Biden’s Build Back Better Act Will Likely Cost Twice as Much as the CBO Projects. Here’s Why.

“”The Build Back Better Act relies on a number of arbitrary sunsets and expirations to lower the official cost of the bill,” explains the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for balanced budgets. The group’s newly updated analysis of the Build Back Better plan finds that the package will cost an estimated $4.8 trillion over 10 years if all provisions are made permanent—double the price tag applied by the CBO last month.”

“several key parts of the bill are designed to game the CBO’s method for scoring the cost of legislation by setting arbitrary expiration dates even though lawmakers obviously intend for those policies to be permanent fixtures. Probably the best example is the expanded child tax credit, which would expire after just a single year. Other parts of the bill, including the universal pre-K funding and new subsidies for child care, would expire after six years. Expanded subsidies through the Affordable Care Act would last until 2025.
With all those gimmicks in place, the CBO assessment of the bill projects that it will cost about $1.8 trillion and add about $367 billion to the deficit over the next decade.

If all the Build Back Better plan’s proposals were made permanent, however, the final price tag would be $4.8 trillion, and the bill would add about $2.8 trillion to the deficit, according to the CRFB.

“To be sure, lawmakers may choose not to extend some or all of these provisions,” the CRFB analysis states. “However, if they do, they would need to more than double current offsets in order for the bill and the extensions to be paid for. The alternative would be a substantial increase in the debt.””

Terry McAuliffe Bet on Voters Hating Trump. Turns Out They Dislike Democrats More.

“many progressives still seem reluctant to engage in any sort of deeper introspection into why they may have alienated former members of their base. Many prefer to cling to the concept of “asymmetric polarization” that blames the widening split solely on conservatives because Republicans have moved farther to the right than Democrats have to the left.

But that view was challenged earlier this year by Kevin Drum, who cited studies showing that, in fact, it had been Democrats who had drifted to the left on issues like immigration, guns, religion and gay marriage.

It is not “both-sides-ism” to point this out. Like others, I have written hundreds of thousands of words about how the Republicans have not only moved hard to the right, but have also gone mad in the process. So this does not suggest any sort of moral equivalence.

The derangement of the GOP, however, has tended to obscure what happened on the left, where elite Democrats have increasingly lost touch with many of the voters who will determine the outcome of the next few elections.

At soccer matches and PTA meetings, or other gatherings of suburban parents, you won’t hear talk of “intersectionality,” or debates about the proper use of pronouns. The words “autocracy” or “authoritarianism” seldom come up; and if you try to define the terms, it’s as likely as not that people will bring up mask and vaccine mandates, cancel culture and what they see as the overreach of the progressive nanny state. References to “white supremacy” are likely to be greeted or with eye rolls or treated as conversation-ending insults.

At times, it seems as if Democrats are speaking a different language than many Americans.”

How Democrats Could Hide $2 Trillion in New Spending With Budget Gimmicks

“Democrats are reportedly considering a one-year extension of the expanded child tax credit, which pays parents $3,000 annually for every child (and an extra $600 for kids under age 6) and is paid out as a refund even for families that owe no federal taxes. Previously, Biden’s plan called for a five-year extension of the child tax credit. As I wrote in September, the five-year extension was a budget gimmick designed to make the tax credit appear to be roughly $700 billion less expensive than it otherwise would be within the standard 10-year budget window. In short, Democrats were signalling that the expanded child tax credit would be permanent, but they were only accounting for half of what it would actually cost to make it permanent.

A one-year extension would be mashing that same “gimmick” button even harder.

In a similar way, Democrats are also reportedly considering a shorter-than-planned extension of the expanded Obamacare subsidies made available during the pandemic. Instead of being extended permanently, those provisions would technically expire after three years—even though everyone knows they are likely to be extended past that sunset date.

“These proposals don’t actually shrink the package; they just shorten it,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for balanced budgets. The CRFB estimates that the twin “blatant budget gimmicks” involving the child tax credit and Obamacare subsidies could hide between $1.5 trillion and $2.4 trillion in future spending, depending on other trade-offs in the final package. Even if the final bill is $1.9 trillion and requires no new borrowing on paper, the CRFB warns that the actual price tag could be as much as $4 trillion with much of the hidden cost financed by adding to the deficit.”

Democrats may let the best weapon against child poverty fade away

“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.”

“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.”

Mass Student Loan Forgiveness Is Already Happening

“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.”

Democrats Are Denying Basic Economics

“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.”

“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.”

Joe Manchin won’t support a key climate program. Alternatives won’t be enough.

“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.”

“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.””

“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.”