Biden Budget: The COVID Ratchet is Permanent
As all the world knows, the Biden administration finally got the federal budget out last week. Sorta.
If you went to the govinfo budget page on Thursday it just showed the president's Budget Message and the Public Budget Database. That's odd because the Budget Message lists 400 employees of the OMB who contributed to the Budget. You'd think that a couple of them could have whipped out the Historical Tables in time for the Thursday rollout.
The partial budget rollout was inconvenient for me because my usgovernmentspending.com uses several of the Historical Tables, including Table 3.2 - Outlays by Function and Subfunction, Table 2.1 -- Receipts by Source, Table 7.1 -- Federal Debt at the End of Year, and so on. But I was able to assemble the data from the Excel files in the Public Budget Database. So if one elderly man can do it at home on a teeny little fanless PC, what about the Charge of the 400 at OMB?
One thing I was particularly interested in was the GDP forecast, and also the inflation forecast, which appeared in Table S–9. Economic Assumptions in the Budget Message. I thought I'd compare it with the GDP/inflation forecast a year ago in the 2023 Budget. Actuals in red.
Do you see that a year ago, the Fearless 400 predicted 4.2 percent real growth in the GDP, and in the event we had a not-recession netting out at 0.2 percent? There's another not-recession of 0.4 percent growth forecast for 2023.
Do you see how last year the Fearless 400 predicted 4.6 percent inflation for 2022 and in the event we had 8.1 percent inflation? But not to worry: this year, 2023, inflation will be 4.3 percent and 2.4 percent in 2024. Nothing to see here; move right along.
Eventually I got the data loaded and took a look at the charts. Here's the Biden administration forecast on federal spending going out to 2028, now appearing on usgovernmentspending.com.
So, the net effect of the COVID emergency was to ratchet up federal spending by about $2 trillion a year. Forever. If you take a look at federal spending in the 20th century, the same ratchet happened after the 1929 Crash and World War II. As the philosopher said: "You never let a serious crisis go to waste."
I used to be angry at the perpetual hunger for more spending by our Democratic friends. But now that I've read and digested Nazi jurist Carl Schmitt's The Concept of the Political, I understand. If politics is the distinction between friend and enemy, then everything makes sense. In politics you fight the enemy in World War COVID and World War Climate and World War J6-Deplorables. to the death, and you shovel the loot and plunder at your DEI supporters.
Everything goes well until you lose the war with the enemy -- hello Germans! -- or you run out of loot and plunder, like the Romans and the French kings. When you run out of other peoples' money then it is often time for Regime Change.
Or not. I watched Jordan Peterson's interview with Bibi Netanyahu from December 2022, and Bibi explained how he turned Israel from socialism into a free-market technological super-state as Finance Minister in Israel's financial crisis in 2003. He misquotes the philosopher above: "you never want a
serious crisis to go to waste." (58:00) So he cut social programs, big time
Of course, there is a price to pay when you cut social programs. In the 2006 election the Likud Party dropped to 12 members in the 120 member Knesset. Everyone said that Bibi was finished. But in 2009 Likud jumped to 26 members and Netanyahu was able to form a government. And the rest is history.
And now we read of the Senate in France passing a shocking increase in the pension age from 62 to 64 in the face of massive street manifestations. So I dare say that President Macron's political career is finished. But the question is whether the French Socialist Party will cancel the age increase when they win the next election or not.
And that's the question for Republicans and reform of Social Security and Medicare. You don't do it until the next "you never want a serious crisis to go to waste," such as a financial system meltdown. So the Democrats accuse you of pushing seniors off a cliff. So Antifa fills the streets with mostly peaceful protests. So you lose the next election. Of course you do. But you saved the nation.
And then, four, or eight years later, you face down Democrats and tell the world that you saved Social Security while the Democrats whiffed.
Yes, the COVID ratchet is permanent. Unless a leader emerges with the courage to break it.
Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also get his American Manifesto and his Road to the Middle Class.