A glance at the introductory sections in the 2024 budget put forth by the Biden administration might invite dangerous bouts of laughter if only the topic were not so serious and our so-called leaders not so delusional. After the “Budget Message of the President,” the fun begins with “Delivering Results for the American People” and “Growing the Economy from the Bottom Up and Middle Out” followed by the impossible-to-say-with-a-straight-face “Ensuring an Equitable, Effective, and Accountable Government that Delivers Results for All.” Unfortunately, it is likely that politicians in Washington are so removed from reality that they truly believe their fiscal policies can do anything but hinder progress, hamper productivity, and forcibly distribute people’s property against their wishes.
An early example of this unreality comes from Joe Biden’s introductory message in which he states:
Throughout, we have delivered on our commitment to fiscal responsibility, cutting the deficit by more than $1.7 trillion in the first 2 years of my Administration—the largest reduction in American history. I have signed into law additional deficit reduction by finally making the wealthy and corporations pay their fair share, including with a new 15 percent minimum tax on billion-dollar corporations, many of which had been paying zero in taxes. We have also stood firm in our commitment to not raise taxes on anyone earning less than $400,000 a year.
This “fiscal responsibility” sounds impressive, after all, but it takes a true verbal contortionist to even approach a charitably expansive definition of responsibility with the numbers put forth in the budget. To wit, Table S-1 in a review of the budget shows that over the ten years from 2024–33, the total deficit is projected at $17.16 trillion, and in no single year therein will the projected deficit be less than $1.5 trillion. In fact, the deficit is projected to range from $1.56 trillion in 2026 to $1.97 trillion in 2033—and those numbers assume no intervening wars, recessions, or other spending sprees.
Think about that for a moment. Responsibility is now defined as spending at least $1.5 trillion more than the government extracts in revenue every single year for the foreseeable future. Moreover, federal outlays (spending) are projected to increase from $6.9 trillion in 2024 to over $10 trillion in 2033.
Let’s put those spending numbers into perspective. If we added up the incomes of all Americans who earned over $500,000 per year in 2022, what do you think would be the total (according to Social Security Administration data): $1.1 trillion, $3.2 trillion, $4.5 trillion, or $5.7 trillion? (Don’t peek.)
Okay, now what about the total income for those earning over $100,000 per year: $2.6 trillion, $4.1 trillion, $5.1 trillion, or $7.3 trillion?
Let’s check your answers. The total income for those earning over $500,000 per year in 2022 was $1.1 trillion (technically, $1.02 trillion), and for those earning over $100,000, it was $5.1 trillion ($5.08 trillion, technically). Compare those numbers with the federal spending I displayed above: $6.9 trillion this year and $10 trillion in 2033. Thus, even a 100 percent tax on everyone in the country earning more than $100,000 per year would still leave a deficit of $1.8 trillion this year.
In fact, the politicians could confiscate all the income of everyone earning over $65,000 per year and only barely pay for this year’s spending ($7.1 trillion in income versus $6.9 trillion in spending). However, recall that Biden has not proposed anything quite so dramatic. In fact, he stated in his opening budget remarks, “We have also stood firm in our commitment to not raise taxes on anyone earning less than $400,000 a year.” He also wants to “[make] the wealthy and corporations pay their fair share, including with a new 15 percent minimum tax on billion-dollar corporations.”
How do these proposals affect the overall budget? According to Table S-5, “tax reforms to ensure the wealthiest Americans and multinational corporations pay at least a minimum tax rate and reforming taxation of stock buybacks” will bring in a maximum of $126.91 billion per year (and a minimum of $116.07 billion) over the next ten years.
Let’s summarize so far: Politicians in Washington are spending $6.9 trillion this year, which is $1.88 trillion more than they are receiving in “receipts” (taxes, fees, etc.). The “problem,” though, is that wealthy corporations and individuals are not paying enough in taxes. The solution is then to raise roughly $120 billion per year by taxing these people and entities more heavily. Let’s remember that the annual deficits of more than $1.5 trillion include the additional wealth taxes, so these taxes reduce the total deficit over the next ten years by only 6.6 percent.
Forgive me, but I’m unsure which part of the above summary is the fiscally responsible part. Is raising taxes on certain people and entities that meet arbitrary thresholds for income or revenue to offset a minuscule portion of an ever-growing deficit fiscally responsible? Is consistently spending 26 percent more than is taxed away from people fiscally responsible? Is borrowing money to pay for those deficits and increasing prices by devaluing the currency fiscally responsible?
Unfortunately, nearly all Washington politicians and many Americans believe the fiscal problems stem from a lack of revenue—not taking enough from other people. As evidenced above, though, even if the politicians voted to confiscate all the income from everyone earning over $65,000 per year, they would still only barely pay for this year’s spending. Truly, fiscal responsibility has simply become one more casualty of the war on words and honesty in communication. Any reality-based, honest approach to fiscal responsibility from the federal government would need to address the real problem: spending. That is about as likely as getting politicians who “deliver results for the American people.”
