July 16, 2021

Senate Budget Agreement

“Senate Democrats announced late Tuesday that they’d reached a budget agreement envisioning spending an enormous $3.5 trillion over the coming decade, paving the way for their drive to pour federal resources into climate change, health care and family-service programs sought by President Joe Biden… Together with a slimmer, $1 trillion bipartisan effort of traditional road, highway and public works also being negotiated, [the bills] represent close to the president’s initial $4 trillion-plus effort that could reach almost every corner of the country.” AP News

The plan is still being finalized but currently includes:

  • Extending the child tax credit
  • Funding for clean energy and reductions in carbon emissions
  • Universal pre-K, childcare, and community college
  • Expand Medicare to include dental, vision, and hearing coverage


Here’s our recent coverage of the bipartisan infrastructure deal. The Flip Side

See past issues

From the Left

The left is supportive of the plan, arguing that it addresses important needs and that many of its programs are popular.

“Rising sea levels and intensifying wildfires and torrential rains threaten roads, homes, buildings, power grids and water systems. Our infrastructure needs to be updated to prepare for this age of climate calamity, and the investments in both bills will most likely help fund those updates. If you need proof of the need, just look at Detroit, where a rainstorm submerged an Interstate highway last month, or at Portland, Ore., where a heat wave a few days later buckled streets and melted power cables…

“The federal government has offered money for projects that can help ameliorate the impact of climate change, from storm surge barriers along the Miami coast to fire-resistant retrofitting in California. In some places, the best policy is just to move people out of the way, as the Federal Emergency Management Agency and other agencies have done for thousands of households in the Houston area…

“A 2018 study suggests that for every dollar the government spends on disaster preparation, it prevents six dollars in future damage. Since the federal government is principally responsible for distributing aid after disasters, such spending will save a great deal of money in the long run.”
Jake Bittle, New York Times

“If [the bill] should pass in its current form, [Democrats will] have plenty to brag about, from improvements to roads, bridges, water systems and broadband, to expanded Medicare benefits, providing health coverage for more low- and moderate-income people, creating a vital clean energy standard and investing in climate change mitigation, creating universal pre-K and much more. But no matter how widespread and popular those benefits prove to be, don’t expect the public to rush to Biden’s side…

“The covid-19 relief bill Biden signed in March shows the limited effect policy has to change the basic political situation. The bill itself was extremely popular: Public support for it regularly topped 60 and even 70 percent. But that didn’t change many minds about Biden himself. Right before the bill’s passage, Biden’s approval rating averaged 53 percent. A month later it was 54 percent. Two months later, also 54 percent. Today it’s around 52 percent. In other words, Biden kept a campaign promise and signed a popular bill that literally sent people thousands of dollars, and his popularity barely budged.”
Paul Waldman, Washington Post

“‘Over the last 16 months, since the formal beginning of the pandemic lockdown, the combined wealth of 713 U.S. billionaires has surged by $1.8 trillion, a gain of almost 60 percent’… 64 percent of voters agreed that ‘the very rich should contribute an extra share of their total wealth each year to support public programs.’…

That’s how to sell this budget, and the bigger budgets that will be needed to create a fair and functional United States. Democrats should not be cautious. They should boldly declare, as did Franklin Roosevelt at the height of his personal and political popularity, that it is time to tax the rich. ‘People know that vast personal incomes come not only through the effort or ability or luck of those who receive them, but also because of the opportunities for advantage which Government itself contributes,’ said FDR in 1935. ‘Therefore, the duty rests upon the Government to restrict such incomes by very high taxes.’”
John Nichols, The Nation

Some, however, note that “The actual duration of each program is unspecified; so are the offsetting tax increases and spending reductions. A document released by the Budget Committee Wednesday alluded to savings on prescription drugs, presumably by allowing Medicare to negotiate with pharmaceutical makers, along with ‘tax reform’ for corporations and high income individuals and ‘tax enforcement’ — the last being the same pot of money that’s already being tapped for a separate bipartisan infrastructure bill. Even less credibly, the plan relies on ‘long-term economic growth.’…

It’s going to be expensive to meet the country’s health, child care, education and climate goals. Democrats should stop pretending that they can be financed by taxing no one but the one percent.”
Editorial Board, Washington Post

From the Right

The right is critical of the plan, arguing that a massive increase in spending is unwise given increasing inflation.

The right is critical of the plan, arguing that a massive increase in spending is unwise given increasing inflation.

“The plan represents some slight progress: It doesn’t come close to Sen. Bernie Sanders’ desire for $6 trillion or even President Joe Biden’s proposal of just under $5 trillion. But it’s still a huge amount of cash, the largest rise in federal spending ever, and the new programs would mean a permanent increase in annual outlays, even beyond the sticker price — which means new, eternal burdens on taxpayers

“It also follows trillions in spending Democrats have already rammed through in Biden’s early months as president — which has sent inflation soaring: June’s Consumer Price Index jumped 5.4 percent from the year before, the biggest rise since August 2008, right before the financial crisis and following recession…

“Sanders is right to say, ‘What we are trying to do is transformative’ — which makes it particularly bizarre that the plan is to pass the bill using reconciliation, which is meant for emergency revisions to spending laws, not for remaking the country.”
Editorial Board, New York Post

Why is inflation so out of control? Most blame must go to the government. As round after round of COVID relief was passed by both parties with scant consideration, we warned that government was sending money to chase goods and services that, because of pandemic lockdowns, were no longer being produced in such great numbers. This is the definition of inflation, a growth in the money supply that exceeds growth in the value of goods and services available for purchase…

“The last thing needed now is the Democrats’ proposed $3.5 trillion reconciliation package, a bill that costs more by itself than all combined federal revenues from last year. It is stuffed with irrelevant far-left policies that couldn’t survive politically in a national infrastructure package. It includes such gems as a massive expansion of a Medicare program that is already going bust. Despite their zero-margin control of the Senate, Democrats are governing as though voters had given them a massive majority that justified dispensing with negotiation and bipartisanship.”
Editorial Board, Washington Examiner

“This is precisely the opposite of how good policy is crafted. To intelligently address problems, one should look at the problem first and then design the solution. That’s how any sensible company would conduct its business. In Congress, though, politicians find a dollar amount they can agree on and then figure out afterward how to spend the money…

“The new deal struck by liberal and moderate Senate Democrats was not based on extensive policy research that found that $3.5 trillion is the precise amount of money necessary to solve our health-care and infrastructure problems. The fact that everyone knows virtually no study was conducted shows how inured we’ve become to these types of proposals…

“But it bears repeating that $3.5 trillion is a political number, not an economic one. If this bill passes, it will be because moderate Democrats can stomach spending that much. However, the American people should be unwilling to stomach this wasteful and arbitrary process of spending borrowed money.”
Sean-Michael Pigeon, National Review

“It seems that if this were truly about infrastructure needs, the way to go about it would be to talk to state transportation officials (the ones who actually do most of the infrastructure work in this country) and ask them for a list of projects that need financial assistance. Get cost estimates of each project and accept bids from contractors. Work with state governments to share funding obligations. Put it together into a proposal so that the American people and their elected representatives can debate it on the merits. But that’s a lot of work. Congress isn’t particularly interested in doing a lot of work…

“Democrats have made clear time and again that they don’t really think this is about infrastructure, in any commonly understood sense of the word. They’re just putting together a progressive wish list and hoping the American people don’t notice. Republicans need to make sure the American people notice.”
Dominic Pino, National Review

A libertarian's take

“Consider what it means for something to be fully paid for. If I claimed that I had fully paid for my cocktail bar tab, for example, you would probably assume that I had forked over actual money equivalent to the entire tab… But for Senate Democrats, it probably means something more like producing an estimate showing that, over the next decade or so, drinking cocktails at this particular bar could generate enough money-making ideas to offset the cost of the drinks…maybe minus food items. The cocktails pay for themselves!...

“For decades, Democrats have lampooned similar logic when applied to tax cuts, opposing the GOP-endorsed supply-side logic that tax cuts ‘pay for themselves’ by increasing economic activity and bringing in greater revenue in the long run. Those supply-side effects are real, but they are typically much smaller than the most enthusiastic partisans have hoped; rarely do they fully offset the revenue loss.”
Peter Suderman, Reason

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