EDITORIAL: Biden poised to repeat Obama’s stimulus mistake

Even an economic stimulus from massive federal spending can be dulled by high levels of taxation and regulations. But don’t expect that to stop President-elect Joe Biden from taking that path anyway.

On Tuesday, Democrats earned the narrowest of Senate majorities by winning two seats in Georgia. Combined with their small majority in the House, Democrats have unified control of the government.

Expect the excessive spending to start forthwith, especially given that Mr. Biden may find much of his policy agenda stymied by the filibuster. Passing policy bills requires either 60 votes or Sen. Joe Manchin, D-W.Va., breaking his word and agreeing to eliminate the filibuster.

But thanks to budget reconciliation, the Senate is able to pass tax and spending bills with a simple majority vote. During the campaign, Mr. Biden called for $11 trillion in new spending over the next 10 years.

That includes his support of the $3 trillion stimulus bill passed by House Democrats last year. The COVID relief bill President Donald Trump signed last month cost $908 billion. Mr. Biden called that bill a “down payment” and also wants $2,000 stimulus checks.

The main justification for continued stimulus is boosting economic growth. But even easy money is no match for onerous taxes and increased government interference in private industry. That’s what happened under President Barack Obama during his first term.

In 2009, Congress passed a large stimulus bill. Mr. Obama promised the new spending would quickly lower unemployment. Instead, joblessness stayed above 8 percent for most of Mr. Obama’s first term. For context, the current national unemployment rate is 6.7 percent despite states such as Nevada placing strict limits on economic activity because of the coronavirus.

The Congressional Budget Office predicted Mr. Obama’s stimulus would trigger 3.6 percent annual growth from 2010 to 2013. Instead, it grew only by 2.1 percent, which was half the average growth rate following previous recessions.

“Because Mr. Biden’s proposed program is little more than Mr. Obama’s tax, spend and regulate agenda on steroids, and because his appointees are merely grayer retreads of the Obama administration, it is excessively optimistic to believe that his stimulus will do any more good for the economy than Mr. Obama’s did,” Phil Gramm and Mike Solon noted in The Wall Street Journal last week.

Like Mr. Obama, President Donald Trump kept federal spending high. But Mr. Trump’s efforts to reduce taxes and regulations, which allowed businesses to thrive and hire more workers, more than countered the fiscal profligacy, creating a high-performing economy until the pandemic hit.

It would be better for Mr. Biden to learn from history than to force Americans to repeat it.