{"id":550019,"date":"2021-06-02T17:21:09","date_gmt":"2021-06-02T21:21:09","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=550019"},"modified":"2021-06-02T17:21:11","modified_gmt":"2021-06-02T21:21:11","slug":"bidens-american-families-plan-is-far-from-a-new-deal-economic-boon","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bidens-american-families-plan-is-far-from-a-new-deal-economic-boon\/","title":{"rendered":"Biden\u2019s \u2018American Families Plan\u2019 Is Far From a New Deal Economic Boon"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbidens-american-families-plan-is-far-from-a-new-deal-economic-boon%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=550019&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2021\/05\/Biden-11-1200x800-1.jpg\" class=\"ff-og-image-inserted\"  style=\"display:none\"><\/div>\n<p><span>Last month, President Biden unveiled his <\/span><a href=\"https:\/\/www.whitehouse.gov\/briefing-room\/statements-releases\/2021\/04\/28\/fact-sheet-the-american-families-plan\/\"><i><span>American Families Plan<\/span><\/i><\/a><span> \u2014 the third multi-trillion-dollar omnibus spending package from the first four months of his administration.<\/span><\/p>\n<p><span>Biden <\/span><a href=\"https:\/\/www.whitehouse.gov\/american-families-plan\/#:~:text=The%20American%20Families%20Plan%20is%20an%20ambitious%2C%20once%20in%20a,and%20invest%20in%20America%27s%20future.&#038;text=The%20resulting%20revenue%20will%20pay,and%20reduction%20in%20child%20poverty.\"><span>frames<\/span><\/a><span> the $1.8 trillion in spending as \u201ca once-in-a-generation investment in the foundations of middle-class prosperity \u2014 education, health care, and child care.\u201d He presented precisely the same point regarding his <\/span><i><span>American Jobs Plan<\/span><\/i><span>, which he called \u201ca once-in-a generation investment in America, unlike anything we\u2019ve seen or done since we built the Interstate Highway System and the Space Race.\u201d<\/span><\/p>\n<p><span>To drive the point home, the White House recently published a <\/span><a href=\"https:\/\/www.whitehouse.gov\/american-families-plan\/\"><span>website<\/span><\/a><span> through which Americans can record a video and share how the bill would help their family.<\/span><\/p>\n<p><span>Indeed, it is roughly \u201conce-in-a-generation\u201d that a Democratic President drastically expands the size of government \u2014 often to the detriment of long-term economic growth.\u00a0<\/span><\/p>\n<p><span>President Franklin Delano Roosevelt\u2019s \u201cNew Deal\u201d addressed the Great Depression with massive social programs that increased the size and scope of the federal government in drastic ways. Likewise, President Lyndon Johnson\u2019s \u201cGreat Society\u201d spent trillions attempting to decrease poverty with even more federal welfare programs.\u00a0<\/span><\/p>\n<p><span>The end results are expenditures such as Social Security, Medicare, and Medicaid, which take up nearly <\/span><a href=\"https:\/\/www.cbo.gov\/publication\/56324\"><span>half<\/span><\/a><span> of the federal budget in a normal year. Biden\u2019s proposals would produce additional long-term government handout opportunities. As President Ronald Reagan once said, \u201cthe closest thing to eternal life on earth is a government program.\u201d<\/span><\/p>\n<p><span>The Penn Wharton Budget Model (PWBM) \u2014 a nonpartisan think tank at the University of Pennsylvania\u2019s Wharton School that dissects the economic impacts of public policy proposals \u2014 has already concluded that the <\/span><a href=\"https:\/\/www.dailywire.com\/news\/comparing-trump-and-bidens-covid-relief-bills\"><i><span>American Rescue Plan<\/span><\/i><\/a><span> and the<\/span> <a href=\"https:\/\/www.dailywire.com\/news\/nonpartisan-economists-say-bidens-infrastructure-plan-will-decrease-economic-growth\"><i><span>American Jobs Plan<\/span><\/i><\/a><span> would have harmful long-term effects upon the economy.\u00a0<\/span><\/p>\n<p><span>As it turns out, PWBM\u2019s analysis of the <\/span><a href=\"https:\/\/budgetmodel.wharton.upenn.edu\/issues\/2021\/5\/5\/biden-american-families-plan\"><i><span>American Families Plan<\/span><\/i><\/a><span> proves that it would likewise dampen future economic growth.<\/span><\/p>\n<p><span>Here\u2019s why.<\/span><\/p>\n<p><b>Tax hikes and credits<\/b><\/p>\n<p><span>The <\/span><i><span>American Families Plan<\/span><\/i><span> amends the federal government\u2019s tax intake structure in many ways \u2014 most notably, by increasing taxes on the wealthiest Americans.<\/span><\/p>\n<p><span>Among the proposals are raising the top individual income tax rate from 37% to 39.6%, taxing unrealized capital gains above $1 million upon death, taxing long-term capital gains and qualified dividends at ordinary rates for individuals making more than $1 million, and applying the 3.8% Medicare tax to income above $400,000.<\/span><\/p>\n<p><span>All of the new taxes would be enforced by $80 billion in new funding for the IRS. According to PWBM, the Biden administration would direct \u201cthe additional resources towards audits, IT modernization, the establishment of a new information reporting regime for financial institutions, and more.\u201d $480 billion of the new $1.3 trillion in federal tax revenue would arise from the new IRS funding alone.<\/span><\/p>\n<p><span>Meanwhile, the plan would extend the <\/span><i><span>American Rescue Plan\u2019s<\/span><\/i><span> tax breaks \u2014 namely, by expanding the Child Tax Credit, Premium Tax Credit, Earned Income Tax Credit, and Child and Dependent Care Tax Credit.<\/span><\/p>\n<p><span>In total, PWBM estimates that the tax hikes and credits would close the federal deficit \u2014 the amount of federal government spending that exceeds tax revenue \u2014 by $275 billion between 2022 and 2031 and by $1.4 trillion between 2022 and 2036.<\/span><\/p>\n<p><span>However, any decreases in the deficit would be overwhelmingly outweighed by new expenditures.<\/span><\/p>\n<p><b>Spending increases<\/b><\/p>\n<p><span>Although the White House estimates that the <\/span><i><span>American Families Plan<\/span><\/i><span> would cost $1.8 trillion, PWBM states that \u201cthe proposal establishes permanent programs,\u201d leading the analysis to assume \u201cthat the additional spending continues beyond the budget window.\u201d<\/span><\/p>\n<p><span>Between 2022 and 2031, the legislation would spend $426 billion on universal pre-kindergarten, $299 billion on tuition-free two-year community college, $66 billion on Pell Grants, $117 billion on other education projects, $493 billion on family and childcare initiatives, as well as the $80 billion for IRS funding.\u00a0<\/span><\/p>\n<p><span>Between 2022 and 2036, the spending forecasts rise to $671 billion, $497 billion, $104 billion, $191 billion, $806 billion, and $176 billion respectively.<\/span><\/p>\n<p><span>All in all, the new expenditures from the <\/span><i><span>American Families Plan<\/span><\/i><span> would total over $2.5 trillion by 2031 and over $3.8 trillion by 2036.<\/span><\/p>\n<p><b>Government debt<\/b><\/p>\n<p><span>Increases in the federal deficit progressively and inevitably lead to more national debt.<\/span><\/p>\n<p><span>Considering both the spending and taxation provisions of the <\/span><i><span>American Families Plan<\/span><\/i><span>, PWBM expects to see increases in government debt of 2.16% by 2031, 3.54% by 2040, and 4.55% by 2050.\u00a0<\/span><\/p>\n<p><span>Such massive increases in the national debt would have sizable consequences on American productivity.<\/span><\/p>\n<p><b>Other economic metrics<\/b><\/p>\n<p><span>By nearly every long-term economic indicator, the <\/span><i><span>American Families Plan<\/span><\/i><span> would slash economic growth while ballooning the size of the federal government \u2014 a far cry from the supposed \u201conce-in-a-generation\u201d investment into the future of the United States.<\/span><\/p>\n<p><span>The gross domestic product (GDP) \u2014 the total value of final goods and services created by American land, labor, capital, and entrepreneurship \u2014 would drop 0.4% by 2050. As PWBM explains, the \u201ceffects from larger debt on the economy outweigh the productivity gains associated with the new spending programs.\u201d<\/span><\/p>\n<p><span>Along with the decrease in potential output comes a decline in the capital stock \u2014 the total amount of machinery, buildings, and other productive assets in the American economy \u2014 of nearly 1.2% by 2050. This change is the result of \u201cthe crowding-out effect that new debt has on private capital formation.\u201d\u00a0<\/span><\/p>\n<p><span>In other words, higher demand for federal debt financing causes investors to pour money into loans for the government rather than projects from the private sector. The latter is essential for fostering economic growth over time.<\/span><\/p>\n<p><span>Although the average hourly wage would increase by 0.1%, PWBM\u2019s analysis shows that a tax hike targeting the wealthy \u201cdiscourages labor by high-productivity households.\u201d Likewise, higher taxes on \u201ccapital gains and dividends facing the wealthiest Americans would lower their after-tax return on equity investment and therefore disincentive saving.\u201d With lower national saving comes lower funds available for financing private ventures \u2014 another factor that helps to explain the lower economic productivity.<\/span><\/p>\n<p><b>Falling short<\/b><\/p>\n<p><span>The White House\u2019s original outline of the <\/span><i><span>American Families Plan<\/span><\/i><span> promised that it would lay \u201cthe groundwork for innovation and inclusive economic growth for all Americans\u201d and constitute \u201ca critical investment in the strength and equity of our economy.\u201d<\/span><\/p>\n<p><span>However, following in the footsteps of the \u201cNew Deal,\u201d the \u201cGreat Society,\u201d and other social programs in modern history, President Biden\u2019s <\/span><i><span>American Families Plan<\/span><\/i><span> would only produce some positive effects in the short-term at the expense of dampening the ability of the American economy to innovate and expand in the long-term.<\/span><\/p>\n<p><i><span>The views expressed in this piece are the author\u2019s own and do not necessarily represent those of The Daily Wire.<\/span><\/i><\/p>\n<p><i><span>The Daily Wire is one of America\u2019s fastest-growing conservative media companies and counter-cultural outlets for news, opinion, and entertainment. Get inside access to The Daily Wire by becoming a <\/span><\/i><a href=\"https:\/\/www.dailywire.com\/subscribe\"><i><span>member<\/span><\/i><\/a><i><span>.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last month, President Biden unveiled his American Families Plan \u2014 the third multi-trillion-dollar omnibus spending package from the first four months of his administration.Biden frames the $1.8 trillion in spending &#8230;<\/p>\n","protected":false},"author":1,"featured_media":2278976,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2021\/05\/Biden-11-1200x800-1.jpg","fifu_image_alt":"Biden\u2019s \u2018American Families Plan\u2019 Is Far From a New Deal Economic Boon","footnotes":""},"categories":[],"tags":[],"class_list":["post-550019","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"fifu_image_url":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2021\/05\/Biden-11-1200x800-1.jpg","fifu_image_alt":"Biden\u2019s \u2018American Families Plan\u2019 Is Far From a New Deal Economic Boon","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/550019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=550019"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/550019\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2278976"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=550019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=550019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=550019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}