Build Back Better is brand new packaging for an old government program—throwing money down the toilet. From Simon Black at sovereignman.com:
Tag Archives: Government spending
The best laid plans of politicians, bureaucrats, and governments rarely make any allowance for the incompetence and corruption of politicians, bureaucrats, and governments. From James Bovard at aier.org:
“Build Back Better” is the motto for President Biden’s ambitious plans to remake much of the American economy and society. On Wednesday in Pittsburgh, Biden will reveal his plans for trillions of dollars of new spending for infrastructure and other projects. His devotees in the national media will whoop up his proposals as the greatest thing since the New Deal, or at least since Biden’s American Rescue Plan Act a couple weeks ago.
Once Biden fires the starting gun, a deluge of experts will descend upon cable news shows to tout the vast benefits of the proposed “investment.” There will be a barrage of econometric formulas that irrefutably prove, via 10 or 15 shaky or squirrely assumptions, that vastly increasing federal spending will multiply prosperity across the land.
Rather than deferring to mathematical formulas, I prefer old time political economy – i.e., analyses premised on the perfidy of politicians and the imbecility of bureaucracies. As a Washington journalist, I have investigated scores of federal programs that sounded great until they crashed and burned (okay, I did give some of them a push). Historical track records of government agencies are a better lodestar than the latest idealistic buncombe regardless of how many MSNBC hosts swoon.
“Washington knows best” is the tacit premise for most of Biden’s initiatives. The Biden administration can trust federal agencies to shamelessly fabricate statistics to vindicate any new program, or at least cover up the initial damage.
When it comes to spending other people’s taxes and borrowing money, Biden and the democrats are just getting warmed up. From David Stockman at internationalman.com:
Leave it to the New York Times to remind us why prosperity is not right around the corner. That’s regardless of whether or not the $6 trillion of Everything Bailouts that were fed into the US economy over the past year causes the 2021 GDP stats to make up for the 2020 plunge brought on by the Virus Patrol.
We are referring to the recent “leak” to the NYT presaging Sleepy Joe’s upcoming $3 trillion infrastructure plan and the following bolded sub-heading that heralded it:
A pair of proposals would invest in infrastructure, education, work force development and fighting climate change, with the aim of making the economy more productive.
And just in case the reader didn’t connect the dots to the “more productive” bit, the NYT thoughtfully provided a picture to explain.
Of course, we say no thanks.
Indeed, the NYT’s write-up of this latest Biden Boondoggle tells you all you need to know about why we do not have just a standard-size economic slump ahead but a veritable calamity.
The chances are 100 percent that the New New Deal will be even worse than the original. From Ryan McMaken at mises.org:
We’ve entered a new era of politics and government in America, and the Left is pretty happy about it. This week, for example, The Guardian announced, “Biden’s $1.9tn Covid Relief Bill Marks an End to Four Decades of Reaganism.”
From this point of view, “Reaganism” is code for extreme free market libertarian public policy. Or as some call it: “neoliberalism.”
The idea that this sort of Reaganism took over the country contradicts reality, of course. By virtually every metric—from tax revenues and federal spending per capita to the size of the regulatory state—the size of the American state has expanded relentlessly for more than forty years.
But in many respects the headline is correct. The new covid relief bill signals that whatever restraint on public spending existed before 2020 is now all but gone. And the bill represents the beginning of a new era: an era that can be likened to the New Deal. This has long been part of the plan according to social democrats and progressives. After all, there’s been a lot of talk from the Left for years about the need for a “new new deal.” Whether it centers on environmentalism or on healthcare, everyone in these circles agrees on one thing: we need a new surge in the size and scope of the government sector.
To paraphrase George Harrison: everything government money touches turns to crap. From Freed Radical at theburningplatform.com:
A business friend asked me to attend a meeting where he was pitching a life saving device to an elder care facility’s management. This was a system designed to help prevent grandma from hurting herself accidentally. So there we were with the campus administrator and a couple other people, one of whom was the staff federal government insurance expert.
As my friend glided through slide after slide of how this innovation was going to save lives, save money, and avoid lawsuits, with every new feature the head administrator looked at the insurance expert and asked one question: “Is this reimbursable under Medicare?”
The administrator asked us no questions whatsoever. There was no concern over how much money they would save, how easy the system is to use, what it costs, or what reduction in lawsuits could they expect. No, the only question was, would the taxpayers pay the bill?
Then last year I made an appointment for a physical at a doctor’s office where I was a new patient. The lady asked me on the phone for my insurance information. I told her I would pay cash. Silence. “Hold on.”
To tackle a depression head on, the first step is to admit its inevitability, and to pretend that government and central bank debt and spending will prevent one only makes the problem worse. From MN Gordon at economicprism.com:
I want to see people get money.” – Donald J. Trump, U.S. President, September 17, 2020
“Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet.” – Steven Mnuchin, U.S. Secretary of the Treasury, September 14, 2020
Money for the People
The real viral contagion that has infected the American populace is not an illness of the body. It’s something far worse than COVID-19. The American populace is suffering from an illness of the mind.
The general malady, as we diagnose it, is the unwavering belief that the government has an endless supply of free money, and the expectation that everyone, except the stinking rich, has claim to it. Why pursue self-reliance and independence when a series of stimulus acts promises the more abundant life? This viral contagion’s really ripped through the population in 2020.
For example, just a year ago, the American populace thought they could all live off the forced philanthropy of their neighbors. That to pay Paul you had to first rob Peter. The CARES Act proved to Boobus americanus that, without a shadow of a doubt, there’s free ‘money for the people’ in Washington. Sí se puede!
This week the Congress did its part to further the greatest show on earth. The people want stimulus. Congress intends to get to them, in good time.
Of course, the need to sprinkle the Country with printing press money was already a foregone conclusion. There was no discussion of the wisdom of not having a stimulus bill. The debate at hand was centered on how much.
Crazy Nancy wants $3.4 trillion. Senate Republicans want $500 billion. Something called the House Problem Solvers Caucus wants $2 trillion.
President Trump wants Republicans to “go for the much higher numbers.” His rationale: “it all comes back to the USA anyway (one way or another!).”
Sen. Rand Paul blasts GOP colleagues, says they should ‘apologize’ to Obama for past spending complaints, by Victor Garcia
Rand Paul speaks some all too rare sanity in Washington. From Victor Garcia at foxnews.com:
“So we were already running a trillion dollars short just with our normal budgetary expenses for the year,” the senator went on. “We added three trillion [with the CARES Act]. Now they’re talking about another one to two trillion. We’re going to borrow $5 trillion in five months. I remember when conservatives complained about George W. Bush borrowing $5 trillion in eight years … [Obama] was a piker compared to their borrowing that they’re doing now.”
Democratic leaders and White House officials are trying to finalize a so-called “Phase 4” emergency aid bill this week and hold a vote in Congress on it next week.
Paul warned that the amount of spending involved in such legislation could have negative consequences for Republicans in November.
“The politicians around here say, ‘Oh, no, we just have to buy more voters by flooding the economy with money.’ Well, guess what?” he asked. “What if conservatives or libertarians that vote Republican decide, ‘The hell with it, you’re acting like Democrats, we’re either staying home or voting for a third party.’ You know what? They might just lose this election because they’re acting like Democrats now.”
The US economy and financial markets had a great fiscal year 2019 and still the government went over $1 trillion deeper in the hole. From Simon Black at sovereignman.com:
Precisely one year ago today, the US federal government opened Fiscal Year 2019 with a total debt level of $21.6 trillion:
Specifically, the US federal debt on October 1st last year was $21,606,948,183,180.23
Today is the start of the government’s 2020 Fiscal Year. And the total debt is now $22,622,684,674,364.43
That means they accumulated more than $1 TRILLION in new debt over the course of the 2019 Fiscal Year.
Think about that for a moment:
FY2019 was, literally, the BEST year EVER measured by short-term US financial performance. The stock market reached an all-time high. Real estate prices reached an all-time high.
The key question: where does government get the money that it spends to support economic growth. From Frank Shostak at mises.org:
According to many commentators, outlays by government play an important role in the economic growth. In particular, when an economy falls into a slower economic growth phase the increase in government outlays could provide the necessary boost to revive the economy so it is held.
The proponents for strong government outlays when an economy displays weakness hold that the stronger outlays by the government will strengthen the spending flow and this in turn will strengthen the economy.
In this way of thinking, spending by one individual becomes part of the earnings of another individual, and spending by another individual becomes part of the first individual’s earnings.
So if for some reason people have become less confident about the future and have decided to reduce their spending this is going to weaken the flow of spending. Once an individual spends less, this worsens the situation of some other individual, who in turn also cuts his spending.
Following this logic, in order to prevent an emerging slowdown in the economy’s growth rate from getting out of hand, the government should step in and lift its outlays thereby filling the shortfall in the private sector spending.
Once the flow of spending is re-established, things are back to normal, so it is held, and sound economic growth is re-established.
The view that an increase in government outlays can contribute to economic growth gives the impression that the government has at its disposal a stock of real savings that employed in emergency.
Once a recessionary threat alleviated, the government may reduce its support by cutting the supply of real savings to the economy. All this implies that the government somehow can generate real wealth and employ it when it sees necessary.
Given that, the government is not a wealth generator, whenever it raises the pace of its outlays it has to lift the pace of the wealth diversion from the wealth-generating private sector.
There’s a certainty to increasing debt and compounding interest: eventually they must end. Either the debt is repaid or repudiated. From Bob Luddy at spectator.org:
Economic growth won’t save us, not without serious cuts in government spending.
The most important issue facing America today is the national debt and increasing federal deficits. Our national debt now exceeds yearly gross domestic product (GDP).
The U.S is the wealthiest country in the world, but our government has the largest spending deficits and national debt in recorded history.
The budget deficit in FY 2018 was $800 billion, but the debt increased by $1,300 trillion, and is now $21,500 trillion dollars. Government accounting (oxymoron) allows for spending and loans outside of the budget. The practice of underreporting deficits is fraud and is not legal in the private market.
Note the US Debt Clock (here).