Does Joe Biden’s Multi-Trillion Dollar Spending Plan Pay for Itself?

My fellow blogger Craig Eyermann did a good job of discussing some shortcomings of Biden’s expenditure plan, so I won’t enter into that debate. Rather, I want to consider the claim that the plan pays for itself. This article quotes President Biden as saying about the plan’s cost, “We pay for everything we spend. It’s going to be zero. Zero.”

How can a plan that proposes to spend trillions of dollars cost nothing? The Orwellian answer from the president is that the plan includes tax increases claimed to match its expenditures.

To further confuse things, in that same article the president says “It’s reducing taxes, not increasing taxes.” Let’s set aside the obvious question about how increases in spending and cuts in taxes can, on net, cost nothing. Any expenditure entails a cost.

Let’s say you decided to spend a weekend at the beach, but were short on funds so you worked some overtime hours to earn the money to pay for the trip. Would you say the cost of the trip was zero, because you worked overtime to pay for it? Of course not. So why would the cost of the president’s expenditure proposals be zero if he also proposes tax increases to pay for them? This is Orwellian double-speak.

One has to separate the revenue side of the president’s proposals from the expenditure side, and realize that any expenditure costs money that could be spent on something else. Would it be better to use the money on the revenue side of the president’s plan to reduce the budget deficit rather than fund his social programs? To ask the question is to recognize that the cost of his proposed plan is not zero. The cost is that we give up spending that money on something else.

One option we should always consider is lowering taxes to let people decide how to spend their own money on what they want, rather than having government policymakers spend it on what they want.

I’m setting aside my own views on whether the taxes and expenditures he proposes are good ideas to make a simple point: The cost of trillions of dollars in spending is not zero. It’s trillions of dollars.

Randall G. Holcombe is a Senior Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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