A Course in Biden Budgetology

After President Biden’s award-winning SOTU speech on March 7, 2024, it was time, on Monday 11, 2024, for the President’s FY2025 Budget, which is now up and running on usgovernmentspending.com. Hey, nothing to see here. Deficits of $1.5 trillion as far as the eye can see:

President Biden says that he’s cut the deficit by a trillion dollars. Yeah, Big Guy, and I got a bridge…

It all adds up to sharply higher federal spending:

And how about that Gross Federal Debt, budgeted at $44 trillion by 2029:

How can this be? In The Budget Message of the President he proudly tells us that the budget is “CUTTING THE DEFICIT BY EXPANDING AMERICA’S PRODUCTIVE CAPACITY AND PROMOTING TAX FAIRNESS”.

I don’t know about you, but I say that $1.5 trillion deficits as far as the eye can see is not “cutting.” Okay, you “fact checkers,” your turn. Hello “fact checkers!”  Anybody there?

For a start the president states that the budget

...would cut wasteful subsidies to Big Oil and other special interests; and it would introduce a minimum tax on billionaires, which alone would raise $500 billion for the American people.

Don’t worry. There’s more. The budget “Ensures Corporations Pay Their Fair Share” and “Denies Corporations Deductions for All Compensation Over $1 million Per Employee” and “Stops the Race to the Bottom in International Corporate Tax and Ends Tax Breaks for Offshoring” and “Quadruples the Stock Buybacks Tax” and “Repeals Tax Cuts for the Wealthy and Reforms Capital Gains Tax to Ensure the Wealthy Pay Their Fair Share” and “Closes Tax Loopholes” and “Cracks Down on Wealthy Tax Cheats” and “Addresses Expiring Tax Cuts after 2025.”

Of course, over at the Epoch Times, Heritage Foundation analyst Preston Brashers writes that all this tax gluttony is going to tank the economy. That’s because “small and big businesses, entrepreneurs, investors, and job and wealth creators” would pay more. Unfortunately, he writes,

Middle-class workers and consumers would be devastated by the economic collateral damage.

How come? Well, it all goes back to the science of marginal economics, invented in about 1870 by a Brit, an Austrian, and a Swiss. That was about ten years after Marx said the workers were all going to starve. Anyway, in the 1970s this guy, name of Art Laffer, started bothering powerful people in restaurants by drawing a Laffer Curve on a napkin to show that lowering tax rates -- marginal tax rates -- would increase revenue and boost the economy. So Ronald Reagan tried “supply-side” economics and Donald Trump said #MeToo, and the rest is history.

Democrats have all agreed since the 1980s -- and I am sure that the experts agree too -- that this is nothing but “trickle-down” economics. Who cares? Well, Biden does, because he declares that his budget is all about “rebuilding our economy from the middle out and bottom up, not the top down”. It says so, right there on page 1, as Lina Lamont would have said.

Earth to Uncle Joe. Here’s how the economy works. Some guy starts selling books online from a garage in the 1990s. The result in 2024 is a corporation, Amazon, today worth 1.8 trillion dollars. What do you say, President Biden? Is Amazon an example of supply-side, trickle down, middle out, or bottom up economics? Or is it a question of having the right idea at the right time and working your pants off? I wonder what experts agree.

Here’s the problem. Since Marx published his Kapital in 1860, all good lefties have known that the labor theory of value says the workers are going be “immiserated.”  Since this truth had been carved in stone by Merlin before the 1870 marginal revolution, no lefty -- and I assume that goes for the kiddies at the Office of Management and Budget -- is aware that the labor theory of value was thrown upon the scrap heap of history 150 years ago.

But who is right? Well, on my usgsovernmentrevenue.com I have published a little chart on the income and income tax share of the Top One Percent of income earners.

You can see that the Top One Percent earns about 20 percent of income (in blue) and pays about 40 percent of federal income tax (in red). Interesting, isn’t it, that the share of income paid by the Top One Percent went up in the 1990s when today’s lefty tech billionaires were creating huge fortunes. Yes, but whatabout the years before 1986? Unfortunately, the IRS doesn’t publish numbers on that.

But never mind. Let’s just look at this chart, which shows Social Security, Medicare, and all the remaining federal spending.

Do you see what it shows? Yes, the entitlements are growing, but the big takeaway is that the jolt in spending in 2020 and 2021 has been baked in, and is never going away. What a surprise!

Government is all about the spending. And that is all.

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.

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