"NO" ON BIDEN'S TWO PLANS
REASON TWO
The second reason these two original policy proposals would have been at best counterproductive and, at worst, insanely irresponsible is that the cost of these proposals were astronomical and, NO, taxing rich people and corporations wouldn’t even begin to cover the tab. President Biden’s original Build Back Better Plan had a combined price tag of over $6 trillion. As a comparison, the United States spent just over $4 trillion (in 2021 dollars) to fight the entire Second World War, which lasted four years.
< Commercial Break: We would like to take this opportunity to remind everyone that we are already $31 trillion in debt, a fact that, as far as we can tell, was completely ignored by the Biden administration not only in the initial discussions for these two plans, but in the final three bills as well. Who are they going to tax to pay for that? >
Now, let’s circle back to my earlier point about loading so much into a bill that there is zero chance for smooth implementation and proper oversight. We're not naïve. Infrastructure is expensive, and we get that. In fact, we already know that the American Society of Civil Engineers estimates it will take an investment of $2.59 trillion for even a grade of B. But the sad, unfortunate truth is this: It’s not so much the amount of money we have a problem with; it’s who we are entrusting the money to.
It’s funny how these massive bills never include any sort of detail beyond an obscene dollar amount. Wouldn’t it be helpful to know who is ultimately in charge of each of these infrastructure categories? Who will manage them? What is the bidding process and the bidding parameters? What is each of their budget, scope, targets, timelines, risks, and expected outcomes? Who will authorize funding, contracting, or changes to the original scope? Is this going to be one of those deals like we talked about in the Operation Overhaul section, where seven separate federal agencies administer 92 different programs, with practically zero coordination between them?
They expect us to just trust them to handle it, and we just don’t. And for good reason…
After the implementation of the American Recovery and Reinvestment Act of 2009 — President Obama’s stimulus package that was passed in the wake of the 2007-2009 Financial Crisis — Congress passed the Digital Accountability and Transparency Act of 2014 (the DATA Act), partly in response to a severe deficit of proper oversight and transparency. The goal of the legislation was to require agencies to prepare and submit clear, standardized information on the money they spend.
In 2020, six years after the DATA Act passed, the U.S. Government Accountability Office (GAO) found that “47 (out of 51) offices of inspectors general (OIGs) reported control deficiencies related to system limitations, quality control procedures, data from external systems, and other issues. Further, 44 OIGs made recommendations for agencies to help improve data quality.” Does it really seem like these agencies are ready to properly account for the trillions of dollars set to be thrown on the pile?
We already discussed the colossal amount of money and resources our federal government wastes in the Operation Overhaul section. Now we are being asked to fork over $400 billion to the Centers for Medicare & Medicaid Services (CMS), an agency that we already know is rife with rampant fraud, waste, and abuse?
CMS, which administers Medicare, faces many challenges related to implementing payment methods that encourage efficient service delivery, managing the program to serve beneficiaries well, and safeguarding the program from loss due to fraud, waste, and abuse. Medicare has been designated as a High Risk program because its complexity and susceptibility to improper payments, in addition to its size, have led to serious management challenges. Addressing these challenges requires improvements to payment methods, program management, and program safeguards.
A follow-up report from the GAO revealed that:
Improper payment estimates for fiscal year 2019 totaled about $175 billion, based on improper payment estimates reported by federal programs, an increase from the fiscal year 2018 total of $151 billion. Of the $175 billion, about $121 billion (approximately 69 percent) was concentrated in three program areas: (1) Medicaid, (2) Medicare, and (3) Earned Income Tax Credit. Improper payments — payments that should not have been made or that were made in incorrect amounts — continue to be an area of fiscal concern in the federal government. Improper payments have been estimated to total almost $1.7 trillion government-wide from fiscal years 2003 through 2019.”
And we can just forget about proper oversight at this point. The latest example is the “oversight” of the $2.2 trillion 2020 stimulus legislation, which still has no centralized supervision and is being tracked by a huge, uncoordinated web of congressional panels, departments and agencies.
In a quarterly report from Brian D. Miller, the U.S. Treasury Department’s special inspector general for pandemic recovery programs, he describes epic turf wars between the agencies and said, in a nutshell, that “things are not working well.” The U.S. Government Accountability Office (GAO) concurs, finding that, among many other atrocities, there has been numerous fraud-related cases associated with the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) program and over $3.6 billion in Pandemic Unemployment Assistance (PUA) overpayments from March 2020 through January 2021.
The GAO classifies the Small Business Administration (SBA) a High Risk area that has “deficiencies within all components of internal control.” The report states that “SBA’s failures to provide data and documentation on a timely basis for PPP and EIDL have impeded efforts to ensure transparency and accountability for the programs. This includes delays in obtaining key information from SBA, such as detailed oversight plans and documentation for estimating improper payments.
President Biden pledged that the American Jobs Plan ($2.3 trillion) and the American Families Plan ($1.8 trillion) would not add a penny to the national debt. He insisted that raising taxes on corporations and taxing anyone who makes over $400,000 would pay for both plans. This is simply not true. There’s just not enough money there. For example, the largest tax slice of both proposals was taxing multinational corporations but, by the administration’s own calculations, that piece was estimated to only bring in $1 trillion.
The Penn Wharton Budget Model (PWBM) projected that the American Families Plan (AFP) alone “would spend $2.5 trillion, about $700 billion more than the White House’s estimate, over the 10-year budget window, 2022-2031. They estimate that AFP would raise 1.3 trillion in new tax revenue over the same period. By 2050, the AFP would have increased government debt by almost 5 percent and decreased GDP by 0.4 percent.” The final Congressional Budget Office (CBO) report on the matter, released in November 2021, concluded that the American Families Plan would increase the budget deficit by $160 billion over the next decade.
At best, the Biden administration was doing the fuzziest of fuzzy math. At worst, they were being straight-up disingenuous. To pay for the American Jobs Plan, the Biden administration planned to raise the corporate tax rate from 21 percent to 28 percent; increase the global minimum tax from 10.5 percent to an average of 21 percent (the exact calculation on this is country specific); impose a 15 percent tax on “book-incomes,” or the amount of income corporations publicly report; end federal tax breaks for fossil fuel companies; crack down on U.S. corporations claiming to be foreign companies; stop deductions for moving jobs overseas; and offer tax credits for bringing jobs back home to America.
But here’s the catch, and it’s a big one (and we think it’s super shady they even tried this subterfuge). The Biden administration said that the $2.3 trillion worth of spending in the American Jobs Plan would take place over the next 8 years, but that it will take the next 15 years of higher taxes on corporations to pay for it. Sorry to break it to you, Mr. President, but that ain’t what I call apples to apples. Do you think no one is going to look into this stuff? C’mon man!
Another super shady gimmick the Biden administration used to artificially reduce the cost of the legislation lies in the way the programs in the bill were to be structured and accounted for in the budget. For one, the Democrats declared many programs in the bill temporary as opposed to permanent because, if a program is considered temporary, the CBO doesn’t calculate it over the requisite ten-year period — which obviously lowers the overall cost impact of the legislation.
Problem is, these programs are not truly considered temporary by anyone. Programs in Washington rarely get cancelled, they get renewed — adding huge additional costs. For example, let’s look at four of the “temporary” policies in the original American Families Plan: an increase in the Child Tax Credit; an expansion of the Earned Income Tax Credit; support for childcare and pre-k; and an expansion of the Affordable Care Act.
If these four programs were renewed, it would add $2.18 trillion to the bottom line. This means that the cost of the bill would actually be $4.29 trillion instead of the officially stated cost of $2.43 trillion. Therefore, the total deficit impact is actually $2.7 trillion. We told you. Shady.
There are two additional problems with this pie-in-the-sky payment plan.
continue to reason three