Little did they know.
Then came 9-11, two wars that we haven’t paid for (President Bush 43 actually urged Americans to keep spending), three unwarranted and unpaid-for tax cuts that disproportionately benefitted the wealthy, the Great Recession, Covid-19 and the transformation of that increasingly rara avis, the deficit hawk, into a flightless sparrow. The result? Today the national debt is approaching $30 trillion and the debt-to-GDP ratio is pushing 110 percent. We are about to owe more of it to foreigners than to Americans.
Thus, it was thrilling to finally have a president who told us that his ambitious infrastructure initiative, the American Jobs Plan, would be paid for by raising taxes on billionaires and millionaires who have been the tax code’s most favored folks dating back decades. Finally, they would ante up just like the rest of us. These new revenues would be used to build and fix the deteriorating bridges, dams, water and sewer systems, etc. and to criss-cross the country with broadband similar to the New Deal’s successful rural electrification program of the 1930s.
Not so fast.
President Biden’s fixation with bipartisanship has resulted in an infrastructure bill that, on the debit side of the ledger, is the same old same old. Just when we thought we could believe that, for once, a President and Congress were going to do something real to actually pay for a new initiative, they instead fell back into their comfort zone of bull. Just like their predecessor can-kickers, they propose to pay for the almost $600 billion in new spending in the bill with smoke and mirrors.
In order to get Republicans to agree to the bill, Biden quickly caved on tax increases. Republicans would never agree to them, even on folks like Warren Buffett, Jeff Bezos, or Donald Trump, all of whom pay less than you do, or companies like Amazon that pay nothing at all. Instead, the GOP negotiators proposed increasing the gas tax, the most regressive tax in the federal arsenal, a solution that would fall most heavily on those Americans least able to afford it. The administration fortunately nixed that idea.
Here is what our political wizards came up with:
First, unemployment benefits will be reduced by $70 billion. Ahh, but no one on the unemployment rolls will see their benefits reduced. Instead, “waste and fraud” will be cut via the magic of improving “program integrity.” Good luck with that. The experts who spend their lives monitoring this stuff estimate that fraud and abuse of unemployment benefits amounts to a fraction of $70 billion. Moreover, they say that benefits will have to be slashed to arrive at that savings.
Second, $65 billion will come from the sale of the telecommunications 5G spectrum. The only problem with that is that the sale took place five months ago. Through the alchemy of accounting, this is suddenly being recast as new money.
Third, “repurposing” $80 billion in Covid-19 relief funding. No one has yet identified where to find these mythical dollars.
Fourth, $6 billion from the sale of oil from the U.S. Strategic Petroleum Reserve. However, by law, the Reserve must be kept at a certain level. The only way to do that will be to repurchase the oil later.
Fifth, $60 billion from the jump in tax revenue from increased productivity and economic growth resulting from the infrastructure initiative. If you believe this, let me remind you that the Trump administration and its congressional allies assured us that their 2017 $2 trillion tax cut would more than pay for itself in increased tax revenues. We’re still waiting for the first dollar of that increase to be tabulated.
The fuzzy math does not end there. There are additional fairy-tale elements in the bill that are just as fanciful as the ones described above.
Isn’t it comforting to know that Washington is back to doing business as usual?
July 9, 2021