President Biden’s $3.5 trillion tax hike and spending plan will decrease future economic growth and reduce private wealth, according to a new analysis from the Penn Wharton Budget Model (PWBM), a macroeconomic forecasting project based at the University of Pennsylvania.
- Democrats’ $3.5 trillion tax and spend plan tanks economic growth: Democrats’ partisan reconciliation package will cause GDP to fall by about 4 percent by 2050—compared to what GDP would be if the proposal doesn’t pass.
- Biden violates deficit spending pledge: President Biden pledged not to deficit spend, citing a need to protect the economy—but this reconciliation package leads to an 8.9 percent increase in government debt.
- Democrats slash private capital: The study finds the economic decline is driven by a 6.1 percent reduction in “computers, equipment, factories, buildings, and other productive assets that are used to produce goods and services.”
- Democrats’ expansion of the welfare state discourages work: Democrats’ reckless spending, including a financially irresponsible expansion of Medicare will further “reduce households’ incentives to work, which accelerates the decline in GDP.”
- Wages will only rise temporarily because of labor shortages—but will then fall 2.1 percent over the long term: Over 10 years, discouraging work will only lead to a small temporary increase in wages. “However, as the decline in private capital grows over time, labor productivity continues to decline, which lowers the wage,” with hourly wages falling 2.1 percent lower than they otherwise would be in 2050.
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