‘Build Back Better’? Beware of the ‘free’ gifts of socialism, America: Fred Sievert

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Socialism will negatively affect all of us in the future if the programs currently proposed are enacted into law

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Most people don’t realize how devastating socialism can be to our collective financial security and their individual financial security. Socialism will negatively affect all of us in the future if the programs currently proposed are enacted into law.

According to InvestopediaIn a purely socialist system, all legal production and distribution decisions are made by the government, and individuals depend on the state for everything from food to health care.

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When a government pays everyone’s bills, it leads to excessive spending, leading to an annual federal deficit and ultimately high levels of annual inflation.

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The end results of excessive government spending and rising annual deficits can prove disastrous for each of us as individual consumers.

Heavy spending widens federal deficit

Has become the centerpiece of President Joe Biden’s domestic agenda two big pieces of lawThe $1 trillion bipartisan infrastructure bill and the $3.5 trillion Build Back Better Act, a budget resolution bill.

The second bill, called the Build Back Better Act, focuses on a long list of social policies and programs. Examples include guaranteed preschool for three- and four-year-olds, free community college, extended Medicare and Medicaid, 12 weeks of paid family and medical leave, and the purchase of an electric vehicle by the federal government. With Republicans uniting in opposition, Democrats are using a special budgetary process known as “conciliation” to avoid the 60-vote filibuster threshold and get the bill passed on a party-line vote.

Penn Wharton analysis suggests Biden’s spending plan could cost up to $4T

A Washington Times article stated, “Most of the programs in the plan are redistribution of wealth programs that undermine job-creating free market activity. Expert economists agree that the Biden plan is largely already too big.” The federal government will expand that is impossible to reverse.”

On October 14, 2021, Biden signed legislation to temporarily raise the US government’s borrowing limit, or debt limit. $28.9 trillion. The act only extended the loan default deadline to December. Without the increase in the debt limit, the US Treasury estimated that it would not have the money to pay the nation’s bills on October 18.

Ten years ago, at the end of 2011, the loan limit was $14.8 trillion, About half what it is now.

A trillion is a thousand billion. It’s hard to imagine how much money $1 trillion is. If you sit and count a dollar a second, it will take you 31,688 years To count up to $1 trillion! It would take 110,908 years for the Build Back Better Act amount to count to $3.5 trillion. In other words, it takes 31,688 years for 1 trillion seconds and 110,908 years for 3.5 trillion seconds. This is more than 55 times the number of years that have elapsed since Jesus Christ came to earth 2,000 years ago.

Spending bills widen the federal deficit

Massive spending bills almost always add to the federal deficit, which is detrimental to a nation’s economic health.

The Congressional Budget Office estimated that the infrastructure bill would add about $250 billion to debt.

As for the Build Back Better Act, Biden claims it will cost zero. While this is a novel use of the word “cost,” it probably means that it will not increase the federal debt as it expects to pay new taxes and other revenue for the new spending.

Biden pitches changes to the millionaire tax, the global minimum bill to spend

The total amount of the bill’s spending and tax credits is expected to reach $3.5 trillion and raise taxes by about $2.3 trillion, leaving a gap of more than $1 trillion. Democrats claim the gap will be enforced through price controls on prescription drugs and hopes of economic growth.

The Bipartisan Policy Center reports that, in fiscal year 2021 (ending September 30, 2021), the federal government will $2.8 trillion deficit The difference between $4.0 trillion in revenue and $6.8 trillion in spending. This FY2021 deficit is nearly three times the $1.0 trillion deficit in FY19 as federal COVID-19 relief spending continues to push outlays to record highs. The deficit for 2021 was about 13 percent of GDP, the second largest deficit as a share of the economy since 1945.

In the United States, an annual federal deficit of more than $1 trillion has become the norm.

Add the cost of interest to that loan

Making the problem worse, the annual interest paid on the national debt is expected to increase substantially. In July 2021, Congressional Budget Office It is estimated that annual interest costs will increase from $331 billion in 2021 to $910 billion in 2031 — a nearly threefold increase. These annual interest costs add to the deficit each year and contribute to the growing national debt. The interest payment of $331 billion this year is about $2,600 per family.

The effect of interest on loans is not unlike the interest consumers pay on credit card debt. If you increase your personal credit card debt to $100,000, you may make annual interest payments of $18,000 to $20,000 and receive nothing in return.

On a much larger scale, this is what happens to the federal government as debt increases and interest on debt increases. The government may no longer be able to provide essential government services as it is required to pay large amounts in interest on the borrowed funds.

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Printing excessive amounts of money can lead to hyperinflation

The impact on each of us as consumers is clear if the government chooses to significantly increase taxes to offset this spending. It could be even worse if the government chooses to increase the money supply by printing more currency. The real danger lies in the potential for higher rates of inflation in that scenario.

Inflation is already rising at levels we haven’t experienced in 30 years, even before the new law was passed. Another jump in consumer prices in September Inflation raised to 5.4 percent Where it was a year ago. This rate corresponds to the biggest increase since 2008.

In response to such an exorbitant increase in the deficit and national debt, the response is, in effect, that governments print more currency to support the excessive spending. History has shown that the consequences of an increased money supply can lead to high levels of inflation and even hyperinflation (defined as an inflation rate more than 50 percent per month).

At a hyperinflation rate of 50 percent per month, you would only need $129,746 at the end of one year to maintain the purchasing power of $1,000 at the beginning of the same year. This would mean that the cost of a consumer commodity (such as a loaf of bread) could go from $1 to $130 after just one year of hyperinflation.

hyperinflation was rampant Germany In the 1920s, Zimbabwe 2008 and in Venezuela in 2019. All these examples of hyperinflation were at least partly driven by the increasing money supply due to excessive government spending.

In the above three historical examples, the rate of inflation exceeded the hyperinflation threshold. In the worst case, in Germany, the price of consumer goods doubles every 3.7 days; In Zimbabwe, the cost of consumer goods doubles daily; And in Venezuela, the cost doubles in a matter of minutes.

If you thought the United States couldn’t have high levels of inflation, it actually happened in 1980, when the annual inflation rate in this country over 14 percent.

a high cost in the long run

Americans may benefit in the short term from Biden’s spending bill, but some experts say we will lose out in the long run.

Biden has promised that his plan will not raise taxes on people earning less than $400,000 per year. Even then Official Congress Scorekeeper Show that the tax burden on households bringing home as little as $30,000 per year will increase.

Not only that – a higher tax burden would hinder the ability of American businesses to compete against foreign competitors. It will also discourage private sector investment which creates jobs and increases the wages of workers.

Clearly, the impact of Biden’s spending on America’s fiscal health is a highly charged political issue. Many Democrats are in favor of big government spending, while many Republicans want to shrink the government’s reins in our lives.

Ian Murray is a leading libertarian financial analyst and vice president of strategy at the Institute for Competitive Enterprise. He says the $3.5 trillion social spending bill admired by President Biden and congressional Democrats move the United States closer For a classical socialist economy. He says the $3.5 trillion figure represents a compromise from the $6.5 trillion for Biden’s Build Back Better plan, which Sen. Bernard Sanders of Vermont, a self-described democratic socialist, called “a starting point”. I had asked. He notes that the bill is intended to “transform America into Western European-style democratic socialism, a massively expanding welfare state with a lot of costly provisions.

Beware the “free gift” of socialism. They are far from free.

Fred Sievert is the former chairman of Fortune 100 Corporation, a New York life insurance company. He is the author of “fast result career startFred and his wife Sue have five children and five grandchildren.


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