Wednesday, April 26, 2023

Biden Once Endorsed “Wacko” Ideas About Spending

President Biden’s recent comments about the “wacko notions” included in the House Republicans’ debt-ceiling bill brought to mind another memorable quote: “I cannot agree to vote for a full increase in the debt without any assurance that steps will be taken early next year to reduce the alarming increase in the deficits and the debt.” Those were Sen. Biden’s words in October 1984. But how different is the House GOP’s spending package from the reforms Mr. Biden claimed to support nearly four decades ago?

During the 1984 debt-limit debate, Mr. Biden supported an amendment by Sen. Paul Tsongas (D., Mass.) that provided for a smaller debt-limit increase than the underlying bill and linked any future increase to a vote on an overall federal spending freeze. Today’s House Republicans are likewise proposing to link a debt-ceiling increase with spending restraint, which the White House has described as “economic hostage taking.” Yet 39 years ago apparently it was sensible. Mr. Biden said he supported tying the debt limit to spending reforms because doing so would “immediately focus our attention . . . at the most critical time attention should be focused on taking on the tough measures”—that is, “when you have to raise the debt ceiling again.” He added: “My mother says there is nothing like looking over the precipice to focus one’s attention.”

At the time, Mr. Biden supported a one-year spending freeze. The following year he suggested “an immediate across-the-board freeze for the next two years in federal spending and a two-year suspension of tax indexing.” By contrast, today’s House Republicans have proposed returning federal discretionary spending to the levels of fiscal 2022, which ended only a few months ago.

Whereas Mr. Biden proposed one or two years of fiscal restraint, House Republicans would extend spending caps for 10 years. But rather than freeze discretionary spending entirely, the House bill would allow spending to grow at a modest 1% a year, which would have two salutary effects. In economic terms, slowing the gusher of federal spending would tame a major source of the inflation plaguing the American economy. And politically, nothing would commit big-government Democrats to taming the inflation beast more than knowing how rampant inflation would erode the value of federal programs.

While the House Republicans’ proposal would apply for longer, its spending constraints would extend only to the discretionary budget. The freeze Mr. Biden supported would have applied to all federal spending. It would have frozen Medicare payments to doctors and hospitals, pensions for federal workers and veterans, and the annual Social Security cost-of-living adjustment. Ironically, while Mr. Biden has spent months attacking Republicans for wanting to reduce Medicare and Social Security benefits, the 1984 debt-limit amendment he supported would have done just that.

It’s also worth comparing the country’s fiscal situation then with its outlook now. When Mr. Biden advocated a spending freeze, the budget deficit stood at 4.7% of gross domestic product. In 1985 it rose to 5% and then fell to 3.1% two years later. By contrast, even if fully implemented, the White House’s budget presumes deficits averaging 5.2% of GDP over the coming decade. Gross federal debt has grown even more over the past four decades: Around Mr. Biden’s October 1984 speech, it stood at just under $1.6 trillion—or 39.6% of GDP—compared with an estimated $32.6 trillion, or 127.5% of GDP, by the end of this fiscal year.

In sum, while House Republicans have proposed longer-term spending restraint, they’ve done so to a smaller section of the federal budget than Mr. Biden did four decades ago. And unlike Mr. Biden’s 1985 suggestion, Republicans haven’t proposed raising taxes on the middle class by suspending tax indexing, which would force working families into higher tax brackets.

One similarity between Mr. Biden’s 1984 pitch and his comments today is that in both he criticized the intelligence of those who disagree with him. On the Senate floor, Mr. Biden said he supported an across-the-board spending freeze because Americans aren’t “stupid” or “dumb”: “They know that to cut the deficit, everybody has to be in it.” But four decades later, the tenor with which he has attacked comparatively modest reforms at a time of greater fiscal peril raises an obvious question: Are House Republicans’ proposed reforms really that “wacko”—or has Mr. Biden simply come to believe that the American people are “dumb” and “stupid”?

This post was originally published in The Wall Street Journal.