If you read no further than this first paragraph, in which I ask the rhetorical question, “Who pays?”—that is to say, who pays for the various Biden administration programs, whether it be student debt forgiveness, the Green New Deal, inflation, aid to Ukraine, or pandemic relief payments?—the answer is always the same: you do. If you are a taxpaying citizen of the United States, you bear the cost of “magic money.” From now on, whenever you hear about a new initiative out of our federal government, regardless of whatever benefits they propose to make the world a greener and more equitable place, just remember, this is your money the government is spending.
For those who have kept reading, you clearly have a high tolerance for pain in the form of bad news. There is plenty of it on the money-printing front. In case you’ve lost track, which is easy to do with numbers in the trillions, what follows is a short list of some of the big-ticket items that our government has doled out in the last couple of years:
Aid to Ukraine
To date, the United States has committed to spend approximately $45 billion on Ukraine, of which more than half ($25 billion) has been in the form of military support. This is more than three times the amount the European Union has committed ($12 billion). This disparity is, notwithstanding, the fact that the threat imposed by Russia and a widening war sits in Europe’s backyard. The United States has once again been duped into playing the role of Rich Uncle in Europe, a long co-dependency that former President Donald Trump had broken just a few years ago. Ukraine has never been deemed to be of strategic interest for the United States, yet suddenly it has become a top priority for the U.S. government. Whatever one feels about the war and the terrible suffering of the Ukrainian people, how can America justify this spending given the serious economic challenges we face at home?
Student Debt Forgiveness
While the Department of Education has been intentionally vague here, estimates are that the costs of this program will ultimately run between $300 billion and $500 billion. I recently wrote in The Epoch Times that this handout is a hidden tax on Americans, especially hurting the working and middle class. Not to mention it being extremely unfair to the millions of Americans who diligently paid off their student debt and now feel like chumps.
The Inflation Reduction Act
The trimmed down successor to the even more egregious Build Back Better Act, which stalled in the Senate at the end of 2021, the misnamed Inflation Reduction Act is expected to do little to reduce inflation, but rather will succeed in lowering national income and employment. Using data provided by the Congressional Budget Office (CBO), the Tax Foundation estimates that this program will increase federal government revenue by $324 billon (net of tax credits) through 2031. Advocates of the plan expect to generate this revenue through more rigorous IRS enforcement (with $80 billion of additional funding), new corporate taxes, and by placing drug price restrictions on the pharmaceutical industry. The act is expected to reduce long-run gross domestic product by 0.2 percent and eliminate about 29,000 jobs in the United States, while reducing after-tax incomes for taxpayers across every income bracket. In effect, the act moves more money from Americans’ shrinking pocketbooks to those of the federal government.
The Infrastructure Act
The act was signed into law in late 2021, and it authorizes $1.2 trillion of new spending. A trillion dollars is a lot of money, no matter how it’s spent, but at least if it were invested in infrastructure, it would be of long-term benefit to the country. Unfortunately, this is not the case. Very little of this spending will go to actual infrastructure, with less than 10 percent going toward “bridges, roads and other major projects.” Instead, it is touted as “a big step to address the climate crisis.” With $415 billion earmarked for discretionary spending, it is safe to assume this money will be wasted on political “pork barrel” projects, not invested in productive infrastructure. Indeed, the CBO estimates that the program will increase budget deficits by $256 billion through 2031.
To date, the U.S. federal government has committed $4.3 trillion to fund various programs related to its COVID-19 response. Of this amount, just under $3.2 trillion was obligated toward “grants, subsidies, and contributions”; in other words, handouts that will never be repaid. These gifts were not evenly distributed to Americans, but went to less than 15 million recipients. For perspective, keep in mind that federal government revenue (composed of income taxes and other taxes) totals just over $4 trillion annually, with deficit spending far exceeding that revenue. So, since there wasn’t enough revenue to pay for this largesse, the U.S. government issued more debt, which has tripled since the global financial crisis of 2008–09 to unsustainable levels of now more than $30 trillion.
This list could go on and on, but the point has been made.
The Biden administration has been hypnotized and enchanted by magicians who worship what is called modern monetary theory (MMT). As I write in Why America Matters, “Proponents of MMT believe that governments can run deficits—and rack up debt to support them—in perpetuity, because government, as the monopoly issuer of currency, can always print more money and raise taxes.” Instead of pulling a rabbit out of the hat, these economic magicians create dollars from thin air. They believe that they can just keep issuing debt and printing more money without consequence.
This debt will eventually have to be repaid, either through economy-killing taxes or by debasing the dollar through severe inflation. Recently released CPI figures show inflation grew 8.3 percent in August. Inflation has been above 8 percent since March. Inflation will persistently run “hot,” with Americans’ purchasing power depleted, until “magic money” is revealed for the fantasy that it is, and the digital printing presses are stopped. In the meantime, Americans will continue to foot the bill.
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