Has anyone noticed that the president has proposed increasing federal spending by nearly $1 trillion a year, while promising that 98% of Americans will pay nothing for it? The very idea would have seemed mad to every previous generation of Americans. Today it is considered conventional.
President Biden’s plans have been rightly criticized for the incontinence of the spending and the perversity of the taxes. Much of the spending is designed to exploit the pandemic crisis by transforming emergency income support into permanent middle-class entitlements for toddler care, higher education, medical services and much else. Other spending is called “infrastructure” but includes a list of progressive wants having nothing to do with capital investment. The tax increases—supposedly confined to the 2% with household incomes of $400,000 or more, but heavily weighted against capital investment—would seriously damage the economy and raise radically less revenue than claimed.
But set aside these problems and take the Biden plans as advertised, as a tremendous expansion of government paid for by a select few taxpayers plus lots of new borrowing. This is the apotheosis of a political transformation that began insensibly in the 1970s and has triumphed with barely a quiver of recognition, much less debate. It may be called the borrowed-benefits syndrome.
From the founding through 1969, the federal government followed a balanced-budget policy, not perfectly but with impressive consistency. Regular operations were covered by current taxes and tariffs. Borrowing was reserved for wars, economic depressions and other emergencies, investments in territory and transportation projects. The debts were paid down through subsequent budget surpluses and economic growth.
From 1970 onward, the country shifted to a budget-deficit policy—spending more than current revenue as a matter of routine, at first a little and then going big, through years of peace and prosperity as well as of war and crisis. Deficits had averaged 3% of spending in 1950-69, a period that included two wars, a pandemic and two serious recessions.