Biden’s Plan for an Entitlement Society

For the first time in history, more than half of all Americans would be on the federal dole

By John F. Cogan and Daniel L. Heil by Jason L. Riley. Excerpts: 

"We estimate that most of the Biden plan’s entitlement benefits would go to middle- and upper-income households. Households in the upper half of the nonelderly income distribution would receive 40% of the new entitlement benefits.

Our estimates are for a full-employment economy, not one in recession. So the percentage of U.S. households receiving benefits from at least one federal entitlement program would only increase if the U.S. economy were to falter.

Where will the money come from to finance this largess? Mr. Biden claims that taxes on the rich will entirely finance his American Families Plan. But his proposed revenue heist falls woefully short of the plan’s true cost. Presidential budgets for years have been littered with gimmicks to hide their true expense. The American Families Plan is no exception.

The plan proposes that the $100 billion annual expansion of the child tax credit will suddenly expire at the end of 2025, reducing the tax credit from a high of $3,600 to $1,000. All other programs in the plan are assumed to be permanent. Why only phase out the child tax credit? The obvious answer: Its expiration reduces the 10-year estimated cost by $465 billion.

The gimmicks don’t stop there. The Biden administration proposes to use more than $200 billion in new business taxes to finance the American Families Plan. Amazingly, it also proposes to use that same money to finance future Medicare spending.

Properly accounting for these gimmicks, and the plan’s overly optimistic revenue assumptions from its Internal Revenue Service compliance initiatives, pushes the American Families Plan deficit to more than $1 trillion during the next 10 years. The president claims that his plan is part of a budget that is “putting the nation on a fiscally responsible path.” Hardly. If passed, it would accelerate the pace of entitlement expansions that began in the late 1960s. Improving the safety net is one thing, but spending more than $1 trillion on mainly middle-class entitlements and financing this expenditure with debt robs future generations while enriching today’s."