by Paige Terryberry
Senior Analyst for Fiscal Policy, John Locke Foundation
President Biden’s first State of the Union address attempted to bring hope to the American people. Unfortunately, the President’s plans are misleading. They offer only false hope, and Americans should reject the unsound fiscal policies that threaten our future prosperity.
In particular, Americans care about the unlegislated tax of inflation and its burden on their budgets as they struggle to make ends meet. To that serious end, Biden offered no real solutions.
Biden claimed he has a better idea to fight inflation. In a message to America’s businesses, he insisted: “Lower your cost, not your wages.” Ironically, Biden stated costs will be lowered by keeping “more infrastructure and innovation in America.” Meanwhile, his Administration blocks increased oil production at home and continues to import from Russia.
Lowering cost, not wages is nonsensical as the primary cost for businesses is their payroll. For private industry, wage and salary costs are 71% of employers’ expenses.
With inflation escalating, compensation costs only increase as a share of employer expenses. It is unlikely a business can cut wages in today’s economy even if they wanted to, as workers demand higher wages to keep up with the rising cost of living. Massive government spending has already eaten into worker wages and raised consumers’ costs.
Biden announced that his economic agenda, Build Back Better, would reduce the deficit. This is false. The CBO’s estimate found that the failed spending bill would increase the deficit by $3 trillion.
To make matters worse, Biden again asserted he would tax corporations to foot the bill for his economic agenda, further stifling businesses and the workers they employ. Though he claimed this would allow “the rich” to pay their fair share, it is myopic to think that these heavy taxes will be paid for by some stand-alone entities known as “corporations.” Corporations don’t pay taxes, people do. The new corporate tax’s burden would indirectly decrease wages and increase consumer prices. Workers will pay for this.
Biden’s fiscal leadership has failed.
North Carolina Rep. Patrick McHenry (R-NC-10) said it well: “Democrats want the American people to believe that things are back to normal and are heading in the right direction. However, all it takes is for an American to fill up their gas tank or head to the grocery store to know this is not the case. We need real solutions. Instead we got political theater and another laundry list of progressive policies that will only make our problems worse.”