It’s time for Democrats to save money

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Democratic leaders are hoping this will finally be the week Congress passes two major pieces of legislation that define Joe Biden’s national agenda: a bipartisan infrastructure bill and a $ 1.75 trillion reconciliation bill containing social and environmental programs. Appearing on ABC News’ “This Week” Sunday, Transportation Secretary Pete Buttigieg said Democrats were “the closest we’ve ever been” to passing the two bills.

After all the delays and resentment, some skepticism is in order. On Monday, Senator Joe Manchin held a media briefing on Capitol Hill, where he said he would not vote for the reconciliation bill until he saw its impact on the budget deficit and the national debt. In the House, Democrats’ hopes to vote on the reconciliation bill on Tuesday have been dashed as negotiations continue. In the Senate, Bernie Sanders said he was still working to “strengthen” the bill by including provisions that would lower the costs of prescription drugs.

The White House, meanwhile, is trying to rally support for the reconciliation framework it unveiled last week. In a memorandum to other Democrats on Thursday obtained by Politico, Mike Donilon, senior adviser to Biden, said passing the two bills would demonstrate Biden delivering on his campaign pledge to “show that democracies can still do great things that actually improve the lives of their citizens.”

Is it still correct to describe the content of the two bills as “great things”? In some cases, it certainly is. The infrastructure bill contains sixty-six billion dollars in new rail spending, the largest sum since Amtrak’s inception; nearly $ 40 billion for public transit; and fifty-five billion dollars for drinking water. It’s not a stupid change, but it pales in comparison to the more than half a trillion dollars in climate-related tax incentives that the reconciliation framework would offer, over ten years, to encourage consumers and consumers alike. companies to move away from fossil fuels. Certainly, this will not satisfy environmentalists who are calling for the shutdown of the fossil fuel industry. Compared to what has happened before, however, this represents a big change.

In terms of social spending, the White House framework contains a commitment to provide a universal preschool for all three and four year olds, as well as expanded grants to cover child care costs for infants. If these programs are implemented effectively, they could prove transformative for many families, especially for working mothers who still bear the brunt of the burden of raising children. For the first time, the United States would follow in the footsteps of countries like France and Norway in making a serious effort to support early childhood development.

The Expanded Child Tax Credit is another landmark Biden program. Introduced as part of the sweep COVID-The relief bill that Congress passed in February provides for monthly cash payments of up to three hundred dollars to parents of children from low- and middle-income families. Experts have said it is the largest anti-poverty program in decades, but warn it will be vulnerable to Republicans’ efforts to roll it back.

Assuming all of these things are in the latest pieces of legislation, it’s hard to argue with the White House’s argument that passing the two bills would improve the lives of countless Americans, many in dire need of. aid. And the money to pay for these new programs would come from wealthy households and large corporations, both of which have enjoyed huge financial gains in recent decades. The measure would raise eight hundred billion dollars over ten years by introducing a minimum tax of 15% on large companies, imposing a new tax on share buybacks and preventing companies from shifting their jobs and profits to abroad. An additional six hundred and fifty billion dollars would come from the introduction of new surtaxes on income above ten million dollars, the limitation of losses that businesses can claim on their income tax returns and the extension of a personal income tax. 3.8% investments to income generated by investment firms and other unincorporated businesses. And the White House says spending nearly $ 80 billion to bolster IRS enforcement would generate $ 400 billion in new revenue over ten years.

We are still waiting for the Congressional Budget Office to provide an independent assessment of the numbers, but there is no doubt that, if taken on, the Biden program would redistribute resources significantly in a progressive direction. “The high income component is starting to tackle the lower tax rates in Bill Trump and the tax code in general,” Chuck Marr, tax policy expert at the Liberal Priorities Center told me. budgetary and political. “This is a historic achievement in international taxation. And that also takes into account the fact that the budget cuts have devastated the IRS ”

So why isn’t he getting more enthusiasm from Democrats? Part of it is a matter of frustration and expectations. In June, Sanders, chairman of the Senate Budget Committee, said Democrats were discussing a $ 6 trillion reconciliation plan. The following month, Senate Majority Leader Chuck Schumer said his caucus members agreed to a $ 3.5 trillion plan. To gain the support of Senators Joe Manchin and Kyrsten Sinema, that figure has been halved, and Manchin is still not satisfied. “What I see are board games, budget gadgets,” he said on Monday.

The new White House executive has abandoned several Democratic priorities, including paid family leave and free community college. Other elements of Biden’s original proposals, such as creating more affordable housing and a nationwide system for providing home care to the elderly, have been slashed. Even some of the larger programs will only be funded for limited periods: six years for the universal preschool program and childcare grants; only one year for the expanded child tax credit, which will need to be renewed before midterm.

Perhaps the most annoying aspect of the lean bill is that some of the country’s most powerful vested interests have succeeded, once again, in protecting their indefensible privileges. Take Big Pharma. Sinema and some other Democrats, including New Jersey Senator Bob Menendez, declined to support a proposal that would allow Medicare to negotiate drug prices. As a result, drug companies will be able to continue to charge Americans much higher prices than they charge in countries where the government negotiates prices.

Hedge fund and private equity fund managers also prevailed. For years, they’ve been able to lower their tax bill by converting much of their fee income into capital gains, which are taxed at lower rates. The so-called self-interest loophole that allows this blatant dodge is so blatant that both Barack Obama and Donald Trump have called for its elimination. Biden too. And yet, he looks set to survive again. How? ‘Or’ What? The full story did not emerge. When it does, the fact that, during the 2019-20 election cycle, hedge funds and private equity firms reportedly spent over six hundred and twenty-five million dollars on political campaigns and lobbying, the money going to both parties, will surely figure prominently.


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