Yesterday The Daily Wire posted an article about the budget reconciliation plan that is currently working its way through Congress.
The article reports:
A group of analysts predicts that Congressional Democrats’ $3.5 trillion budget reconciliation plan could actually cost up to $5.5 trillion.
As The Daily Wire recently reported, lawmakers are attempting to ram spending proposals through Congress without Republican approval. Their budget incorporates portions of President Biden’s American Families Plan and American Jobs Plan.
The Committee for a Responsible Budget has stated the following:
While the actual cost of this new legislation will ultimately depend heavily on details that have yet to be revealed, we estimate the policies under consideration could cost between $5 trillion and $5.5 trillion over a decade, assuming they are made permanent. In order to fit these proposals within a $3.5 trillion budget target, lawmakers apparently intend to have some policies expire before the end of the ten-year budget window, using this oft-criticized budget gimmick to hide their true cost.
…Based on these sources, we estimate policies in the fact sheet would cost about $5 trillion over a ten-year period. Including additional policies not explicitly mentioned but rumored to be part of the package, and incorporating possible estimating differences between the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO), the cost could rise to $5.5 trillion.
The article concludes:
Economists from the University of Pennsylvania’s Wharton School explain that deficit spending discourages investment in private ventures, thereby cutting innovation and business growth:
The government collects real resources via voluntary transactions with economic agents who are willing to trade real resources today for the promise of real resources in the future. Debt buyers, including U.S. households saving for retirement, view this debt as savings, which reduces their savings in private investment. This substitution is called the ‘capital crowding-out effect’ from government debt issuance.
With $1 trillion in deficit spending, capital stock would fall 0.78% by 2050; with $10 trillion in spending, capital stock would fall by 8.59%.
If you add tax increases to that picture, the future of the American economy looks even worse.