On April 4th I published an article on my blog entitled POLITICAL PORK, YOUR TAX DOLLARS AT WORK. In that article I pointed out over $100 billion of democrat goodies that are completely unrelated to COVID-19 relief. Some examples to refresh you memories: $300M for migrant and refugee assistance, $90M for the Peace Corp, $526M grants to Amtrak, $1B for more Obamaphones, $3B upgrade for IT at the VA, $25B for transit infrastructure, $15B for the Community Development Fund, $9.5B for higher education.
Little did we know that Speaker Pelosi was just getting started with her wish list. The $3 trillion HEROES Act, which stands for the Health and Economic Recovery Omnibus Emergency Solutions Act, passed the House on 15 May.
The passage of this bill was likely the most egregious application of power politics in our history. The Pelosi power machine was at full-throttle. While the Senate reconvened 1 May after the spring break, Pelosi left the Representatives home while she put together the bill. Upon completion, she reconvened the House for an immediate up-or-down vote.
What, do you suppose, were the Representatives’ most likely thoughts before they voted? It might have been, I wonder what the bill says? Didn’t they read the bill before voting? Unlikely since it is 1,800 pages long. Well, at least the executive summary? It’s 90 pages.
What did not happen before the vote was the meeting of a single House committee to consider the provisions of the most expensive bill in history and take into account expert witness’ views. Not a single amendment or input from republicans was allowed. The bill passed along partisan lines.
But I digress; this article is about more political pork and democrat platform issues.
A couple of examples: First the Act forbids the government from sharing any information with you about lower-cost health options such as association plans; some of which are up to 60% cheaper than Obamacare.
Secondly, the bill dictates voting by mail to the states. While voting by mail exists in five states there are horrific down-sides. Because the ballot is cast outside the public eye there is concern for coercion by family members and others.
Voter registration rolls are notoriously inaccurate, containing names of voters who are deceased, have moved, or otherwise have become ineligible. In 2018, California was sued over maintaining 1.5 million inactive voter files.
But the principle piece of pork is a doozie; It directs nearly $1 trillion to state and local governments, including $500 billion for state governments and an additional $357 billion for local governments and counties, mostly in the form of unrestricted aid that doesn’t need to be used to offset coronavirus costs.
Let me take a shot at restating the intent of the trillion dollars for indebted state and local governments. It goes something like this: lets add a trillion dollars to the federal debt so that certain state and local governments can get out from under most of their debt, they can continue with their irresponsible fiscal policies and can have all the nation’s tax payers pay for it.
Just for a moment, stop and think about the precedent this sets for the future. Scary.
One trillion dollars, easy to say, more difficult to comprehend. If you were to spend one dollar per second, it would take you over 32,000 years to spend one trillion dollars.
On 18 May the Wall Street Journal Editorial Board provided some insightful thoughts on fiscal responsibility by comparing the states of New York and Florida.
The leading lobbyist for Pelosi’s plan is New York’s Governor Andrew Cuomo. His antagonist is Florida Senator and former Governor Rick Scott. Both were first elected governor in 2010. The comparison of their economic planning and fiscal management during the 2010-2019 time-frame tells an enlightening story.
In 2010 NY population was 19.4 million, FL was 18.8. While FL population grew 2.7 million, 2010-2019, NY increased by only 75 thousand.
NY has increased spending by $43 billion since 2010 about $570,000 for each additional person while the FL budget has increased by $28 billion, a $10,400 increase per new resident.
While NY has a top state and local tax rate of 12.7%, FL has no income tax. NY has a growing budget deficit while Scott inherited a large deficit in 2010, but paid down state debt and built a surplus. The difference is spending.
For example, NY spending on worker retirement benefits has nearly doubled since 2010 and is six times greater that FL. The cost to service the NY debt has doubled.
New York state and local government debt in 2010 was $317 billion. By 2019 the total has grown to $374 billion and is expected to be $433 billion by 2023.
NY’s biggest cost driver is Medicaid, 40% of the state budget and twice what it spends on education. By comparison FL spends equal amounts on schools and Medicaid.
NY spends about $76 billion a year on Medicaid, three times more than FL.
NY spends about twice as much per Medicaid beneficiary and six times more on nursing homes as Fl though its elderly population is 20% smaller.
NY spending on Medicaid has squeezed spending on transportation causing trains and roads to fall into disrepair. Conversely FL has increased transportation spending ten times more than NY between 2010 and 2019.
Many high-earning individuals are leaving the high taxes of NY. NY lost $9.6 billion in adjusted gross income to other states in 2018 while FL gained $16 billion.
The rate of private job growth in FL has been about 60% higher than in NY from 2010 to 2020. Finance jobs expanded by 25% in FL compared to 9.7%in NY.
The awful truth is we may never be able to pay down this new $1 trillion in federal debt, but every year taxpayers have to service the debt. The policy question here is why taxpayers in FL and other well-managed states should pay higher taxes to rescue a NY political class that refuses to restrain its tax-and-spend governance.
Oh, and lets not forget about Illinois with over $200 billion indebtedness for pensions and health insurance benefits alone. And then there are those democrats in California who have worked up a whopping $1.5 trillion in state and local government debt.
You, the taxpayer, have a choice here. One, you can believe how Speaker Pilose described the bill to the House membership just before they voted, saying, “This is a very strategically planned piece of legislation that is tailored strictly to meet the needs of the American people regarding the coronavirus pandemic. To do anything less would not be responsible.”
Or you can remind yourself it is never a good idea to take Speaker Pelosi at her word, “……. STRICKLY TO MEET THE NEEDS OF THE AMERICAN PEOPLE REGARDING THE CORONAVIRUS PANDEMIC.” Really?
Lieutenant General, US Army retired, Marvin L. Covault is the author of Vision to Execution, a book for leaders