Schumer, Manchin Strike Deal To Raise Taxes, Cut the Deficit, Spend Billions on Climate Change

“Senate Majority Leader Chuck Schumer (D–N.Y.) has reportedly brokered a deal with Sen. Joe Manchin (D–W.Va.) to pass a slimmed-down version of President Joe Biden’s spending plan—now to be marketed as an attempt to curb inflation.”

“The bill will include $370 billion in new spending on climate change initiatives and green energy projects—a linchpin of Biden’s Build Back Better plan through its many, many interactions over the past year—and would dedicate about $300 billion of revenue toward reducing the deficit, which has been Manchin’s top priority.
The bill also reportedly includes a three-year extension of the expanded Affordable Care Act (ACA) subsidies originally passed as a temporary measure during the early days of the COVID-19 pandemic, as well as changes to how federal health insurance programs price prescription drugs. Though pitched as a way to cut costs for households, the extension of those ACA subsidies could actually worsen inflation, as Reason’s Peter Suderman has explained.

The spending and deficit-reduction items will be funded with a series of proposed tax increases. Politico reports that the bill would impose a 15 percent corporate minimum tax, expand the IRS’ enforcement division (a questionable means for generating revenue, it should be noted), and close a commonly used business tax break for carried interest. The tax changes would generate about $739 billion over the next decade, according to The Washington Post.”

“For today, at least, Joe Manchin seems to have gotten his way.”

Blame Congress for Pandemic Fraud

“The inconvenient truth behind all this fraud and waste is that these government programs never should have been designed as they were. For example, while the federal government justifiably boosted state unemployment benefits at the beginning of the pandemic, it was irresponsible to enhance the benefits by $600 a week. As a result, 76 percent of the individuals who received such benefits were making more by not working than by working. It was also irresponsible to extend the program long after the economy reopened and resumed growing.

The same is true of the overly generous three rounds of $1,200, $600, and $1,400 individual payments paid to people who either already received the enhanced unemployment benefits or who never lost their jobs. Most recipients of these funds didn’t need them. In fact, only 15 percent of people who received the first round of checks said they had spent it or planned to spend it. And there were other benefits on top of these checks.”

“This non-fraudulent spending is now helping to fuel inflation.

Then, you have the money dispensed to corporations. In one way or another, that spending made up a huge share of the COVID-19 relief. Indeed, whether through the airline bailouts or the Payroll Protection Program, shareholders collected trillions of dollars in government handouts they didn’t need. Most of the PPP funding, for example, went to companies whose workers were never at risk of losing their jobs since they were well-suited to work from home.”

“billions of dollars went to state and local governments, including for schools that stayed closed, even though many of these governments’ revenue growth equaled or exceeded pre-pandemic levels.

Of course there was some fraud, but the malfeasance happened only because the programs were created in the first place and designed to go to everyone regardless of need. This reckless “design” is the true scandal.”

Greg Abbott Spent $1,400 a Head To Bus Migrants to D.C. for a Political Stunt

“In early April, Texas Gov. Greg Abbott unveiled a controversial plan to send buses full of undocumented immigrants to Washington, D.C. The policy, Abbott said, would “help local officials whose communities are being overwhelmed by hordes of illegal immigrants.”

But it turns out those communities might be stuck footing the hefty bill for Abbott’s busing scheme. According to state records obtained by Dallas–Fort Worth’s NBC 5, bussing costs came out to over $1.6 million in April and May. With 1,154 migrants transported during that period, the per-rider cost was roughly $1,400.

That’s far more expensive than a commercial bus or train ticket would’ve cost—a one-way journey from El Paso, Texas, to Washington, D.C., runs somewhere between $200 and $300 as of this article’s writing. It’s also more expensive than a first-class plane ticket from a border town to Washington, which NBC 5 reported ranged between $800 and $900. And it’s more than the public spends on average to transport a student to school for an entire school year.

NBC 5 notes that costs are so high in part because the state has hired security guards to staff each bus.”

“Costs are further inflated by the fact that buses drive back to Texas from Washington empty, having dropped off their passengers. Texas, however, gets billed for all total mileage.”

“Abbott’s busing plan is by no mean his only expensive anti-immigrant endeavor. He vowed last year to build a wall along his state’s border with Mexico, initially transferring $250 million in state revenues to the project as a “down payment.” A donation page for the wall has collected $55,322,273 as of May 27—unlikely to make a significant dent, given that a section of former President Donald Trump’s border wall in Texas came out to $27 million a mile. Abbott’s border-securing mission, Operation Lone Star, costs taxpayers over $2.5 million per week. That effort also left hundreds of migrants in pretrial detention for weeks or months over misdemeanor trespassing charges”

Government Employees Got $872 Million in Bonuses Out of COVID Aid Cash

“The widespread use of COVID relief funds to line the wallets of public employees should also raise even more questions about whether a federal bailout of state and local governments was necessary. Expected revenue shortfalls in state and local tax coffers never materialized—and many states emerged from the pandemic with surpluses instead.

States have until the end of 2024 to spend the federal aid distributed as part of the American Rescue Plan, so the totals reported so far (the Treasury’s tracker has been updated to include spending through December 31 of last year) could increase.

In an analysis of the spending published last month, the Treasury notes that state and local governments spent $5 billion of their federal COVID aid on “worker support,” a category that includes those bonuses along with things like unemployment payments and job training. That’s the same amount of money that states and local governments reported using for actual COVID relief—a category that includes “vaccinations, testing, contact tracing, PPE, prevention in congregate facilities, medical expenses, and other public health measures.””

The American Rescue Plan Bailed Out Unprofitable Government-Owned Golf Courses

“An unnecessary federal bailout of state and local governments has given an undeserved mulligan to some money-losing government-owned golf courses.

That’s despite the fact that some of those same courses reported an increase in customers during the COVID-19 pandemic. According to reports submitted to the Treasury Department and reviewed by Reason, Union County, New Jersey, has committed $929,000 of its federal COVID funds to a pair of county-owned golf courses: Galloping Hill and Ash Brook. That spending will help the courses cover “costs associated with increased use” as a result of “an increase in play at county golf courses due to the COVID-19 pandemic.”

That’s the sort of problem that many private businesses would probably love to have. Either as the result of government-imposed lockdowns or changes in consumer behavior during the pandemic, recreational spending on restaurants, bars, concert venues, and theaters plummeted. If that made golfing—an outdoor, socially distanced activity—more popular, why should taxpayers now have to bail out a business that got more successful?”

“In a report published earlier this year, the Reason Foundation (the nonprofit that publishes this website) found that 155 local governments lost a combined $61 million by running golf courses during their 2020 fiscal years. One of the biggest losers was Thousand Oaks, California, which lost a staggering $800,023 on a single city-owned golf course in 2020.

Naturally, that course got a piece of the federal bailout too. The Treasury Department’s tracker of American Rescue Plan spending shows that Thousand Oaks plans to spend more than $14 million on “revenue replacement” on a variety of items, including “city-owned theatres and golf course.” It’s not clear from the data provided to the Treasury Department how much of that money will be spent on the golf course (nor is it clear why the city owns multiple theaters, but that’s for another day).”

“”Congress really put taxpayers in the rough,” says Tom Schatz, president of Citizens Against Government Waste, a fiscally conservative nonprofit. He says Congress should have placed stricter limits on how the $350 billion state and local government bailout could be used.

Those funds were included in the $1.9 trillion American Rescue Plan, passed by Congress in March 2021, and were ostensibly meant to cover pandemic-related public health costs or to offset lost tax revenue due to the economic consequences of COVID-19. Even before the law was passed, there were questions about whether such a large bailout of state and local tax coffers was necessary or prudent.

It seems to have been neither, as most governments did not experience a significant revenue shortfall due to the pandemic. Now flush with extra cash from Washington and few restrictions on how to use it, some state and local governments are blowing the money on pet projects like government-owned golf courses and bonuses for government workers”

“Other obviously vital public health costs being covered by the American Rescue Plan’s local government bailout fund include the planting of new trees “including ash, spruce, maple, pine, [and] cherry” and the installation of a new irrigation system at a government-owned golf course in Elmira, New York, according to Treasury Department data. That’ll burn through $1.2 million of federal funds.

In Lexington, Kentucky, a government-owned course that brags about containing “the longest par-5” hole in the state, will be getting a new irrigation system with the help of more than $1.3 million from the federal bailout. The course is already “a local favorite and an attraction to visitors,” the county wrote in its project summary submitted to the Treasury Department, but the desired upgrades haven’t been made due to a lack of funding from the local government.”

Do We Really Need 100 Different Federal Programs To Fund Broadband?

“President Joe Biden’s bipartisan infrastructure bill apportioned $1.2 trillion for such projects as roads, bridges, and airports. But it also designated $65 billion “to help ensure that every American has access to reliable high-speed internet” by funding broadband expansion. This included a $45 billion “Internet for All” program, under which Biden pledged to expand broadband access to all Americans by 2030.

But this was not the first tranche of federal funds dedicated to expanding internet access: The 2009 stimulus bill allocated more than $7 billion toward broadband grants for rural areas, and expenditures have grown since. A new report from the Government Accountability Office (GAO) shows that the return on that investment has been underwhelming.

The report, titled “Broadband: National Strategy Needed to Guide Federal Efforts to Reduce Digital Divide,” was released…Based on Biden’s pledge of getting to universal broadband access by the end of the decade, the GAO studied the government’s current broadband programs and expenditures, looking for shortcomings or areas of improvement.

What it found was a jumbled mess.

“Federal broadband efforts are fragmented and overlapping,” with “at least 133” programs “administered by 15 agencies,” the report found. These agencies varied widely, with the three largest being the Federal Communications Commission (FCC), the U.S. Department of Agriculture (USDA), and the National Telecommunications and Information Administration (NTIA), which is part of the Department of Commerce. Between FY 2015 and FY 2020, these programs collectively dispensed at least $44 billion in broadband assistance.

In practice, so many programs from so many agencies all pursuing the same goal leads inevitably to waste. In one case the report cites, “multiple providers received funding from different programs to deploy broadband to the same county in Minnesota.” If the goal of the federal broadband effort is to expand into areas that lack access, then there is no reason to fund multiple providers in the same area.”

“Overall, the report determined, “The U.S. broadband efforts are not guided by a national strategy with clear roles, goals, objectives, and performance measures.””

“A previous GAO report noted that while the federal government invested over $47 billion in rural broadband infrastructure between 2009 and 2017, the broadband industry invested $795 billion over the same period. To the extent that federal funding would ever be necessary, it would be to fill in any gaps the private sector was unable to cover.

“The problem is the Biden administration is prioritizing the government being the provider,” rather than the private sector, says Swarztrauber. “The rhetoric is all about how we should prioritize the local government being the owner and operator of the network.”

In the past, such plans consistently lead to higher costs, corrupt bidding processes, and technology inferior to what’s offered by the private sector. But the Biden administration is moving full steam ahead, with NTIA Administrator Alan Davidson saying last month that his agency would “press” states to allow more municipal broadband programs.”

A $4.4 billion US destroyer was touted as one of the most advanced ships in the world. Take a look at the USS Zumwalt, which has since been called a ‘failed ship concept.’

“Despite their cost, the Zumwalts have been plagued by equipment problems. Soon after its commissioning in 2016, the USS Zumwalt broke down in the Panama Canal. The second ship in its class, the USS Michael Monsoor, failed during sea trials the following year.

As a 2018 report from Military Watch Magazine noted the Zumwalts “suffered from poorly functioning weapons, stalling engines, and an underperformance in their stealth capabilities, among other shortcomings.”

“They have almost entirely failed to fulfill the originally intended role of multipurpose destroyer warships, while the scale of cost overruns alone brings the viability of the program into question even if the destroyers were able to function as intended,” the outlet said.

The Zumwalts lack several vital features, including anti-ship missiles, anti-submarine torpedoes, and long-range area-air defense missiles, the military expert Sebastian Roblin wrote in a 2021 National Interest article. Roblin called the destroyers an “ambitious but failed ship concept.”

And, noted Roblin, their weaponry wasn’t cheap. The ship’s long-range land-attack projectile guided shells cost roughly $800,000 each — about the same price as a cruise missile. The munitions were eventually canceled, considered too pricey to merit producing.

Roblin said the Zumwalt was produced based on “unrealistic” estimates that banked on minimal cost, despite coming in 50% over budget.”

The V.A. Bought 10,000 iPhones for Veterans. 8,544 of Them Were Never Used.

“The U.S. Department of Veterans Affairs (V.A.) lost nearly $2.4 million on data plans for iPhones and iPads that were supposed to help homeless veterans connect to telehealth services. Ultimately, 85 percent of the iPhones meant to be loaned went unused and remained in storage one year after their purchase, according to a new inspector general’s report.

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the V.A. received $14.4 billion to be used on health services for homeless veterans and those at risk of becoming homeless. A chunk of that money went to the department’s Office of Connected Care, which has loaned communications devices to veterans since 2014 so they can access telehealth services.

Connected Care launched a new program in the summer of 2020 that loans iPhones and iPads, equipped with prepaid 12-month data plans, to veterans. Officials spent $63 million on 80,930 iPads and $8.1 million on 10,000 iPhones during FY 2020 and the first two quarters of FY 2021.

“Connected Care’s procedures led to excessive wasted data plans while the iPads and iPhones remained in storage,” according to the report. In July 2021, one year after their initial purchase, “8,544 iPhones (85 percent) remained in storage.” In addition to the money lost on buying phones that went unused, the V.A. also wasted cash on unused data plans. Because contractors activated data plans before shipment to the V.A. and not upon delivery to veterans, the agency lost roughly $1.8 million on data for iPhones and $571,000 on data for iPads as the devices sat in storage.

“This occurred because Connected Care officials were not able to identify the quantity needed for the targeted veteran population because of uncertainties associated with COVID-19 and the lack of data on the quantity needed for a new initiative,” concluded the report. Ultimately, demand for iPhones “was much lower than anticipated”—but the V.A. failed to predict this prior to its purchases and did not take sufficient corrective actions along the way. Excess devices ended up getting shuffled to a separate office within the department for distribution to homeless veterans, but not before losing the V.A. millions of dollars simply by sitting on shelves.”

Biden’s Plan for Reducing Inflation Will Actually Make It Worse

“Writing in The Wall Street Journal, the president outlined three policy choices to deal with an inflation caused, he seems to believe, largely by pandemic-related supply-chain obstructions and intensified by the war in Ukraine. His plan is simple: Continue to trust that one of the main architects of our current inflation, Federal Reserve Chairman Jerome Powell, will raise interest rates fast and high enough to tame inflation without crashing the economy, dispense more subsidies and tax credits, and let the deficit melt away—by some miracle—without cutting spending.

Absent from the piece is any acknowledgement of what readers of this column know all too well: that inflation was fueled by Biden’s own reckless spending policies, especially the $1.9 trillion American Rescue Plan passed in March 2021. Half a dozen or so studies have shown that fiscal policies implemented during COVID-19 are a main culprit behind today’s inflation. Biden also fails to mention the Fed’s overly accommodating monetary policy and its current slow response to inflation.

In other words, the president’s argument is amazing for its tone-deafness, inconsistent thinking, and sheer economic ignorance.”

The $1.7 Trillion F-35 Fighter Jet Program Is About To Get More Expensive

“The GAO notes that it would be more cost-efficient to hold off on buying F-35s until they are operationally tested than it would be to pay for the aircraft now and upgrade them later.

But, of course, when did cost efficiency and the military go hand-in-hand? There’s a reason Lockheed Martin brags about building parts of the F-35 in 48 different states, and that’s not because it saves money. The F-35 has been as much an expensive make-work program for military contractors as it has been a vital part of America’s national defense—and in that regard the cost overruns and eventual upgrades might be seen as a feature rather than a bug.

Production of the F-35 fighter was originally supposed to cost about $200 billion, but the price tag has already ballooned to about twice as much. Recently, Lockheed Martin warned that supply chain issues and inflation could cause further delays and cost overruns. Monday’s GAO report confirmed that construction is running behind schedule, with about 28 percent of the 553 completed jets having been delivered late.”