When I was a kid, I thought I knew the value of a dollar. Of course, when I was a kid, I also thought I could take a dollar and put it in a Xerox machine, and then I’d have more dollars.
I’ve grown out of that notion. But I’m not sure our lawmakers have. Have you noticed that our government has been spending trillions the way it once spent billions?
We’ve had the $2 trillion CARES act last year, the nearly $2 trillion “American Rescue Plan” signed last month, now a new proposed $2.3 trillion infrastructure proposal called “The American Jobs Plan,” soon to be followed by another $2 trillion “American Family Plan” proposal.
President Joe Biden has labeled the infrastructure plan as “once in a generation” spending. Once in a generation? It’s more like once a month.
Now, of course, in the COVID-19 era, some massive relief has been necessary. Helping citizens in times of crisis is why we pay taxes in the first place.
But the coronavirus has turned lawmakers into teenagers with their parents’ credit cards. So much of the money being spent now is not about COVID-19. How long can American politicians go on shelling out cash as if they’re printing it?
Well, as long as they keep printing it, some say. Heck, Rep. Alexandria Ocasio-Cortez, D-N.Y., says we should be spending $10 trillion on infrastructure, not $2 trillion. Why not? It’s not her money. In fact, whose money is it?
Well, that’s part of the problem. Money used to be tied to a commodity, like gold. You couldn’t increase the amount of money out there without increasing the underlying element.
But those days are gone. Now, when money is just a printing exercise, you can feel like the more ink you have, the richer you are.
“In that case,” people sometimes say, “why don’t we just print all the money that anyone needs, give it to them, and go have a party?”
The real cost of doing business
Here’s why that doesn’t work. Money itself has no value. It’s only what it can buy. If you have $100 million, you think you’re rich because you buy all you want. But if that $100 million only gets you a gallon of milk, you don’t feel so rich, right?
This is where things like inflation come in. If you just keep printing money, there’s so much of it in the economy that demand for things goes up, which means prices go up, which means labor demand goes up, which means wages go up, which means profits go down, which means prices go up, which means you buy less with the money you earn, etc., etc., etc.
Politicians conveniently forget this, even when they ought to know better. Biden, like many spendthrift presidents before him, claims we’ll pay for his massive proposals with higher taxes, increased revenues, and general rises in economic activity from all the amazing good they will do.
You’ll note all of those incoming sources are maybes. The cost is definite.
But hey, that’s how you sell things to the American public. Already, you hear the administration and supportive media outlets boasting about how Americans “like” the new infrastructure plan.
But here’s the thing. Tell Americans that you are going to build new roads and bridges, they’ll love it. Tell them you’re going to stick corporations and rich people with the bill, they’ll love that, too.
But tell them that sticking it to those folks may result in fewer jobs and less investment, they’ll hate it. Tell them all this spending may result in prices shooting up like fireworks, they’ll hate it, too.
Which is why nobody frames the question that way.
Read the fine print
Please note, this is true of either political party. The Trump administration certainly spent its share of our money, often in questionable ways.
Meanwhile, Biden’s first 100 days are looking like that old TV game show “Supermarket Sweep,” where you run through the store and grab everything you can. Except with Biden, this is followed by some serious-sounding declarations which make it seem that anyone against such spending is a cheap, selfish, opposite-party hater.
“The very health of our nation is at stake,” Biden said of his American Rescue Plan, which, in addition to COVID-19-related items, also happened to include $350 billion for state and local governments, $1.5 billion for Amtrak, hundreds of millions for things like museums, Native American language preservation and an underground transit train in Silicon Valley. Call me crazy, but it doesn’t seem the “nation’s health” depends on any of that.
This time around, Biden is claiming “the heart of the plan” is modernizing “transportation infrastructure — our roads, our bridges, our airports.” Sounds good, right?
But the actual plan spends more on encouraging electric vehicles ($174 billion) than the total spent on roads and bridges combined ($115 billion.)
In fact, the actual percentage of the plan that goes to what most people think of as infrastructure is minor. According to the White House, there’s tons more for senior and disabled care ($400 billion) and affordable housing ($300 billion), plus $35 billion aimed at researching climate change, $20 billion to “advance racial equity and environmental justice,” $45 billion to buy clean energy goods, and several billion to “eliminate racial and gender inequities in research and development and science, technology, engineering and math” academic programs.
Some of these are worthy expenditures, some not so much, but none of it is infrastructure. Why do politicians think they can get away with calling it one thing and meaning something else?
Because we let them. We don’t look into the details. And they’re counting on that. They’re counting on Americans not to read the hundreds of pages on these bills and just trust the spin they get.
But you can’t spin money. It’s either coming in or going out. Spending trillions as if they were billions is a dangerous game — especially if you’re doing it in a rush.
We now have a national debt north of $28 trillion dollars, which is larger than our entire annual GDP — and larger than the annual GDP’s of China, Japan, India, Great Britain and France combined. That’s the size of our debt! We can’t pretend that doesn’t exist or have consequences.
Even Janet Yellen, Biden’s treasury secretary, said last year, “The U.S. debt path is completely unsustainable under current tax and spending plans,” and that it is something “most people don’t understand and I see very little evidence of concern about it.”
Voters ought to be concerned about it. And voice that concern. But as long as we think we can keep printing dollars on that Xerox machine, politicians are more than ready to take advantage of our ignorance.
Contact Mitch Albom: email@example.com. Check out the latest updates with his charities, books and events at MitchAlbom.com. Download “The Sports Reporters” podcast each Monday and Thursday on-demand through Apple Podcasts, Google Play, Spotify and more. Follow him on Twitter @mitchalbom.
Thank you, Mitch Albom, for your voice of reason in an increasingly insane world.
Thanks for sharing much needed insight into this very real troubling problem. With an economics background I’ve had to bite my tongue nearly in two more than I’d care to share over the past few months. The excessive sums you’ve pointed out in this article will not all be spent efficiently and we all will pay for this excess for much longer than we are being told. The party’s in full swing now so any voices (like mine or yours) saying that the band is too loud are told to go home and sleep it off. I hope I’m wrong. All the Best..