“The expanded child tax credit, a policy passed in March 2021 that beefed up monthly payments to most families with kids, has already had a massive, positive effect on the lives of America’s children. After just one monthly payment, it cut child poverty by 25 percent — and should the larger payments continue, it could slash child poverty by more than 40 percent in a typical year, according to the Urban Institute.
This is a huge decline in a very short time frame. According to the Brookings Institution, child poverty rates dropped by 26 percent between 2009 and 2019, meaning the tax credit accomplished in one month what other policies took a decade to achieve.
Despite that success, the expanded child tax credit (CTC) is in serious danger. As part of their budget negotiations, Democrats are debating how long to extend the program — most likely for a year, with some calling for a four-year (or even indefinite) extension. In the best-case scenario with a short extension, the program will probably run out of money by the end of 2022. In the worst-case scenario, it could end as soon as April 2022, when families are currently due to receive their final enhanced payment.”
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“Opponents of the policy, however, argue that these payments could deter recipients from working since parents without an income can receive the help as well. Manchin has expressed this concern, arguing that work and/or education requirements ought to be added to the policy should it be extended. “Don’t you think, if we’re going to help the children, that the people should make some effort?” Manchin has said.
Some researchers have pushed back against this view, noting that a continual credit might help parents join the workforce by enabling them to afford basic services like child care. Given that the expanded child tax credit has only been distributed since July, it’s too early to ascertain which argument is correct, though data from a Columbia University study found that the credit hadn’t had a “significant effect on employment or labor force participation” so far.
There is also debate as to whether access to the credit should be capped even more. Right now, families that make up to $150,000 a year receive the full boost, a figure that Manchin would like to see go down. Manchin has argued that the policy should be capped at households that make $60,000 or less.
Proponents of a more universal policy, meanwhile, argue that broadening the constituency that benefits from the credit will increase its political support. More universal programs including Social Security and Medicare are some of the most popular government offerings and have polled better than Medicaid, which is means-tested.”
“While progressive Democrats in Congress have yet to pass a universal student loan forgiveness bill, the Department of Education has nevertheless forgiven billions of dollars in federal student loan debt since Joe Biden became president. And even without new statutory authority, the federal government is slated to forgive increasingly more student loan debt in the future, thanks to the Biden administration’s expansive interpretation of the Education Department’s existing authorities, as well as a law signed by George W. Bush way back in 2007 that mandates loan forgiveness for certain borrowers.”
“The simplest way to understand economics is that it is a reckoning with unavoidable tradeoffs. If you spend money on something, you may obtain something in return—but you lose the ability to use those resources on something else. In the world of politics, economics helps us weigh the merits of those tradeoffs. It answers the question: Do the benefits of a policy outweigh the costs? Sometimes the benefits are larger. Sometimes they are meager or even nonexistent. But there are always costs. To acknowledge this is merely to acknowledge reality.”
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“White House press secretary Jen Psaki responded to a question about the tax impact of the $3.5 trillion spending plan now working its way through Congress by declaring that “there are some…who argue that in the past companies have passed on these costs to consumers…we feel that that’s unfair and absurd and the American people would not stand for that.”
When taxes are raised on corporations—the “companies” in Psaki’s response—corporations often respond by passing that tax on to others. In some cases, they pass costs to consumers. In others, as the Cato Institute’s Scott Lincicome wryly notes on Twitter, they reduce the amount they would have otherwise spent on wages. They have to pay more to do business, and so they make adjustments accordingly. Costs create consequences and tradeoffs.
Empirical research has consistently shown that a large portion of corporate tax increases is actually paid by labor down the line. There are some reasonable academic debates about the precise percentage of the tax paid by labor, and how that might change under certain circumstances. But there is little real debate about whether or not some of the costs are passed on. The point is that it happens. Workers, not owners, pay at least some share of higher corporate taxes.”
“A key climate policy designed to phase out fossil fuels will likely be cut from Democrats’ upcoming reconciliation package due to opposition from Sen. Joe Manchin (D-WV), who has reportedly refused to back the measure as negotiations over the budget bill continue.
According to the New York Times’s Coral Davenport, who first reported the news on Friday, Manchin, who chairs the Senate Energy and Natural Resources Committee, will not support the sweeping clean electricity program widely seen as the centerpiece of the bill’s climate plan.
The $150 billion program — officially known as the Clean Electricity Performance Program, or CEPP — would reward energy suppliers who switch from fossil fuels like coal and natural gas to clean power sources like solar, wind, and nuclear power, which already make up about 40 percent of the industry, and fine those who do not.
Experts believe the program is the most effective way to slash US carbon emissions significantly enough to prevent the global temperature from rising by 1.5 degrees Celsius, a threshold which would have drastic consequences for the planet if exceeded.”
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“Manchin’s home state of West Virginia is one of the largest producers of coal in the US, and Manchin himself benefits financially from the coal industry.
Manchin’s spokesperson, Sam Runyon, told the New York Times that Manchin opposed the CEPP because he couldn’t support “using taxpayer dollars to pay private companies to do things they’re already doing.””
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“Manchin is correct in saying that some companies are indeed changing over to sustainable electricity production; currently, almost 40 percent of electricity generated in the US comes from a clean energy source, either nuclear or renewable. But corporations are ultimately concerned about their bottom line, and the carrot-and-stick approach of the proposed clean electricity program incorporates that reality by incentivizing companies to make the drastic changes necessary to address climate change — and penalizing them if they don’t.
The other reason a clean electricity program could prove key to addressing climate change is that it creates a national standard, as opposed to the patchwork of municipal and state legislation and individual efforts currently in place. Among other impacts, the program would help bring lagging areas up to speed with the ambitious targets set by the Biden administration, which call for 80 percent of the nation’s electricity to come from renewable sources by 2030, and 100 percent by 2035.”
“Most Democrats in Congress are united around the Democratic agenda, but a small number of senators and representatives have so far been able to hold up its passage. “I need 50 votes in the Senate. I have 48,” President Biden said last week, regarding his social spending bill. As for who is standing in the way, his blame was clear: “Two. Two people.”
Those two people are Sens. Joe Manchin and Kyrsten Sinema. The two moderates have forced Democrats to water down several priorities (such as election reform and the $3.5 trillion budget bill) and are blocking more ambitious reforms entirely (such as abolishing the filibuster). But while congressional observers — from the commander-in-chief on down — usually mention Manchin and Sinema in the same sentence, it’s a mistake to lump together their resistance to their party’s priorities. Manchin’s centrism is unsurprising: He has been a conservative Democrat his entire career, and his home state of West Virginia is so red that it might be politically impossible for him to move left, even if he wanted to.
But neither is true of Sinema. Once a staunch progressive, Arizona’s senior senator has taken a hard turn to the right. On the surface, that appears to have been an effort to make her more electable by courting moderate and conservative voters. If so, she may have overcompensated: Arizona is no West Virginia, and no other swing-state senator has vexed Democratic leadership so thoroughly. In fact, Sinema’s established such a firm anti-progressive reputation that she may have lost the support of enough Democrats to endanger her reelection just the same.”
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“Democrats are lucky that Manchin is in the Senate at all. Because of how red West Virginia is, a typical senator from the state would almost certainly be a Republican.2 Indeed, based on Trump’s margin in West Virginia in 2016, we’d expect that a generic replacement for Manchin would have voted in line with Trump’s position 89.3 percent of the time during his presidency. Manchin, though, voted with Trump just 50.4 percent of the time — a lot for a Democrat, but not a lot considering the partisanship of his home state.
Using the same methodology, we’d have expected a generic replacement for Sinema to vote with Trump just 39.8 percent of the time — a reflection of the purpler partisanship of her state and her congressional district at the time. Yet Sinema voted with him 50.4 percent of the time too, as much as Manchin. That made her the only Democratic senator who voted with Trump significantly3 more often than expected based on the politics of senators’ states. Her voting record during the Trump years looked more like Manchin’s, Sen. Joe Donnelly’s, Sen. Heidi Heitkamp’s or Sen. Claire McCaskill’s — all Democrats from substantially redder states.”
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“If Sinema is acting moderate for electoral reasons, she clearly disagrees with the conventional wisdom about how moderate a swing-state senator needs to be. On one hand, maybe she has a point: Donnelly, Heitkamp and McCaskill all lost reelection in 2018, as did Sen. Bill Nelson, whose home state of Florida is about as purple as Arizona but who voted with Trump less often than Sinema did. All four voted with Trump significantly less often than we’d have expected given the partisanship of their state, suggesting that Sinema’s strategy of hewing closer to expectations might have been smarter. (Although this doesn’t justify her approach of voting with Trump more often than expected.) On the other hand, political science research has found that candidates and congressional aides are really bad at assessing where voters stand on the issues. One 2013 study found that politicians overestimated by several percentage points how conservative their constituents were, in direct contradiction of Sinema’s entire theory of the case.”
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“Sinema is presumably betting that Democrats who dislike her will vote for her regardless, and that at least some Republicans who like her will vote for her, too.”
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“If Democratic opinion of Sinema sinks low enough, she could even be in danger of losing in a primary.”
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“It may be her donors. In a September report, liberal group Accountable.US found that Sinema raised at least $923,065 from business interests that opposed Biden’s budget reconciliation plan, such as the U.S. Chamber of Commerce, a longtime Sinema ally. She’s also been the recipient of large donations from the pharmaceutical industry, which critics have blamed for her opposition to letting Medicare negotiate down drug costs. Of course, it’s possible that the causation is reversed — that such interest groups are donating to her because they like her positions on these issues.”
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“Another explanation for Sinema’s centrism could be that she genuinely believes in it. In her 2009 book “Unite and Conquer,” Sinema described how she was initially frustrated at her inability to get things done in the state legislature — so she decided to stop being a “bomb-thrower” and start working with Republicans. Perhaps now, after so many years of embedding with the GOP to get things done (this is the first time she has ever served in a legislative chamber controlled by Democrats), she has internalized the conservatism of her peers — and even embraced bipartisanship as a policy goal unto itself. (That would explain her fierce opposition to ending the filibuster and her dogged negotiation of a bipartisan $1 trillion infrastructure bill earlier this year.)”
“Medicare’s board of trustees produced their annual report on the program’s fiscal health. That report contained some expected yet nonetheless alarming news: Medicare’s hospital insurance (HI) trust fund, itself a kind of accounting fiction, will be insolvent in just five years. Starting in 2026, the HI fund, which covers inpatient hospital services, will be depleted.
The program will have to rely on the HI fund’s incoming revenues, essentially operating on a cash flow basis—and there won’t be enough cash. In 2026, the HI fund will only cover about 91 percent of its bills. In the years that follow, that gap will only grow larger. So without changes to the program’s financing, doctors, hospitals, and other medical providers will face rapidly reduced payments from the program, with ensuing ripple effects on both the wider economy, roughly a sixth of which revolves around health care services, and on the provision and availability of health care.
If anything, the program’s fiscal problems may be even worse than that: The new report assumes that an array of cost-reduction measures, including a series of technical tweaks the physician payments and bonuses, will persist. But they also note that Medicare’s “long-range costs could be substantially higher than shown throughout much of the report if the cost-reduction measures prove problematic and new legislation scales them back.
As anyone who has even a passing familiarity with attempts to control the cost of federal health care programs through doctor payment tweaks knows, those sorts of measures often prove problematic—which is to say, doctors don’t like them, and thus, for political reasons, Congress overrides those payment changes.”
“the roots of the Democratic divide go back to last November, to the arguments over what happened, and to the way to respond to those results. In those first days after Election Day, Democrats discovered that their hopes for widespread gains were
“It’s an imperfect science, indeed. Under the gambit, budget forecasters estimate how much a policy change might boost the economy and send more cash flowing to the federal government. This time, Democrats are pinning their revenue hopes on the idea that major investments in the social safety net, climate policy and tax reform will yield robust, long-term economic growth.
“I’m very concerned that the pay-fors aren’t real,” said Sen. Rand Paul (R-Ky.), a fiscal conservative. “Both parties bear some culpability. But I’m worried about adding so much debt in such a short period of time.”
Both Democrats and Republicans have previously relied on dynamic scoring and both have lampooned its use as a budget trick. Predictions about how much revenue a new government policy will generate are often exaggerated or inaccurate and are difficult to calculate, placing enormous pressure on independent budget analysts to come up with favorable numbers that might turn out to be a bust.”