The U.S. Senate spent much of last week spending our children’s inheritance. It is the kids who will bear the burden of their profligate elders.
When the Senate finished, the projected 10-year level of federal spending had increased by $4.2 trillion, measured on-budget as the nonpartisan Congressional Budget Office does. This extra spending, said the Senate, would be tacked on to the deficit — basically borrowed — increasing the 10-year deficit by more than 14%.
The $3.5 trillion budget plan is only for next year, but it sets the table for the higher costs included in the 10-year plan, including a big jump in interest payment on the debt.
The plan, approved in outline by the Senate, covers the items on President Joe Biden’s wish list, including what he calls investments in the nation’s future. Others argue they look more like a plan to extend welfare to the middle class through such items as an expanded child tax credit, paid family leave, child care subsidies, expansion of the earned-income tax credit, home health care and health insurance subsidies.
While the Biden plan includes higher taxes for corporations and high-income individuals, it does not envision any overall increase in taxes to pay for the added benefits.
The 10-year added cost for these items makes up most of the planned increase in borrowing. The administration argues that these items, many borrowed from the European welfare system, will lead more people to join the workforce, particularly women, and that will speed economic growth. But many of the proposed items are not work-dependent, as the American Action Forum, a center-right economic think tank, has pointed out.
Europeans mostly pay for such benefits through higher taxes, not borrowing. Lower U.S. taxes are one reason the American economy is more productive and why ambitious, educated Europeans — and others from around the world — want to move here, to our nation’s benefit.
The expansion of middle-class benefits probably will cost more than the Senate’s projected 10-year spending proposal. Included in that number is an assumption that Medicare spending can be cut by nearly $2 trillion through yet-to-be-enacted provisions of law.
Also included in the Senate’s plan is $550 billion in new authority for infrastructure investments, part of a larger $1.2 trillion general infrastructure authorization bill. The core investments in highways and bridges are sorely needed, and the decision to make broadband expansion a federal priority is welcome. South Carolina will get some much needed and welcome help in the billions of dollars for our highways, rail transportation, bridges, broadband and other projects. But the new infrastructure is only about half paid for, and it gets the federal government more deeply involved in subsidizing — and controlling — the electric grid and helping the transition to electric automobiles by creating charging stations.
The bill passed by the Senate now goes to the House. It would set the stage for bypassing the Senate filibuster and passing the controversial items by the narrowest of majorities. It cannot be said that there is a powerful public mandate for this spending, which makes ramrodding it through Congress unwise.
The Senate should have listened, and the House should listen, to the Congressional Budget Office. It has repeatedly said that increasing the debt as a percentage of GDP, which the Biden plan does, will raise borrowing costs, lower economic output and reduce national income in the long run. In other words, our children will have to pay for profligate government spending.