President Joe Biden’s budget plan gained attention for its eye-popping numbers, including trillions of dollars in new spending and massive additions to both the deficit and the debt.
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But some reports have noted the budget might also be a quiet confession that the economy is far softer than anyone on Team Biden is letting on… and a sign they don’t expect that to improve during this administration.
Politico said the Biden budget predicts economic growth of just 2 percent a year or less – or roughly what the U.S. endured during the sluggish years following the 2008 financial crisis.
That’s the Obama economy, also known as eight years of weak growth.
While the early years were due to the ’08 meltdown, the recovery got weaker as time went on – and by 2016, yearly growth topped off at just 1.6 percent… its slowest rate in five years.
That was reversed when President Donald Trump took office the following year and the economy boomed with rapid growth, rising wages, and record-low unemployment.
The Biden team hasn’t admitted publicly that they’re anticipating a return to the stagnation of the Obama years.
In a budget dropped just before the Memorial Day weekend began – a tactic politicians use when they’re hoping to escape scrutiny – the Biden administration detailed its upcoming spending plans, priorities and taxes.
But those numbers didn’t escape the analysts’ attention.
Richard Bernstein, founder of investment advisory firm Richard Bernstein Advisors, told Politico:
The 2 percent trend is real [after inflation] growth. So, if they think there’s only going to be 2 percent trend real growth with a $4 trillion spend, then they must believe either the $4 trillion will be impotent or will result in a lot of inflation and therefore substantial nominal growth instead of real growth.
Larry Kudlow, who served as director of the National Economic Council under then-President Donald Trump, also delivered a harsh verdict on those predictions.
“In case they haven’t noticed, there’s a Trump boom going on. If it ain’t broke, don’t fix it.” He told Politico. “If that’s all you get, why do it?”
Another expert said the budget harkens back to another time with anemic growth and high inflation – and it’s not a time Americans look back on fondly.
“Biden has cut, copy and pasted economic policy from the 1970s,” Russ Vought, budget director to former President Donald Trump, told the New York Post. “And at a time of inflation, record debt, and gas lines, it’s not a serious budget.”
The New York Times called it the “highest sustained levels of federal spending since World War II.”
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The Times also notes that it relies on a prediction of very little inflation to make some of its numbers work.
The Bloomberg news agency said the 1,700-page budget relies on “gimmicks” to make the math add up — something not likely to happen out in the real world.
“Like his predecessors, the president uses convenient but politically unlikely assumptions about changes to the tax code to reduce projected deficits while simultaneously projecting modest inflation and a broad rebound in U.S. employment,” the report noted.
But even with those assumptions, the numbers still don’t work: The budget predicts $1.3 trillion deficits per year, every year, for 10 years… which would be a national debt of $39 trillion by 2031.
That debt would equal 117 percent of the nation’s annual economic output, according to Bloomberg.
Higher taxes. Higher inflation. A bigger deficit. More debt. And low growth.
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The next four years could be very difficult for many Americans.
Thanks, Joe.
— Walter W. Murray is a reporter for The Horn News. He is an outspoken conservative and a survival expert.