I’ve seen some reports applauding President Biden for being realistic about growth over the next ten years.
What about the sad truth that he is predicting that his own policies will lead to a miserable economic future for America?
In a phrase, the President’s economists are predicting the return of “secular stagnation.” Readers may recall that unfortunate term from the Obama Presidency, when leftish economists sought to explain why growth seemed stuck at 2% or so despite unprecedented monetary stimulus. The fault, they said, was in our stars and not in their policies.
The Biden budget says we’re likely to stagnate again after the Keynesian spending flood of 2021 and 2022—though at even lower growth rates than the slow-growth Obama years. The White House predicts a two-year growth boom of 5.2% in 2021 and 4.3% in 2022, as the country returns to normal after the pandemic and record amounts of government spending flood the economy to goose consumer demand.
But the White House says growth will sink to 2.2% in 2023, and then average below 1.9% for the next eight years . . .
The White House is essentially conceding that all of its unprecedented monetary and fiscal stimulus really is living for today with little regard for the future. It implicitly concedes that the growth it spurs now will have to be paid back later in the form of higher taxes or tighter monetary policy, which might reduce growth. This is the definition of a “sugar high.”