We’ve been warning for months that the Biden Administration’s reckless fiscal policies would lead to a recession, and now, it’s official, the United States economy is in recession. The U.S. economy shrank for the second consecutive quarter this year-a 1.4% decline in GDP in the First Quarter, and a .9% decline in the Second Quarter.
The Biden Administration’s policies of massive deficit spending, paying able-bodied people not to work, oppressive regulation that has stifled innovation, turning America from an energy exporter to a nation dependent on foreign oil, have all led to high gas prices, rampant inflation, low work force participation, and now an economic recession.
The only way out is by implementing pro-growth policies that cut spending, lower taxes, and eliminate overbearing regulations. As economist Diana Furchgott-Roth, detailed in her Club for Growth Foundation White Paper, the Biden Administration’s policies of excessive spending, tax increases, and hindering oil and natural gas production in the U.S., have gotten us to where we are today, in an actual recession.
Economic White Paper
How President Biden’s Agenda Slows Economic Growth
Originally Published May 11, 2022
Table of Contents
III. Increases in Taxes
President Biden’s agenda includes raising taxes; substantially increasing government spending, including entitlement payments; imposing burdensome regulations on businesses and ordinary Americans; increasing the cost of labor through regulation and expansion of union power while real wages are declining; and forfeiting America’s energy independence.
Standing alone, each initiative is harmful to America’s economy. In combination, these initiatives have led to the increased possibility of an economic recession, as can be seen from the 1.4 percent decline in real Gross Domestic Product in the first quarter of 2022, the first decline in GDP since the pandemic.1 If this decline persists for another quarter, then the country will be in a recession. In addition to the decline in GDP, the results include rising inflation, currently at 8.3 percent, close to April’s 40-year high; supply chain problems; disincentives to work; and slower GDP growth.2 Inflation is an “invisible tax” and the effect on American families and small businesses is serious; higher gas prices; higher food prices; and labor shortages. If additional parts of President Biden’s agenda are enacted, we expect the elimination of millions of jobs, weakened national competitiveness, and increased dependence on other nations, including Russia and China, for our energy needs, further eroding our energy independence.
On his first day in office, President Biden rolled back many of President Trump’s pro-growth regulatory reforms and initiatives, reimposing costly regulations by Executive Order.3 Since then, President Biden and Congress have added trillions of dollars in government spending. Although the U.S. economy has continued to grow in large part from the 2017 tax cuts signed into law by President Trump, President Biden has repeatedly sought to raise taxes, most recently in a speech on the economy on May 10, 2022 and his proposed budget presented to Congress in March 2022.4 These proposed tax increases, if they were to become law, would cause corporations and small businesses to reduce investment. Some would move offshore. New taxes, regulations, and higher inflation are a signal to those interested in taking risks to start or to expand a business to wait on the sidelines until there is predictability and certainty in economic policies.
The paper describes how President Biden’s policies have weakened the American economy. We will examine increases in government spending, the effects of this spending on inflation, proposed tax increases, effects of labor regulations, and reductions in domestic energy production.