Articles

Yes, It’s Still the Economy, Stupid

June 03, 2021
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President Biden proposes a $6 trillion budget he claims “will strengthen our nation’s economy and improve our long-run fiscal health.” His acting Office of Management and Budget director, Shalanda Young, told reporters the budget seeks “robust, durable economic growth and broadly shared prosperity.” The numbers tell a different story, and voters seem to be taking notice.

The U.S. expects strong growth in the short term as the pandemic recedes and economic activity resumes. But even the OMB expects slower growth in the long run. It projects gross domestic product growth running slightly over 2% on average annually between fiscal 2022 and 2031, while the nonpartisan Congressional Budget Office pegs growth at less than 2% on average over the same window. Either growth rate is anemic, making more “broadly shared prosperity” unlikely as well.

Yet Mr. Biden’s advisers seem to believe the dramatic spending increase will pay off at the polls next year. As White House senior adviser Mike Donilon wrote in a February memo, “voters are hurting—and they’re looking for leadership that comes forward with plans and solutions.”

It may be that raising federal spending turns out to be a winning formula for Democrats in 2022. Then again, it may not. Especially since Mr. Biden would hike taxes high enough to eat up more GDP than in any 10-year period in American history, according to the American Action Forum’s Gordon Gray. The spending binge would also increase the nation’s public debt to 117% of GDP—greater than the previous record GDP percentage that Washington clocked in the year after World War II.

Recent polling suggests the Democrats’ approach may not help them in the midterms. Forty-six percent of respondents to a Fox News poll in late May said the president’s positions are “too liberal,” up from only 36% in December. The number who find his positions “too conservative” fell from 15% to 10%. Only 40% of respondents now think where Mr. Biden stands is “about right.”

The survey—conducted before the president upped his spending request—also asked what respondents thought of the president’s plans for government outlays. Forty-seven percent said he was asking for “too much,” while 33% replied it was “about the right amount” and only 17% thought it was “not enough.” Now that the bill has jumped from $4 trillion to $6 trillion, it’s logical that the number of voters who see the president as too liberal or profligate could rise.

More evidence of the political downside of the president’s agenda comes from a HarrisX poll of 10 swing Democratic congressional districts conducted May 18-23 for No Labels, a group that promotes bipartisanship and is chaired by Gov. Larry Hogan (R., Md.) and former Sen. Joe Lieberman (D., Conn.). All 10 of the districts featured close contests last year for the presidency as well as Congress.

Pluralities in seven of the districts now think both the country and economy are on the wrong track. Voters are closely divided on raising corporate taxes, but strong majorities in all 10 districts say “taxes overall” should either be “lowered or kept the same” while between 61% and 71% in each district “oppose raising federal taxes.” By majorities ranging from 66% to 72%, voters in all 10 districts oppose raising capital-gains taxes, while between 64% and 70% in each district oppose raising taxes by $1.8 billion—the total spending outlays for Mr. Biden’s American Families Plan.

Read more at WSJ.com

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