Biden Budget Extends His Silent War On The Middle Class

President Joe Biden’s recently proposed budget for the fiscal year 2024 might accelerate the decline of the middle class, which has already suffered from flawed fiscal and monetary policies in the past two decades. On the surface, Biden’s budget seems to benefit the middle class, with proposals for “free” child care, universal preschool, a permanent extension of enhanced Obamacare subsidies, “free” community college, and paid medical and family leave funded by higher taxes on “the rich” and corporations.

However, there is a contradiction hidden in plain sight. The fiscal plan will lead to the creation or expansion of as many as six entitlements, thus increasing the deficit further. The deficits are likely to average 5.2 percent of GDP over the next decade, even with the trillions of higher taxes on “the rich.” The perpetual gusher of red ink will exacerbate the inflation that continues to cause considerable harm in working-class families. Adding to this, federal borrowing will crowd out private investments, thus raising interest rates on mortgages and car loans.

Furthermore, higher taxes will squeeze economic growth across the board, causing lower incomes and fewer jobs for the working classes, even if nominally assessed on the “rich.” Though the administration claims to support a permanent increase in the child tax credit, the budget only includes a two-year extension, with no specific measures to preserve Social Security’s solvency leveraged with reduced benefits as well.

Middle Class Pay For Fed Bailouts

Biden’s fiscal policies lead to stagnation for the middle class, following ill-considered monetary policy that has, in turn, exacerbated inequality. The Federal Reserve’s policies have resulted in negative interest rates for most of the last two decades and quantitative easing over the past 15 years, giving rise to excessive risk-taking. This has created a boom-and-bust economy benefiting the wealthy, whereas the middle class suffers because of it.

Due to Federal Reserve interventions this century, wealthy Americans have enjoyed a golden age, resulting in a quadrupling of stock prices, further supported by successive rounds of quantitative easing. With the emergence of bubbles ranging from cryptocurrencies to non-fungible tokens to real estate, billionaires’ wealth has soared even higher. In contrast, middle-class families have suffered millions of foreclosures around the financial crisis, job losses, economic stagnation, and most recently, higher costs via the Federal Deposit Insurance Corporation “assessment” to pay for the bailout of wealthy uninsured depositors at Silicon Valley Bank.

Federal Reserve Chairman Jerome Powell and President Joe Biden both claim to want to aid the middle class. However, the effects of their “assistance” to date suggest the opposite. Washington needs a change in course while the vestiges of a middle class still remain.