A Future of Secular Stagnation
The Biden budget predicts a not very Roaring Twenties.
By The Editorial Board, The Wall Street Journal (WSJ)
June 1, 2021
One critique of President Biden’s historic spending blowout is that it steals economic growth from the future in return for a temporary surge in the next two years. Imagine our surprise to see the White House confirm this criticism in its own budget proposal.
That’s the not-so-fine print in the President’s fiscal 2022 budget outline, which was conveniently released on the Friday before Memorial Day weekend when most of the press corps was heading out of town. We’ve already reviewed the $6 trillion spending lowlights, but nearly as striking is the budget’s prediction for the U.S. economy through the next decade.
In a phrase, the President’s economists are predicting the return of “secular stagnation.” Readers may recall that unfortunate term from the Obama Presidency, when leftish economists sought to explain why growth seemed stuck at 2% or so despite unprecedented monetary stimulus. The fault, they said, was in our stars and not in their policies.
The Biden budget says we’re likely to stagnate again after the Keynesian spending flood of 2021 and 2022—though at even lower growth rates than the slow-growth Obama years. The White House predicts a two-year growth boom of 5.2% in 2021 and 4.3% in 2022, as the country returns to normal after the pandemic and record amounts of government spending flood the economy to goose consumer demand.
But the White House says growth will sink to 2.2% in 2023, and then average below 1.9% for the next eight years. That’s striking for a couple of reasons...
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