The only good thing to be said about President Joe Biden‘s boondoggle of a 2025 budget proposal is that so long as House Republicans do not continue to immolate their own razor-thin majority, it will never become law.
Biden boasts he would inflate the fiscal 2025 deficit to $1.8 trillion. He says he would increase spending by $300 billion to $7.3 trillion and increase revenue by $400 billion to $5.5 trillion. The latter proposition is even more preposterous, considering that he would undo his predecessor’s corporate tax rate cut, which culminated in record corporate tax revenue.
The Democratic Party stenographers have boasted that the president’s budget will cut $3 trillion from the deficit over the course of a decade, compared to the ever-rosy projections of the Congressional Budget Office, which assumes optimistically low interest rates and high growth rates.
Although inflation has fallen from its near-double-digit peak of 2022, progress hasn’t just stalled. It’s reversing.
Consumer price index inflation is back on the rise to an annual rate of 3.2%, and core CPI has stagnated at 3.8%, nearly twice. Both came in at 0.4% in February, or more than twice the Federal Reserve’s maximum target. Only personal consumption expenditures and core PCE are trending slightly in the right direction, at 2.4% and 2.8%, respectively.
But wholesale prices are leading indicators of consumer inflation, and they indicate that progress is not just slowing but reversing. Producer price index inflation blew past economist expectations, jumping from 1% annually in January to 1.6% in February. Core PPI came in even higher at 2%.
Multitrillion-dollar deficits aren’t just unprecedented — the only other time the deficit has surpassed $1 trillion, let alone $2 trillion, is in the aftermath of the Great Recession and during the pandemic — they’re also inflationary. While the Fed tries to constrict the money supply through punishing interest rates and winding down its balance sheet, Biden has actively undermined its efforts, bailing out lawyers and investment bankers with Harvard University degrees at the expense of a working class whose fixed incomes cannot cope with the overall rise in prices.
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And while the 18% increase in prices overall since Biden took office is punishing for all, the real inflation rate faced by the least privileged is even more painful. Food and energy prices, which make up a bigger share of the budgets of lower-income households, are up 20% and 32%, respectively.
Dig deeper into Biden’s proposal, and the sheer substance is indeed objectionable: While Poland begs NATO members to increase their defense spending, Biden wants to slash money to the Pentagon. But the very price tag, nearly $2 trillion to fuel a peacetime economy that’s entirely moved on from the pandemic, is the budget’s greatest offense. Yet it makes perfect sense that the president who stoked the worst inflationary crisis in 40 years would only want to fan the flames even further.