Spending Blowout Imposes Costs Beyond the Enormous Price Tag
Originally published here by the Wall Street Journal on April 12, 2021.
Nobody in Washington seems to care about the long-term burdens of debt and dependency.
Where has all the money gone? Where will all the money go? No one really knows. Few seem to care.
I left the private sector in 2010 to campaign for the U.S. Senate. I began serving in 2011, when the country’s total national debt was $14 trillion. At $28 trillion, it is now double that, with trillions more guaranteed to be added over the next few years.
In the private sector, we often have to remind ourselves to celebrate success because competition forces us to focus on solving problems and striving for continuous improvement. In government and politics, members of both parties love to celebrate bipartisan spending boondoggles, but few are willing to question—much less accept responsibility for—the harmful consequences: financial dependency, deficits and debt.
Emergency spending bills in the midst of crisis provide the best examples. The $800 billion American Recovery and Jobs Act of 2009 wasted money on gems like Crescent Dunes and Solyndra ($1.2 billion between the two, with zero jobs created). President Obama famously touted this bill, saying it would fund “shovel-ready projects” and create millions of “green” jobs. Later, Mr. Obama sheepishly admitted the projects weren’t very shovel-ready. Probably less than $100 billion of the $800 billion total was spent funding “infrastructure,” even using the most generous plausible definition of the term.
I have no doubt that President Biden’s 100% partisan $1.9 trillion American Rescue Plan and $2.25 trillion American Jobs Plan will be similarly unproductive. But like roosters taking credit for the dawn, Democrats will claim credit for a strong economic recovery in 2021 that will happen with or without these tax-and-spend blowouts. What Democrats won’t accept responsibility for is the harmful effects of growing dependency, long-term reduction in opportunity, and a future debt crisis.
Taking credit for the good and denying responsibility for the bad is a bipartisan habit. The first five Covid relief packages prove this. In order of passage, these bills authorized $8.3 billion, $192 billion, $2.2 trillion, $484 billion and $868 billion. Add the estimated cost of tax credits, and the amount of Covid-19 relief authorized in 2020 totaled approximately $4 trillion—18.7% of 2019’s GDP.
It’s actually hard to spend that much in such a short time. Demonstrating a small measure of restraint, the $868 billion bill, passed in December, actually repurposed $600 billion unspent from the previous bills. When Mr. Biden’s American Rescue Plan was passed, approximately $1 trillion remained unspent from the first five relief bills. But that didn’t restrain Democrats from authorizing $1.9 trillion more.
At the beginning of the pandemic-induced recession, it was imperative that Congress act swiftly and massively to prevent financial market collapse and provide help to individuals and businesses harmed by shutdowns. Initially, a figure of $750 billion was floated. Once spending fever broke out, it took only a few days for that to balloon into the $2.2 trillion Cares Act.
No one will ever know how much was disbursed to people and businesses who didn’t need it. I guarantee there will never be a serious effort to find out how much economic damage was caused when employers couldn’t compete with unemployment benefits that paid more than working. What about the devastating impact of ultralow interest rates or inflation on people living on fixed incomes and at the bottom of the economic pyramid?
Mr. Biden is now talking about trillions more for infrastructure, green energy and “equity”—whatever that means. I’m not sure how much infrastructure would actually be built with these trillions, but I’m certain that government would grow and become far more intrusive. History proves that would not be good for individual liberty, economic opportunity or American families.
President Lyndon Johnson’s Great Society programs were passed on the promise they would reduce poverty and strengthen the fabric of society. Although it is impossible to spend trillions and not do some good, data suggest these programs also did a great deal of harm. Before the Great Society, a booming economy was reducing poverty, and the national out-of-wedlock birthrate was only 4%.
Fifty years later, 40% of all births occur outside marriage, deaths by suicide and drug overdose are rising, society is being torn apart by divisive forces, and many believe we need to spend trillions more to redress long-held grievances. It sure doesn’t feel like we’re better off. Rather than decreasing dependency, I would argue the Great Society increased it by weakening American families.
Politicians of both parties whistle past this societal wreckage as they look for new excuses to spend even more money we don’t have. They will celebrate their well-intentioned efforts and ignore the harmful consequences. What will those long-term consequences be? How will debt be paid? Most seem unwilling even to consider the question.