Biden Legacy: Massive spending on employee benefits


President Joe Biden signs the US bailout in the Oval Office of the White House in Washington, DC on March 11, 2021. (Tom Brenner / Reuters)

If so, get ready for even more calls for increased welfare.

Jin Biden seems to be in love with the adoption of FDR-like changes in the United States, and for good reason. The shadow of FDR is both long and durable. Take, for example, the Social Security program he helped create: Since its inception, it has fundamentally changed American life, affecting how long we work, when we retire, and how many people do. us who end up in poverty. Today, this program pays monthly checks to 55 million retirees, survivors and their dependents. (The disability benefits that were created in the 1950s support millions more.) But while it has taken decades for Social Security to reach this scale, President Biden has already surpassed that level by sending new monthly benefits to approximately 65 million children in 39 million families. – representing 30 percent of all households in America.

This massive check-writing operation is one of the results of the US bailout, the Democrats’ $ 1.9 trillion pandemic relief law that President Biden signed in March. This law included three major extensions to the long-standing child tax credit program, the costs of which added to the deficit.

First, it increased the annual payments per child – from $ 2,000 to $ 3,600 for children under six, or $ 3,000 for older children. Second, it cut the link between the collection of benefits and the work of parents. Previously, only working parents could qualify – and full payments were reserved for those who worked enough to owe federal income tax. Now, increased payments are made even to parents without jobs, income or federal tax liability. Third, the new law pays checks in monthly installments, rather than as a single payment at tax time.

Biden suggested these changes were necessary to fight the pandemic. In March, for example, he said the US bailout “directly responds to the emergency in this country because it focuses on what people need most.” Yet, in truth, these controls have nothing to do with the pandemic. (Just take a look at the now dusty white papers proposing similar measures, long before anyone had even heard of COVID-19.) Supporters, including the president, have repeatedly called for the return to be made. extended permanent payments, further undermining such a link.

The president also maintains that the new checks amount to a substantial “tax cut”. On July 15, he called the benefit “one of the biggest tax cuts ever given to families with children.” Not so. Official estimates from the non-partisan Congressional Budget Office (CBO) show that more than 80 percent of the current expansion reflects new spending on benefits for parents who owe no federal income taxes; less than 20 percent is tax relief. Taxes will need to rise dramatically to cover the $ 1.6 trillion cost in the first decade alone if these benefits are made permanent.

The Biden administration appears to be following the advice of former White House chief of staff Rahm Emanuel, who during the Great Recession said: “You never want a serious crisis to be wasted. It’s an opportunity to do things you thought you couldn’t do before. Remember the previous consequences of this approach: a temporary $ 900 billion stimulus bill and Obamacare. Today’s lawmakers are capitalizing on again on a crisis, looking for even more trillion dollars in benefit extensions and a continuation of these controls.

The significant number and cost of controls today should obviously be of concern. But it is not the only one. The same goes for the precedent they set for later more extensive measures. This very real consequence is already taking hold. Consider that Rep Ilhan Omar (D., Minn.) Recently introduced legislation to permanently provide larger monthly checks to all but the wealthiest U.S. residents. His plan would double federal spending – and taxes, if policymakers tried to cover the huge costs. Don’t be surprised if demands for such massive increases in benefits increase if the monthly checks of a third of all households are made permanent.

Democrats also suggest these checks reduce child poverty, but they are poorly targeted on that effort. In addition to offering expanded benefits to millions of families earning more than $ 100,000 a year, they are also reversing the successful, bipartisan, and work-friendly reforms of the 1990s by eliminating work demands for beneficiaries. More generally, they will make tens of millions of families – almost all in their prime working years – newly dependent on monthly government payments.

One of the key questions facing Congress this month is whether to continue this deluge of government controls. President Biden and other Democrats who support their sustainability are already resorting to budget tricks to minimize the apparent cost, leaving future lawmakers to raise the taxes needed to pay them permanently. This is not surprising given recent polls, which suggest that support can quickly evaporate in the face of the large tax hikes needed to cover their full cost. Congress’ decision will ultimately determine whether this massive federal check-writing operation will be cemented in the legacy of Joe Biden – an initiative that has already made FDR look like a government check-writing piker in comparison.

Matt Weidinger is the Rowe Fellow in Poverty Studies at the American Enterprise Institute.

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