By my calculation, there are at the very least 11 trillion reasons to worry about Democratic presidential contender Joe Biden. He's the odds-on favorite to beat incumbent Donald Trump on November 3. Not only is the former vice president likely to win, but FiveThirtyEight predicts Democrats have a 74-in-100 chance of taking the Senate while holding the House of Representatives, meaning that he will have a great opportunity to deliver on all of his campaign promises, which add up to a mind-blowing total of $11 trillion in new federal spending over the coming decade. His "platform is more liberal than that of every past Democratic nominee," writes The Washington Post.
That's bad news not just for the economy but for a wide range of libertarian concerns about things such as individual autonomy, free speech, school choice, and gun rights. In last week's debate with Trump, Biden warned that we are entering a "dark winter." He was talking about rising COVID-19 cases, but his own platform is likely to keep us at home, out of work, and in a bad place for a long time to come.
Biden's expansive vision is about more than vastly increasing spending, but let's start there because the numbers are simply staggering. He's proposing $11 trillion in brand new spending over the next decade, according to the Manhattan Institute's Brian Riedl. Big-ticket new items include $1.4 trillion to expand Obamacare; $2 trillion on his version of a Green New Deal; jacking Social Security and Supplemental Security Income by $1 trillion; and goosing spending on preschool, K-12, and higher education by $1.5 trillion. Biden has also signed on to a $3.3 trillion stimulus spending plan pushed by House and Senate Democrats.
All of this new spending would be layered on top of an existing annual federal budget that has swelled to nearly $7 trillion in fiscal year 2020, from a record-high yet relatively cheap $4.4 trillion in 2019. To pay for this new largess, Biden has laid out $3.6 trillion in tax hikes over the coming decade, resulting in what Riedl says is "the largest permanent tax increase since World War II." Much of the new revenue would come from boosting corporate income taxes back to what they were before Republicans lowered them during Trump's first year in office. Yet despite all the hikes, Biden would still manage to increase the national debt (and thus depress long-term economic growth) by about $5.6 trillion between 2021 and 2030, according to the Committee for a Responsible Federal Budget.
Despite Biden's claims that no one in a household making under $400,000 a year would pay one red cent more in taxes, it's inevitable that everyone will feel the pinch. First, notes Richard Rubin in The Wall Street Journal, Biden is calling for a reinstatement of the Affordable Care Act's individual mandate. Second,
the corporate tax increases would indirectly affect households at all income levels. That's because the burden of that tax is borne mostly by shareholders and, over the long run, by workers. So anyone owning stocks could be affected and eventually, companies may raise wages less than they otherwise would.
Worse still, the new levies, along with a bevy of new regulations on energy, health care, and more that Biden has promised, will almost certainly stall the economy big time. Analysts at the Hoover Institution calculate, according to Reason's Billy Binion, "that over the next decade, these changes would prompt the economy to shed 4.9 million jobs and the gross domestic product to drop $2.6 trillion." And in the year 2030, "U.S. consumption would be down $1.5 trillion and median-income households would make $6,500 less."
Using the Hoover study as a guide, the economic conservatives at The Wall Street Journal's opinion page take pains to note that Biden's plan won't tank the economy overnight. Rather, they rightly fear his "proposals will have a long-term corrosive impact by raising the cost of capital, reducing the incentive to work and invest, and reducing productivity across the economy." They illustrate how that works:
To take only one example, the electrification of most passenger cars would increase the per capita demand for electric power by 25% even as more than 70% of baseline electric power from fossil fuels would go offline. Bridging this supply-demand gulf would require enormous subsidies and far more investment and labor to achieve the same energy output. Mr. Biden's energy plans would cut total factor productivity by 1%-2% across the entire economy.
Perhaps even scarier than Biden's explicit plans to tax, spend, and regulate what already exists are the seemingly infinite promises he has made to push new government controls onto virtually all aspects of our lives. He wants to repeal Section 230, the law that protects online platforms from legal liability for speech generated by users, and wants to "take a really hard look" at breaking up tech companies, especially Facebook. He's called for an end to federal funding for charter schools and the reinstatement of ineffective assault-weapons bans and countless other gun-control measures.
Pick any page of his campaign website's extensive "vision" section and you'll find endless proposals to tinker with everyday life and employment. He pledges to "aggressively pursue employers who violate labor laws, participate in wage theft, or cheat on their taxes by intentionally misclassifying employees as independent contractors" and also to "establish an Environmental and Climate Justice Division within the U.S. Department of Justice." What sort of bureaucracy do those sorts of things require? The same sorts of questions are raised by his on-again, off-again endorsement of a federal mask mandate. On many, perhaps most, issues, Joe Biden's America will be one in which political and economic power is unified under Washington's control.
He will be all things to all people and it's hard to know where any single agenda ends and another begins. Hence, in a section devoted to "Joe's Agenda for Students," he promises to require "aggressive methane pollution limits for oil and gas operations" while also making "four-year public colleges and universities tuition-free for all students whose family incomes are below $125,000."
As Reason's publisher Mike Alissi noted in Reason's recent roundup of how the staff is voting:
These ideas aren't just rhetoric from a blowhard. Depending on what happens in the Senate, they're likely to become law, undermining economic growth and moving us backward on First and Second Amendment protections, school choice, property rights, consumer freedom, campus due process, worker freedom, energy choices, and so much more.
Joe Biden has been in national politics for some 47 years, almost 10 years more than most of us are old. Because of various scandals (he dropped out of the 1988 presidential race after it came out that he'd plagiarized details of his own biography from a British politician!) and gaffes (in 2008, he asked a wheelchair-bound supporter to "stand up…and let 'em see you"), he was a late-night punchline for much of his half-century in the public eye.
But he is a battle-hardened politician whose time has finally come and who has a very good chance of being the next president of the United States. He will also likely have Democratic majorities in both houses of Congress that are even more expansionist than he is. His season in the sun—coming decades after he first tossed his hat into the presidential ring—may well usher in a dark winter that will persist long after next year's first crocuses bloom.