Twenty-five years ago, Bill Clinton declared in an address to Congress that the “era of big government” was over and subsequently joined with Republicans in scaling back welfare and reducing the government’s deficits.
That sentiment now seems mostly nostalgic, with both Republicans and Democrats setting new deficit records, in good times and bad.
This past week, President Joe Biden, who served in the U.S. Senate while Clinton was president, used his own speech to Congress to champion one of the biggest proposed expansions in government spending in decades, including several new, very expensive social programs.
Fresh after signing the nation’s third coronavirus relief bill, this one totaling nearly $2 trillion, Biden wants to spend another $4 trillion to fund universal preschool and free community college, extend the pandemic-initiated monthly child subsidies for at least three years, and revamp and expand America’s transportation, utilities and broadband systems.
As always, there is no shortage of good ideas on ways to spend the public’s money. The difficulty is coming up with a way to pay for those ideas now and sustain that spending over the long haul.
Biden says he wants to do it by raising the taxes on the wealthy and corporations, reversing or reducing some of the tax cuts ushered in during the Donald Trump years. (Those tax cuts, by the way, also helped keep deficits in the trillion-dollars-a-year range.) Even if Biden could get such tax increases — a dubious proposition — through a closely divided Congress, it’s almost a certainty that such an ambitious spending proposal would keep the federal debt on its current skyrocketing trajectory. Now at $28 trillion, that debt has more than doubled in the past decade.
So far, the economy has been immune from the government getting so deeply into hock. But for how long?
Plus there’s always the possibility of unintended consequences. The more that the government does for people, the less they are inclined to do for themselves. That’s been shown over and over again. Even now, with millions still unemployed supposedly because of the economic repercussions of COVID-19, companies here and elsewhere say it doesn’t appear that they will be able to fill many of their job openings until the stimulus money and extended unemployment benefits run out.
The United States had no choice but to ratchet up its spending during the pandemic to avoid a protracted economic collapse. With the economy recovering, it’s time to start turning back the spigot and maybe asking for some of that stimulus money back in higher taxes on those who didn’t really need the help.
The nation’s economy did well during the Clinton era of greater austerity. It’s done well during the Obama-Trump-Biden era of unbridled deficits. It should be obvious which is more risky.