In his first three weeks in office, President Biden has shown Americans what his economic policy intentions are. In each area, his goal is generally to have a fairer distribution. Policies seeking those goals, however, follow principles that are exactly opposite to the principles that made America great.
In spite of some real and perceived social injustices, the US, miraculously, went from the birth of a nation to the largest, most prosperous economy in the world in less than 150 years. Other countries were hundreds and in many cases thousands of years older.
There seemed to be four basic principles that allowed that tremendous growth to happen. New policies that follow those principles will lead to more prosperity. Policies that are based on principles that are the opposite, will result in a stagnant economy with a possibly persistent inflation problem.
It is, then, in everyone’s best interest to continue with economic policies that will lead to prosperity instead of policies that will lead elsewhere. What are the basic principles?
One, the US encouraged individual freedom. As long as an individual did not infringe on the basic rights of another American, they could, pretty much, do what they wanted. It was this love of freedom that created the pioneers and entrepreneurs who led the country to greatness.
Two, the US encouraged individual responsibility. As long as a person was mentally and physically able to take care of themselves, each had the responsibility to do so. Because prosperous Americans became very compassionate, we deviated from this principle with programs like Medicare and Social Security.
Three, the US had low rates of taxation. That meant whatever an individual earned, they got to keep nearly all of it. That provided a tremendous incentive for Americans to contribute to the economy and earn income. People knew that only a few cents of every dollar they earned would go to pay taxes.
Four, a very limited role for government. There were certain clearly public goods, like national leadership, defense of the country and a legal system. Beyond that, as long as everyone played by the rules, the government did not interfere with business responding to the needs of the market.
Individual freedom, individual responsibility, low rates of taxation and a limited role for government are the basic principles that led to American prosperity and American exceptionalism.
Biden’s policy actions are not consistent with those principles. They are in fact, exactly the opposite.
Biden wants less personal freedom.
Biden wants the government to control some key markets, like health care and higher education. Once the government controls a market, they will dictate policy rather than having the market dictate policy. Americans will lose some personal freedom of choice. And of course, without individual freedom, free markets don’t work.
Biden wants more social responsibility.
Biden wants to expand social programs, like providing health care for all Americans. He set a goal of 97% of the population covered in 10 years. To reach his goal he wants the government, not the free market, to control healthcare. Biden also wants to help people that he sees as hurting. One way to do that, he suggests, is to remove the individual responsibility of student debt.
Biden wants higher rates of taxation.
In the area of taxes, he wants to repeal the 2018 tax cut which reduced taxes for all Americans by 10%. He also wants the top bracket raised even further to more than 40%. He wants capital gains to be treated as ordinary income so that rate goes up to 40%. And he also wants to raise taxes on corporations.
Biden wants a larger role for government.
With the increased taxation comes an even faster increase in government spending. Along with that spending increase, Biden will increase government regulation in key markets like energy. And as he expands the social programs government assumes a larger and larger role.
While Biden’s economic policies seek to satisfy his goal of fairness, the result will be less individual freedom, less individual responsibility, higher rates of taxation and a larger role for government. Those actions won’t make America great again.
Indeed they will probably do just the opposite.