Peter Schiff: Biden’s Next Tax and Spend Boondoggle

Biden and Company have given us stimulus 3.0. They have unveiled an infrastructure spending plan. But that’s not the end of the spending. Next in the lineup comes the “American Families Plan” — another $1.8 trillion or so of government spending. Peter Schiff talked about it in his podcast, calling it a giant new welfare package. He said ultimately, it’s going to be another giant government boondoggle.

The plan includes all kinds of goodies including free community college, government-paid family and medical leave, and “affordable” childcare, free preschool and more. It will be financed with more tax increases on the “rich.”

Peter said the American Families Plan is reminiscent of Lyndon Johnson’s Great Society.

We’re coming up with these new welfare benefits that we now want to engrain into law as some type of entitlement.”

Peter said that the proposal for free college will likely drive up the cost of college even more. After all, everything the government promises always ends up costing more than advertised.

How much do you think these free colleges are going to end up costing taxpayers? Because whenever the government provides something for free, it’s always far more expensive than what the free market provides for a price because when people have to pay a price, they shop around. There’s competition. And when private sector businesses are trying to attract consumers, well, they’re cognizant that their customers have a choice and they have to keep their prices down.”

We’ve already seen how federal money (subsidized student loans) has driven up the cost of a college education. Peter said the “free” community college model will make it even worse.

These free colleges are probably going to cost, on average, more per pupil than it may cost the private sector to send someone to Harvard or Yale, except they’re not going to get a Harvard or Yale quality education. They’re going to get nothing. They’re going to get a bunch of nonsense.”

This scheme will also completely take the cost-benefit analysis out choosing between continuing education or entering the workforce. In effect, the government would be subsidizing a lot of people continuing in school who have no business in college.

The minute you make college completely free, well then what the hell? You might as well go. I mean, it doesn’t cost anything. And if everybody else is going, I mean, my high school degree is worth absolutely nothing now because everybody else is getting these college degrees. So, what hope do I have of getting a job if all I have is a high school degree? And it’s not going to cost me anything. So, how could I turn down free college? So, even more people are going to end up wasting their time getting worthless degrees because those worthless degrees are free.”

Peter said the proposal for mandated paid family and medical leave will end up being one of the biggest boondoggles out there.

It will be ripe with fraud and abuse. If you thought the PPE had a lot of fraud and abuse, if you thought these extended unemployment benefits had a lot of fraud and abuse, you ain’t seen nothing like the fraud and abuse that is going to come with paid family and medical leave.”

The incentive will be to max it out – every single year.

It remains unclear whether the employers will have to foot the bill, or if the government will reimburse the paid leave, or some combination of the two.

Whichever way it’s paid, it’s ultimately paid for by the average American. Not by the taxpayer. It’s paid by every American who has dollars and has a paycheck because the value of that money is going to collapse because of all the money that is going to be printed to fund all these bogus family paid leaves and medical leaves.”

Beyond the cost of paid leave, employers will have to figure out how to cover those workers who are out on leave.

However this ends up being financed, it has to reduce real wages because if the employers have to pay for it, they’ve got to pay you less or not pay you at all because they fire you. Or if the government pays for it, they’re going to have to print a ton of money to fund it.”

The president claims tax hikes on the rich will cover the 1.8 trillion price tag, but as Peter points out, it will almost certainly cost significantly more than that.

When it comes to government spending programs, it always costs a lot more than they think.”

There is no way the government is going to get the money from taxation to cover the actual costs of all these programs.

The other aspect people don’t consider are the incentives embedded in all these programs. Incentives matter. You get less of what’s taxed – productivity – and more of what’s subsidized – not working. The programs will cost more because more people will take advantage of them. And the tax revenue will be lower because those being taxed will shift their activities to avoid taxation.