The obvious, but hidden problem with Biden's "paid for" spending plan



As you well know, the federal government is currently finding a way to spend $3.5 trillion of our money. According to Biden, this plan won't cost anything. To paraphrase Biden himself, $6 trillion, $3.5 trillion, $1 trillion, it doesn't matter, the real cost to Americans is "zero."


Let's imagine that Biden is correct. We will spend $3.5 trillion over 10 years, and we will somehow raise taxes the perfect amount that the dollar amount will be offset by new "income" to the government. I put "income" in quotes because I would disagree with a thief calling his stolen goods "income."



Biden will allegedly offset these costs by raising taxes in numerous different ways. Common proposals include raising corporate taxes, raising capital gains taxes, income taxes for the rich, and even taxing unrealized gains on assets.


First off, there is no way that this comes to no cost for the average American. By now you probably know what any taxes levied on "the rich" and corporations just get transferred down to the consumer via higher prices for goods and services. There's also the economic impact of transferring money from the productive side of our economy, to the very unproductive and inefficient side of our economy. How much smaller will the overall economy be when the government is picking winners and losers based on the political power of the recipients?


Now for the obvious, yet hidden reason this will never cost "zero."


The government finds new ways to spend your money every single year. There will always be the next "crisis," and the next "victim."


Let's assume that there is a point that we can all agree on that taxes will no longer be able to be raised without seriously destroying our country's GDP. We'll call this The Laffer Curve. Even some on the left could admit that taxes cannot be raised every single year. We will hit (and probably already have) a point of diminishing returns.


The current spending plan lays out numerous takes hikes to "pay for" its expenditures. That's great. Like I said, we'll assume that's actually possible for the purposes of this article.


What about the next spending bill?


The entire "paid for" narrative revolves around the idea that this is the last deficit increasing money the government will ever spend. We all know this isn't the case. There will be a new bill next year. Heck, there might be two. There will also be 1-2 new bills with new spending in 2023, 2024, and so on. What will the "pay for" be for those bills?


By 2023, we've already raised taxes to simply "break even" on the $3.5 trillion bill from 2021. How do we pay for new spending? We will either borrow more money, or we will raise taxes again. Likely a combination of both. But this is 2023.. What about 2025? We need to increase the federal budget in 2025, of course. How will we pay for that? More taxes and more borrowing...I think you get the idea.


My point is that Biden's talk about "paying for" this bill is completely pointless in a world where we see federal expenditures increase every year. This will not be paid for. The only way I see out of the looming debt crisis is to freeze federal spending for several years to allow GDP to catch up. The government historically rakes in 17% of GDP regardless of the tax rates. Freezing spending and allowing GDP to grow is our only option.


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