The $3.5 trillion spending plan from President Biden is at risk in Congress partly because $3.5 trillion strikes people as a lot of money. Which, of course, it is. But the net cost of the plan, after taking into account offsetting tax increases and spending cuts, is only one-quarter as big.
Sharon Parrott, president of the Center on Budget and Policy Priorities, a left-of-center think tank, is urging people to stop focusing on the $3.5 trillion label.
In an Aug. 31 commentary, she wrote that if Donald Trump’s signature legislative achievement, the Tax Cuts and Jobs Act of 2017, had been measured the same way as Biden’s plan is being calculated, it would have been called a $5.5 trillion package. It never was — it was described appropriately as a $1.5 trillion piece of legislation (later revised by the nonpartisan Congressional Budget Office to $1.9 trillion) — because Republicans and Democrats alike took into account that the Trump bill contained offsetting tax increases and spending cuts.
Parrott argued that the number associated with the Biden spending bill should likewise reflect offsetting tax increases and spending cuts. “When considering the cost of legislation, the net effect, not just the investment or tax cut side of the ledger, matters most,” she wrote.
Since she wrote that commentary there has been a lot of negotiating in Congress over “pay-fors” — the spending cuts and tax increases required to make the Biden bill palatable to the likes of Senators Kyrsten Sinema of Arizona and Joe Manchin of West Virginia, moderate Democrats whose support will be required for the bill to get through the Senate under reconciliation procedures.
I interviewed Chuck Marr, senior director of tax policy at the Center on Budget and Policy Priorities, about the horse-trading. He didn’t blame the media or Republicans for emphasizing the $3.5 trillion number, saying it originated with the bill’s Democratic sponsors.
“It became the number everyone goes with,” Marr said. “As it gets repeated and put in stories, it morphs into describing the fiscal impact of it, which is not what it is.”
Like Parrott, Marr recommended we use a number that describes the net fiscal impact of the bill. That would be more like $871 billion. That’s the estimate provided by the congressional Joint Committee on Taxation in a report released on Sept. 13.
Parrott made another important point in her Aug. 31 commentary, which is that the Biden bill should be judged on its merits, not just on its fiscal impact. Though less debt is generally preferable to more debt, she argued, “reasonable additional debt” is welcome if it funds smart investments that “improve well-being, bolster the economy and help more children reach their full potential.”
That’s true. If a bill is good for America, the way it gets paid for is a secondary consideration.
The Black populations of New York, Chicago and Los Angeles decreased from 2010 to 2020, while the Black populations of Atlanta, Houston and Dallas grew. The Latino and Hispanic populations grew 23 percent nationwide over the decade, registering rapid expansion in such Pennsylvania cities as Pittsburgh, Scranton and Harrisburg. The Asian American population of Omaha, Neb., nearly doubled over the decade. The white population grew in Phoenix, Denver and Nashville, as well as in Austin, Tex., and Raleigh, N.C., but declined in the United States as a whole.
Those are some of the findings of a Sept. 21 report by William Frey, a demographer and senior fellow at the Brookings Institution. Frey writes that “white population losses on America’s coasts and much of its northern interior are being countered by the growth of different groups of color.”
Quote of the day
“Can you believe that? That no matter where you stand, no matter how much popularity you have, no matter how much education you have, no matter how much money you have, you have it because somebody in this universe helped you to get it. And when you see that, you can’t be arrogant, you can’t be supercilious. You discover that you have your position because of the events of history and because of individuals in the background making it possible for you to stand there.”
— The Rev. Dr. Martin Luther King Jr., “Conquering Self-Centeredness” (1957)
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