The Biden economy gets a reality check
A Census Bureau report reveals inflations corrosive effects.
FIRST ON FOX: A top conservative group released a new report Thursday that the co-author tells Fox News Digital is the most comprehensive of its kind and examines the historic spending spree from both parties in Congress over the last 2 years that resulted in $7.5 trillion of new debt.
The Heritage Foundation report, which took a year to complete, outlines all the legislation passed by Congress between March 2020 and December 2022, including a 2.2 trillion COVID response in March, the America Rescue plan which cost $1.9 trillion, the $565 billion Inflation Reduction Act, the December 2020 COVID stimulus which cost $932 billion and other spending that totaled to a whopping $7.464 trillion, more than $57,400 per household.
Co-author Richard Stern, Director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation, told Fox News Digital that Heritage has put together the first "comprehensive" outlining all the spending programs and then "tying it together."
"When there's a supply shock, when the economy tumbles off a cliff, all the government can do is make the recovery longer and slower by trying to give you a sugar pill on the front end," Stern said when asked about the main takeaway from the study.
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The U.S. added $7.5 trillion in debt from March 2020 - December 2022 (iStock)
"That's what happened here. We are now suffering worse four years later because the government did things in the moment to make it look a little better."
The report is broken into three parts: Part 1 reviews all the federal spending and how "legislators in both parties used the pandemic as an opportunity to ignore any pretense of fiscal responsibility and use deficit spending to enact a panoply of new programs that would have been difficult to pass had they been coupled with equally sized tax increases."
In Part 2, Heritage Foundation examined how the Federal Reserve contributed to the spending spree and looked at how it managed the aftermath. In Part 3, the study considers how the rapid growth of debt will affect the economy and what Congress can do to stop the bleeding.
"The Federal Reserve ended up printing basically as much money as the above baseline spending," Stern told Fox News Digital.
"Which is to say there were going to be deficits anyway. That was already the CBO trajectory. But all of the extra spending, all of the extra deficits that were created during the pandemic period essentially were pretty close to 100% backed by the federal government printing money."
"You have this notion that when the government runs a deficit, people invest, people buy bonds, they make interest back on it. That we're taking existing resources and offering it for the government to use for some crisis and that is almost exclusively not what happened."
The study, which was co-authored by Heritage Senior Policy Analyst in the Grover M. Hermann Center for the Federal Budget David A. Ditch, points out that it took 215 years for the national debt in the United States to hit $7 trillion and yet the U.S. added $7 trillion over the course of 2020-2022.
Heritage Foundation report tallies up the massive spending spree over the last couple years. (Heritage Foundation)
Heritage Foundation President Kevin Roberts told Fox News Digital that Ditch and Stern's findings "explain how we got here and provide recommendations for extinguishing the fire so that we can change course and reduce the severe economic pain facing everyday Americans across the country."
"Inflation doesn’t just happen; it is a direct result of overbearing, clumsy, dysfunctional government policies," Roberts said. "While everyday Americans suffer under the hidden tax of Biden's crippling inflation – at the gas pump and checkout counters, in utility bills, rents, and car payments – Congress and the President have an unending appetite for more spending, regulation, and subsidies."
The study concludes that "most of the spending during the pandemic was unnecessary" as were the lockdown measures which "meant imposing high costs on all members of society, including damage to mental and physical health, as well as severe educational and economic costs, for marginal public health benefit."
"The COVID-19 pandemic unleashed unprecedented federal fiscal and monetary actions that wasted trillions of dollars," the Heritage experts explained.
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US President Joe Biden pauses as he speaks about the American Rescue Plan investments in the South Court Auditorium of the White House in Washington, DC, on September 2, 2022. - Biden is meeting virtually with the winners of the $1 billion Build Back Better Regional Challenge, which was funded by his American Rescue Plan. (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)
According to the report's authors, the U.S. Congress failed to couple any justifiable pandemic spending with measures that would reduce future deficits.
"A looming fiscal crisis has shifted from a long-term concern to a current event. Congress must return to responsible governance for America to avoid further economic calamity," the report concluded.
In addition to the coronavirus spending, the report examines how the Inflation Reduction Act "a complete misnomer" that only exacerbated inflation rather than address it.
"This reckless and politically opportunistic spending spree has left the U.S. with a weakened economy, an inflation crisis, and a looming debt crisis. The volume and nature of the spending spree helped to create skyrocketing inflation and interest rates and created a labor shortage, reducing real household incomes and leaving store shelves bare and supply chains broken."
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Heritage Foundation exhibits the three layers of massive debt. (Heritage Foundation)
In a statement to Fox News Digital, White House spokesperson Michael Kikukawa placed the blame at the feet of Republicans for the current debt situation.
"The increase in debt over the last 20 years was overwhelmingly driven by the trillions spent on Republican tax cuts skewed to the wealthy and big corporations," Kikukawa said.
"Congressional Republicans want to double down on trickle down by extending President Trump’s tax cuts and repealing President Biden’s corporate tax reforms. President Biden has a plan to reverse course, cutting deficits by $2.5 trillion by asking the wealthy and big corporations to pay their fair share and cutting subsidies to Big Pharma and Big Oil. And he won’t let congressional Republicans use the debt left by their own tax policies as an excuse to cut Social Security, Medicare, and Medicaid."
In terms of the future, the report addresses the question of whether the worst is yet to come and explained why fiscal responsibility is more important than ever given that the country's financial situation was already dire before the explosion of new debt.
"The amount of damage caused by the federal spending spree is immense, and the size and scope of the long-term fiscal problem can be overwhelming," the report's final paragraph summarizes. "Policymakers must address this reality in a sober fashion, neither pretending that easy fixes exist nor ignoring the problem altogether. This will require controlling spending, returning to meaningful budgeting, and fixing problems at the Federal Reserve."
"There is a genuine opportunity for leadership if elected officials have the courage and foresight to do the right thing, both for America’s near-term battle against inflation and its long term economic prospects."
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