Last year, a total of $ 8.8 trillion in new federal spending was proposed, of which $ 5 trillion has already been enacted. This is the largest increase in federal spending since Lyndon Baines Johnson’s great society.
Spending began with President Donald Trump. In March and December 2020, Trump signed a law providing $ 2.2 trillion, then $ 900 billion, as an economic stimulus to respond to a pandemic. President Joe Biden added $ 1.9 trillion to this amount in his “American Rescue Plan,” which was enacted in March 2021.
The Congressional Budget Office scores COVID bailout spending as a net increase to the deficit. The United States will have to borrow $ 5 trillion more than before to pay for the stimulus for the two presidents.
In March of this year, Biden announced the following proposals for infrastructure: The American Jobs Plan, among many other proposals, spends $ 2 trillion on highways, ports, bridges, internet upgrades, global climate change response, and water projects. Byden will increase the tax on corporate profits, raise the maximum tax rate from 21% to 28%, eliminate the fossil fuel industry preference, and impose a minimum tax on multinational companies operating overseas subsidiaries and affiliates. Proposed payment for these projects.
Last month, Biden then proposed “American Family Planning.” This $ 1.8 trillion proposal includes universal pre-kindergarten education, federal paid leave for health and childcare, free community colleges, increased childcare subsidies for people who make up 150% of the state’s central income, and medical care. Includes subsidies to. And countless social spending directed at helping American working families. The spending package is based on the assumption that the top 1% of taxpayers will raise their personal income tax, the capital gains tax on those who earn more than $ 1 million a year, and the state will raise its own tax to bring the community. It is covered. University tuition will be zero.
It’s perfectly appropriate to call attention when deciding what the new federal spending is and what it should be for. For example, do you need to provide a wealthy family with free community colleges and kindergartens aged 3 and 4? If you can build less, faster, and better infrastructure by subcontracting from the government, why do you need to pay more to meet UnionPay’s wage levels, like Biden’s “American Employment Plan”? Is it? Ratcheting down new spending on what you really need is an essential movement.
But of the $ 8.8 trillion, $ 4.2 trillion is already in use. How do you repay it, not to mention the additional $ 4.6 trillion still spent in the eight years of the Biden project?
If Congress is stuck on this question, the politically simple default solution is to increase borrowing and print money to repay it. It happened in the late 70’s. Then inflation broke out and government interest rates peaked at 14% in 1981. US dimes pay only 1.63% today. Fold it within a year or two.
A better option is to do everything you can to support the economic revival, which will increase your bottom line. America’s fastest economic growth in modern history was 7.2% in 1984. Government revenues have increased by 10%. No reputable economist today predicts that level of economic growth, but care must be taken not to curb the growth that can be achieved by raising corporate taxes. Similarly, proposed spending projects that stimulate growth, such as childcare and water storage infrastructure for low-income households, should be prioritized.
It will be difficult for Republicans to accept the tax increase. It will be harder for Democrats to support spending based on economic growth than to reward their members. But our greatest interests, and true leadership, are in the middle.
Tom Campbell is a professor of economics and law at Chapman University. He was the Chief Financial Officer of California and a member of Parliament for the fifth term. He left the Republican Party in 2016 and formed a new party in California called the Common Sense Party.
Federal deficit spending must be prudent as well as political – Pasadena Star News
Source link Federal deficit spending must be prudent as well as political – Pasadena Star News