Democrats have only the thinnest of marginal control over the U.S. House and Senate, yet they are trying to push through a breathtakingly ambitious and enormously expensive $3.5 trillion program of spending and tax increases.
Frankly, you shouldn’t be able to ram through massive policy changes without a solid mandate from the voters, which Democrats definitely do not have. And they may not be able to with such a fragile coalition, because some members are refusing to support the full $3.5 trillion amount, while others refuse to support anything less.
We’re hoping they fail, and so should you, for at least two reasons.
First, as we have suggested, pushing through massive changes with no voter mandate will be bad for our already tribal and vindictive politics. If Democrats manage to jam through their whole policy program, Republicans will only assume that payback is appropriate when it’s their turn. Our politics would become much healthier if Democrats and Republicans would simply return to regular order and determine spending priorities through a normal committee process, with the kinds of compromises by both sides that our system requires in order to function.
But second, if the package goes through, it will harm the economy. Last week a team of analysts from the Wharton School of Business at the University of Pennsylvania, using the Penn Wharton Budget Model (PWBM), released a projection of the economic effects of the reconciliation package. It isn’t pretty, and the bad news isn’t coming from some right-wing advocacy organization.
For one thing, the model predicts a DECLINE in GDP by between 4 percent and 4.8 percent from current projections as a result of the policy changes. Now, remember, it’s pretty basic that a primary goal of fiscal and economic policy should be to increase economic growth, not lessen or decrease it.
The primary driver behind this poor economic growth projection is the finding that the reconciliation package will decrease the private stock of capital by 6.1 percent. Again, something we should be growing, not shrinking.
And the PWBM finds that national debt will increase by between 8.9 percent and 16.4 percent. So far, we’re decreasing investment, slowing the economy and increasing the national debt. Not a good trend.
And it gets worse. As icing on the cake, the PWBM also projects that personal income will decline by 2.1 percent by 2050.
Not exactly the result we would think elected Democrats in marginal seats want to take back to their constituents come reelection time.