their income and pay taxes to have these funds expropriated.
Inflation is another tax. When the government doesn’t explicitly take the funds through taxes and prints the money to meet obligations, this shows up as inflation, which then hits every working American.
In 1900, the federal government’s non-defense spending was 1.8% of our economy. In 1950, it was 10.4%. In 2000, it was 14.8%. And in 2021, it was 28.5%.
Politicians are spending far too much of your and mine money. Hopefully, the $2 trillion won’t make it into law.
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