America Doesn’t Need Biden’s New Deal to Revive the Economy

Many have praised President Biden’s flurry of trillion-dollar policy proposals, likening him to historical giants like FDR. Biden has claimed to have inherited an economy like a “house on fire” and insists that his myriad of American ‘fill in the blank’ plans are necessary to turn the tide. But the truth is, the economy is well on its way to recovery and was so before the president even proposed any of these plans, let alone passed one of them. If a robust economic recovery is what Biden is after, channeling FDR won’t get him there.

The problem with FDR’s Keynesian-style economics is that it yields only temporary results. There is no real growth or consistent wealth creation underpinning the short-term economic activity it generates.

For example, despite spending billions and creating a dizzying array of new government programs, the unemployment rate actually increased under FDR’s leadership. The unemployment rate at the start of the depression was 16.3 percent — after two FDR terms, it rose to 17.2 percent. Up until that point in American history, U.S. depressions typically lasted no more than four years. FDR’s misguided fiscal policy, however, bogged down the recovery and made the depression last for a decade.

This type of fiscal policy focuses on increasing demand by pumping cash to consumers, but at the same time it punishes supply by raising taxes. Sound familiar?

Now consider the nearly $6 trillion in government spending Biden has proposed. Each program goes well beyond its advertised purpose, pumping trillions into systems plagued by waste and down avenues that have led to failure before. And he aims to pay for it by raising taxes.

The $1.9 trillion American Rescue Plan, only 8.5 percent of which will actually be spent on direct Covid relief; the $2.25 trillion American Jobs Plan, $1 trillion of which one would have to do mental gymnastics to define as infrastructure; and the $1.8 trillion American Family Plan that further expands entitlement programs by, for example, establishing free preschool and two years of free community college — Biden’s programs might be good politics, but they aren’t good economics.