The $3.98 Trillion Trojan Horse

Penn Wharton says the real cost is more than twice what Pelosi says

WSJ editorial.

"The White House and House leaders are going all out to sell their monstrosity of a budget bill, which they claim will cost $1.75 trillion over 10 years. The Treasury even rolled out an estimate claiming it will reduce the federal deficit. Anyone who believes this probably responds to email pitches from Nigeria.

For a dose of reality, the better source is the Penn Wharton Budget Model, which on Thursday rolled out its own score of the latest version of the White House ‘framework” deal that House Democrats are moving to pass this week or next. No economic-fiscal model is perfect, but Penn Wharton tries to take into account the impact of tax and spending changes on the economy as well as the federal budget.

Penn Wharton estimates that, as written, the framework could cost $1.87 trillion, while raising $1.56 trillion in revenue, over 10 years. That’s both more spending ($1.75 trillion) and much less in taxes ($2 trillion) than the White House projects.

So the entitlement bill doesn’t come close to paying for itself, and that’s before the House restored a program for four weeks of paid family leave. Penn Wharton estimates that it would reduce economic growth by 0.1% by 2050 and add 2% to the federal debt.

But here’s the shin kick, and it’s a bruiser. Penn Wharton says that if all of the provisions of the bill (except green energy tax cuts) are made permanent, new spending would increase by $3.98 trillion, while the tax revenue would stay at $1.55 trillion, over 10 years.

That’s more than twice what the White House is trying to get Americans to believe. Penn Wharton says this level of spending would increase the federal debt 25.2% and reduce GDP 2.8% compared with current law by 2050.

This matters because Democrats openly admit that their strategy is to pass new entitlements like national child care, disguise their cost by pretending to phase the programs out inside the 10-year budget window, but assume they will become permanent as they always do. This means the real cost of the Sanders-Biden-Pelosi budget is $4 trillion, and it will put the U.S. on a path to European entropy.

Mrs. Pelosi may ram this bill through the House. But if Sen. Joe Manchin means what he says about a $1.75 trillion spending limit, more than half of the Pelosi bill will have to go or, better, let it all fade away."