Progressives in Washington, DC are trying to push an astounding $3.5 trillion “human infrastructure” spending package through Congress. It’s one of the largest proposed expansions of the welfare state in US history. But not all Democrats are on board with this radical plan.
West Virginia Senator Joe Manchin, a moderate Democrat, just came out against the proposed spending binge—likely dooming it, at least for now, given the 50-50 partisan split in the Senate.
"Hit the pause button,” Manchin said on Wednesday. “Let’s sit back. Let’s see what happens. We have so much on our plate. We really have an awful lot. I think that would be the prudent, wise thing to do."
To be clear, the senator isn’t a free-market absolutist or fiscal conservative by any stretch. He stressed that he believes there is a “lot of good stuff” in the bill, and is generally supportive of increased government spending in a number of areas. But Manchin is at least in touch with economic reality—something that unfortunately can’t be said for many of his colleagues in Washington.
“Some in Congress have a strange belief there is an infinite supply of money to deal with any current or future crisis, and that spending trillions upon trillions will have no negative consequence for the future,” the senator wrote in a Wall Street Journal Op-Ed explaining his opposition. “I disagree."
“An overheating economy has imposed a costly ‘inflation tax’ on every middle- and working-class American,” Manchin continued. “At $28.7 trillion and growing, the nation’s debt has reached record levels. Now Democratic congressional leaders propose to pass the largest single spending bill in history with no regard to rising inflation, crippling debt or the inevitability of future crises. Ignoring the fiscal consequences of our policy choices will create a disastrous future for the next generation of Americans.”
Certainly, some of Manchin’s arguments and calls for government spending of a lesser degree aren’t in line with free-market principles. But his overall opposition to the spending binge is grounded in a basic economic reality: trade-offs. Some progressive legislators subscribe to a radical theory known as “Modern Monetary Theory,” which posits that the federal government can just print money to finance nearly unlimited welfare spending. Yet, as Manchin acknowledges, there’s no such thing as a free lunch, and everything has a cost.
“The truth is the government cannot give if it does not take from somebody,” economist Ludwig von Mises famously explained in Bureaucracy. “The government and its chiefs do not have the powers of the mythical Santa Claus. They cannot spend except by taking out of the pockets of some people for the benefit of others.”
Government spending must ultimately be financed by new taxes, adding debt, or via the printing of new money, which leads to price inflation. In the real world, trade-offs are inescapable. And the costs of the $3.5 trillion in proposed spending are truly astounding. Whatever our disagreements, Senator Manchin deserves credit for at least acknowledging that the federal government is not Santa Claus.
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