Peter Schiff: The Government Doesn’t Actually Budget
President Biden has proposed a borrow and spend “to infinity and beyond” budget featuring $6 trillion in government spending. That’s the largest amount of spending ever proposed in a presidential budget. In the following podcast clip, Peter Schiff argues it’s not accurate to call it a “budget.” The federal government has given up on actual budgeting.
Keep in mind that all government spending ultimately equals taxation.
If the government is going to spend $6 trillion, it needs to deprive the economy of $6 trillion worth of recourses one way or another.”
The Biden budget includes some tax increases, but they won’t come close to funding the $6 trillion budget.
So, most of the money is going to be printed into existence by the Fed, which means instead of paying for all this government with an income tax or some kind of excise tax, the average American is going to get the bill through the inflation tax, meaning the price of everything you want to buy is going to go up.”
The inflation tax is the most pernicious tax because the government can get away with levying it and most people don’t even notice.
The $6 trillion figure only accounts for official spending. The government spends a lot of money that isn’t “official.”
It’s not on budget, and it doesn’t count. It counts in that we’ve got to pay for it as taxpayers, but it doesn’t count as far as the government being honest in reporting how much it’s going to spend.”
Consider natural disasters. The federal budget doesn’t set aside money to pay for disaster relief, but it doles out disaster money every single year. If the government was actually budgeting, it would look back over time, figure out the average spent each year for federal disaster relief, and make that a line item in the budget.
We know we’re going to spend the money. It should be in there. It’s not.”
In a nutshell, if the government says it plans to spend $6 trillion that means it will probably spend $7 trillion, if not more.
It’s an even bigger tax than the one they’re threatening to impose.”
So, why do we even call this a budget?
I don’t even think budget is the appropriate term to use to describe what the government is offering up here because it’s not a budget.”
Think about your family budget. The first thing you do is figure out how much money you have. You figure out how much you can spend based on your income. Then you prioritize and decide what you will spend your money on. When it’s all said and done, your spending budget will at least roughly approximate your income.
You want to make sure you budget your spending because you want to live within your means, and you want to make sure that you spend the money that you have.”
That’s not what the federal government does.
The government doesn’t even care what the revenue is. The government just figures out what it wants to buy, what it wants to spend money on. And that’s what the budget is. It’s just a spending proposal.”
This is not a budget.
Of course, a lot of people will say a government isn’t like a family. With its power to tax, it can always get more money so it can spend what it wants.
No. They can’t. I mean, they can do it for a while until there is a crisis. The reason they can get away with it is because people think, ‘Well, you know, the government can just raise taxes and get more revenue.’ Well, not really. Because raising taxes is politically impossible at this point, unless you’re going to raise taxes on the rich. But when you’re raising taxes on 1% of the population, and the other 99% are off the table, there’s only so much revenue you can get by raising taxes.”
Of course, the government can just print money to pay for spending.
Well, that only works until the money they’re printing no longer has any value. And we are very close to hitting that point.”