President Biden and his progressive allies in Washington, DC are currently trying to pass one of the largest government spending plans in American history. Yet they’re now bizarrely claiming that their $3.5+ trillion climate change and welfare proposal will cost... nothing?
In a White House speech promoting his spending plans, Biden said that “the price tag is zero… on the national debt. We’re going to pay for everything we spend. [People say] ‘It started off at six trillion, now it’s 3.5 trillion’... it’s going to be zero.”
BUDGET: While President Biden's agenda has been billed as a $3.5 Trillion cost, he says the real cost is $0, since it will all be paid for and won't contribute to the national debt. pic.twitter.com/HT2RJBQIBW— Forbes (@Forbes) September 24, 2021
This wasn’t just a verbal slip. In a tweet, the president reiterated the claim that “My Build Back Better Agenda costs zero dollars.”
That’s not what “costs zero dollars” means. https://t.co/ynULisP4CH— Brad Polumbo 🇺🇸⚽️ 🏳️🌈 (@brad_polumbo) September 26, 2021
Biden’s allies in the mainstream media are pushing a similar narrative. Appearing on CNN, Washington Post opinion columnist Catherine Rampell argued that “The bill itself will not cost $3.5T in the sense it will be entirely, or at least partly, paid for. So the actual cost, in terms of deficits, will be smaller than that, perhaps zero, although I think that’s unlikely." Also on CNN, Congresswoman Pramila Jayapal said that “This is a zero-dollar bill because it's all going to be paid for with taxes on the wealthiest corporations and the wealthiest individuals.”
Gaslighting. This is NOT how basic economics and math work. Paying with new taxes instead of new debt doesn't make something have a "zero-dollar" cost. You're still confiscating and redistributing $3.5T+. https://t.co/4bsYn9lnuQ— Brad Polumbo 🇺🇸⚽️ 🏳️🌈 (@brad_polumbo) September 27, 2021
Yet whether they’re coming out of the White House, Congress, or the media, claims that multi-trillion-dollar spending plans really cost nothing are highly misleading. What Biden and others are honing in on is the fact that, supposedly, the spending legislation will not add to the national debt, because it includes tax increases sufficient to offset the new spending.
This is in itself a dubious claim—because the real cost of the proposals is likely higher than advertised and the tax increases have highly optimistic revenue projections that may not come to fruition. But, for the sake of argument, let’s assume that they’re right, and that the spending plans really all are deficit-neutral and “paid for.”
It’s still wrong—very wrong—to suggest that the plans are therefore cost less or have a price tag of “zero.” Even without adding to the debt, the new spending plans still cost what they cost, and those costs manifest themselves in trillions of dollars of new taxes that will hurt all Americans.
While it may be more fiscally responsible to pair spending increases with tax hikes, it doesn’t make them cost less. That’s like saying that buying groceries with cash instead of a credit card means the price tag is zero—it’s nonsensical.
Every dollar the government spends has to come from somewhere. Whether it’s financed through additional debt or new taxes means that the consequences are different, yes, but there are still costs involved.
As Nobel-Prize-winning economist Milton Friedman famously said, “there is no such thing as a free lunch.” There’s also no such thing as a “free” $3.5 trillion spending bill.
The misleading arguments painting Biden’s spending agenda as costless ignore one of the most basic principles of economics: the inescapable nature of trade-offs.
“There are no solutions, there are only trade-offs,” the economist Thomas Sowell once observed, “and you try to get the best trade-off you can get, that's all you can hope for.”
By claiming his massive spending agenda has no real costs, President Biden is misleading the public. If he wants to argue for a massive expansion of the welfare state financed through broad tax hikes, he’s free to do so. But the president shouldn’t offer voters the empty promise of a free lunch—when they’re still going to be stuck with the bill.
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