Democrats Are Denying Basic Economics

The simplest way to understand economics is that it is a reckoning with unavoidable tradeoffs. If you spend money on something, you may obtain something in return—but you lose the ability to use those resources on something else. In the world of politics, economics helps us weigh the merits of those tradeoffs. It answers the question: Do the benefits of a policy outweigh the costs? Sometimes the benefits are larger. Sometimes they are meager or even nonexistent. But there are always costs. To acknowledge this is merely to acknowledge reality.

Under President Joe Biden, however, Democrats in Washington have decided that they can simply wish those tradeoffs away by declaring that they do not exist. Over and over again, they have argued that their policies do not or should not have any costs whatsoever.

Just this week, for example, White House press secretary Jen Psaki responded to a question about the tax impact of the $3.5 trillion spending plan now working its way through Congress by declaring that “there are some…who argue that in the past companies have passed on these costs to consumers…we feel that that’s unfair and absurd and the American people would not stand for that.”

When taxes are raised on corporations—the “companies” in Psaki’s response—corporations often respond by passing that tax on to others. In some cases, they pass costs to consumers. In others, as the Cato Institute’s Scott Lincicome wryly notes on Twitter, they reduce the amount they would have otherwise spent on wages. They have to pay more to do business, and so they make adjustments accordingly. Costs create consequences and tradeoffs.

Empirical research has consistently shown that a large portion of corporate tax increases is actually paid by labor down the line. There are some reasonable academic debates about the precise percentage of the tax paid by labor, and how that might change under certain circumstances. But there is little real debate about whether or not some of the costs are passed on. The point is that it happens . Workers, not owners, pay at least some share of higher corporate taxes.

Yet Psaki’s position—the Biden White House’s position—is that this sort of thing is “absurd and unfair.”

One may feel that the omnipresence of gravity is unfair and absurd. Nevertheless, few people plan their lives around the ability to leap into the air and fly whenever they would like. We accept reality and make plans around its constraints, however absurd or unfair they may seem. To do otherwise would be foolish.

Yet that is essentially what Democrats are doing as they work to pass the Biden agenda. They are insisting that their plans, which are still in flux but amount to a call for some $4 trillion in spending over two bills, have no real costs at all—or that the costs should not be factored in, because they are “unfair and absurd.”

Just last week, Biden himself tweeted that the $3.5 trillion spending bill would not actually cost $3.5 trillion. Instead, its true price was more like nothing at all. “We talk about price tags. It is zero price tag on the debt,” Biden said from a White House podium. “We are going to pay for everything we spend.”

Biden’s remarks came after a week in which congressional Democrats had run into something of an impasse over their spending plans. In response, they decided that the problem was not with the plans themselves, but with the messaging. Early messaging for the bigger of the bills, which is mostly focused on welfare state expansions and climate policy, had revolved around the $3.5 trillion figure, which Democrats had taken to as a sign of how much they wanted to commit to their agenda. But the size of the spending package became a point of contention with moderates, who worried, understandably, that $3.5 trillion was a lot of money—probably too much.

Some Democrats admitted that the final legislation would likely end up trimmed down. But some backers of the spending bill, like Sen. Bernie Sanders (I–Vt.) have continued to insist that there is nothing that could reasonably be cut. After all, the $3.5 trillion figure was itself a compromise from their initial $6 trillion ask.

So Democrats and their backers in the press focused most of their energy on altering the way they described the legislation.

Hence we were treated to essays attempting to downplay the cost with headlines like: “$3.5 Trillion Is Not a Lot of Money” ( New Yor k magazine) and “It’s Not Really a ‘$3.5 Trillion’ Bill” ( The New York Times ). And then, of course, there were the official statements from Biden and White House communications functionaries making claimslike “it’s just a fact” that the plan “adds $0 to the debt.”

It is not “just a fact.” It is, at best, a dicey projection. And as Reason 's Eric Boehm has noted, it may not even be that, partly because the legislation in its current form is structured via timing gimmicks intended to induce further spending down the road or begin spending late in order to hide the long-term, on-paper cost of the plans.

But in some ways, this is all beside the point. It is a plan that, in its broadest form, calls for spending $3.5 trillion. Even in the unlikely event that such a plan turns out to be truly fully paid for, it would still spend $3.5 trillion . Those economic resources would be used to do some specific things, which in turn would reduce the ability to do other things. In other words, there would be costs and tradeoffs.

Changing the description is just a way of wishing away those costs, of thinking that it is possible to make them disappear by saying that they aren’t real or shouldn’t matter. Under Biden, this has been the way for Democrats, especially the self-identified progressives, who have implied that large minimum wage hikes might not cost jobs (they would) and that debt and deficit-driven federal spending constraints are effectively not real (they are). The intent in every case is to downplay concerns that any significant tradeoffs actually exist. After all, costs and tradeoffs are absurd and unfair . Perhaps. But they are also real. And lawmakers ignore them at our peril.

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Ps%#ki must have the Brain disease as Bidet. If the increase in taxes is not passed to consumers,there is LESS MONEY available to increase wages ,benefits and expansion .You don’t have to have a PHD in Economics. You have to stay awake during class to learn and not parrot and BS people. Its not that hard to understand.
Their PALS in the media don’t put out all the info to people. Wait till they find out the ruse with rhe Child Tax Credit.

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Exactly !!! Dems = higher taxes , higher prices ,and more regulations .


We want the ultra wealthy to pay their fair share. How is that in any way denying basic economics?

The job creators? Ummm pssst what happens when they close??

They won’t close. They have more than enough money to pay their fair share. This will literally cost the American people nothing. Why do Republicans rush to defend these wealthy elites who abuse the system and oppress people? It’s time they pay up.

It’s their money they can do what they want, and yes they will close look at every shit hole in world that went socialist… THEY ALL LEFT. We will never be a communist country we will never be a socialist country move out

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So you don’t want the wealthy taxed? Why should we have to pay what we do when the wealthy pays nothing?

Lol did I say no tax? Wake up. Do you know how much sales tax they pay on items that they purchase when they open up a business?
Furniture, equipment, construction, property tax real estate tax.

Do you understand Inflation will look like when people stop buying construction equipment? Lol

You have no basic understanding of how economics work in order to make a cogent argument sound intelligent on the contrary. Epic failure on your part!

Are you related to Monte or are you a product of inbreeding or both? :rofl: :rofl: :rofl: :rofl:

You’re not paying attention!!!. You’re playing Robin Hood, steal from the " Rich " to give to the bottomfeeders. How much more do you want to steal to fund those at the bottom that don’t psy any income tax??? They have use of Child Care Taxes , Food Stamps etc how much more help do they need. Because of you QUASI-SOCIALISTS ( BORDERLINE COMMUNISTS) those thst need help can’t get it because they’re in the WRONG group.
Go ahead, Tax the HELL out of corporations and see a MASS EXODUS of them leaving places like Ireland with lower Corp. Tax Rates and create a larger class of people sitting under the table waiting for you SOCIALISTS to feed them ossasional scraps.Give more to the Criminals that cross the border daily. They’re your type of voters.
You have LESS of a brain thsn the president!!!

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You could take all their wealth and not put a dent in the National Debt.

Some people do have a separate reality when it comes to a small minority of people.

Thee politic of envy.

The top 1% of income earners—those who earned more than $540,000—earned 21% of all U.S. income while paying 40% of all federal income taxes.

Seems they are above their FAIR SHARE.

With all the Federal Assistance Programs, they would be better off with the bottomfeeders.

We have one mega rich guy that’s been honest enough to point out that he’s taxed much lower than his secretary…

I always wonder how all these lower middle class Trumpers always bitch about the mega rich being held accountable for taxes….

There’s lots of poor republicans that are the beneficiary of federal assistance programs too you know….

If there are so many poor in the US and democrats are so concerned, why are they allowing millions of illegals into the US which consumes welfare dollars???

  • Unauthorized immigrants are ineligible for most major federally-funded safety net programs. Key safety net programs, including the cash welfare program Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program), and the means-tested disability program Supplemental Security Income (SSI) are available only to “qualified” immigrants and citizens (see here for a review). Undocumented immigrants, along with some legal immigrants, are typically in the “unqualified” category unless they are victims of abuse or trafficking. Undocumented immigrants are also excluded from most federal health programs. They are prohibited from non-emergency Medicaid, the Children’s Health Insurance Program (CHIP), and the Medicare program. Undocumented immigrants are not eligible to receive insurance subsidies under the Affordable Care Act or to participate in the ACA insurance exchanges. They may be able to privately purchase insurance through their employer or on the non-group market. An estimated 40 percent of non-elderly undocumented immigrants have no health insurance. According to a study by the CATO Institute, low-income non-citizens (documented and undocumented combined) have lower participation rates in safety net programs than low-income citizens, in part due to eligibility restrictions for the undocumented.
  • Undocumented immigrants are not eligible to receive Social Security benefits even though many contribute to the system. Many undocumented immigrants work in the formal sector and contribute to the social security trust fund. Estimates suggest that up to $12 billion per year are contributed by undocumented immigrants and their employers. Most undocumented immigrants will never draw from the system. One hypothetical exception is that if the Deferred Action for Childhood Arrivals (DACA) program lasts long enough and participants pay into the system, they would eventually be eligible for benefits, but the first payouts in this hypothetical eventuality are nearly three decades away. Other immigrants who transition to legal status can also collect benefits based on their contribution history, even if some of their contributions were made while unauthorized.

Are you advocating for illegals to get welfare? Lol
What’s your budget for 500 million third worlders? If we keep getting 400,000 a month we will be at the number soon

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The wealthy are taxed. They pay a higher percentage in taxes than most of us.

You just want them to pay a majority of their wealth. That is not going to happen.

The wealthy own the businesses that provide the jobs you and I have. If they are forced to pay exorbitant taxes, they will just leave for greener pastures. “We” lose… they lose nothing.

You lefties just can’t seem to comprehend that.