Did Biden End the Welfare State?

Welfare spending is on a course to destroy the federal government, because Biden expanded benefits and gutted work requirements for able-bodied recipients. Only Trump and Musk can avert it.

Much of the expected increase in federal spending over the next 10 years will be caused by a 34 percent rise in annual welfare spending, amounting to $2.2 trillion more over the next 10 years, the Economic Policy Innovation Center (EPIC) reports (hat tip to Unleash Prosperity). Current law requires this increase even though present welfare spending is “almost double the poverty threshold per impoverished person,” as EPIC reports in another article.

This massive spending increase is not intended to meet a public need or to help poverty-stricken individuals, EPIC reports:

If our nation’s welfare system exists solely to subsidize the basic needs of low-income individuals, then this 34% expansion of welfare spending should in theory coincide with an expected increase in poverty over the next decade.

Unsurprisingly, it does not.

There is nothing in the CBO’s economic projections that signals a drastic increase in poverty in the next decade.

The reason welfare spending has increased so rapidly and is on track for further rapid rises is that “even though Covid ended years ago[,] Biden gutted work requirements for able-bodied citizens while expanding benefits,” as Unleash Prosperity reports.

Two charts from EPIC illustrate the projected increase in federal welfare spending and the upsurge above the pre-pandemic level:

This is a direct, obvious outcome of vote-buying by the Biden administration and congressional Democrats in 2021 and 2022, a price the American people are now expected to pay in perpetuity. As noted above, this money is not directed toward relief of distress but instead is a payoff to Democrat constituencies, especially the welfare bureaucracy itself.

The good news is that these projected increases in welfare-branded waste are not going to happen. They will be prevented not by ill-will (such as GOP grinches) or a shocking bout of common sense from the federal government, but by the effects of this spending itself along with the overall mass of wasteful spending in the federal budget.

It is not a matter of will, desire, or motives. It is simple math.

Here’s how it will happen. Removing people from the workforce, and paying them not to work, has two critical economic effects: it reduces the supply of goods and services well below potential, and it increases government spending (the payments to people not to work).

Those two effects have two important consequences, in turn: they reduce the tax base from which the government takes its cut, and they increase government spending significantly as people move into government transfer-payment programs.

Together, those outcomes increase inflation while further ballooning the annual budget deficit, which raises interest rates. The latter happens because people won't buy more and more government bonds without a big incentive, if at all, when the Treasury is selling many more of them to cover the debt—supply and demand settle the price, and thus the interest rate on Treasurys. The rising interest rates increase the cost of debt, and therefore the federal deficit and debt, creating an upward spiral of debt. (Federal revenues will not rise to cover the additional debt because they cannot, as I noted in the item above.)

The rapid and continual increase in federal debt pushes the government toward an inevitable disaster (for those in government and those in the public who have become dependent on government handouts): the repudiation of federal debt.

This debt repudiation will occur through monetary inflation, haircuts on the debt owed (which does not seem likely and would cause interest rates to skyrocket further, thus worsening the problem), or a simple collapse in which the Treasury Department defaults on some or all payments on the national debt (only temporarily, they will claim).

However it happens, this course of ever-greater income redistribution through deficit spending will cause the U.S. government’s spending machine to collapse.

Those welfare-spending projections are not going to come true, just like the rest of the “mandatory spending” the federal government and its corporate-media lickspittles fancifully expect to occur in the years to come. Either federal spending will be significantly downsized by choice and in an organized way, as President Trump and the Department of Government Efficiency are trying to do, or it will be reduced by a crash caused by this very overspending.

In the case of welfare spending, potential solutions could include work rules, eligibility checks, program consolidation, block grants to the states, and the like. As the EPIC analysis shows, federal welfare spending involves an enormous amount of money that does not go to its supposedly intended beneficiaries. The concise term for that is “waste.”

The most foolish thing that those in favor of a strong, well-funded federal government could do would be to impede the efforts of Trump and his team to save the current system through purposeful spending cuts.

I presume that the welfare-statists will do the most foolish thing. Scorpions gotta scorpion.

I’m not surprised that there are countless people in Congress who do not understand this reality, simple as it is. What does puzzle me is that so many analysts, who should know better, do not see the impossibility of their big-government dreams.