Heading into a bruising reelection fight, President Joe Biden faces an abysmal 38% approval rating on the economy. Yet the White House and much of the media blame the voters for failing to understand how good they’ve had it since 2021, with pundits and cable TV hosts trying to solve the mystery of how voters could possibly be so displeased with soaring prices, spiraling interest rates, massive budget deficits, and stagnant wages. Biden correctly reminds voters that he inherited a difficult economy. However, his aggressive spending and regulations proceeded to drive inflation, interest rates, and federal debt even higher than necessary.
The economic tone of this administration was set in its first 50 days with the enactment of the $1.9 trillion American Rescue Plan. Any voters still holding out hope that a Biden White House would be moderate, prudent, bipartisan, deficit-focused, or even willing to listen to economists instead witnessed the establishment of a highly political, partisan, and quite ideologically progressive administration.
The new administration began crafting the American Rescue Plan before the ink had even dried on a $900 billion stimulus law signed by former President Donald Trump weeks earlier. With this federal spending flooding an economy that was already beginning to recover and reopen from the pandemic, the Congressional Budget Office forecast that the 2021 economy would perform just $420 billion short of its $22 trillion capacity. However, the over-caffeinated White House responded by shooting a $1.9 trillion American Rescue Plan bazooka at this $420 billion output gap. This swollen package of bailouts, giveaways, and pent-up Democratic wish lists included $350 billion to bail out state budget deficits that did not actually exist, a bloated union pension bailout, and a decade’s worth of additional federal school funding. The White House then bought broader public support with child tax credits, unemployment insurance bonuses, and yet another round of taxpayer rebates.
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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
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