ENTITLEMENTS, WELFARE, and TAXES vs THE AMERICAN DREAM

If you stood on a street corner handing out dollar bills, one dollar every second, you would have to stand there 12,600 years to dispense 400 billion dollars. “A billion here, a billion there, and pretty soon you’re talking about real money” is famously attributed to Senator Everett Dirksen in the 1960s. Times have certainly changed, now politicians throw around trillion-dollar figures like it is of little consequence.  I will get back to the $400 billion story shortly.

Since the Biden inauguration we have been deluged with progressive plans:  The American Rescue Plan, The American Family Plan, The American Jobs Plan.  Good public relations titles but what do they mean and where are they taking us?

THE AMERICAN RESCUE PLAN, $1.9 trillion, over 600 pages:  The Biden administration led us to believe it was to stimulate the economy, fight COVID-19 and help those most in need.  Keep in mind that this was the third act by Congress to address pandemic issues.  The CARES Act, March 2020 authorized $2 trillion to do deal with COVID-19 relief.  And in December 2020 Congress added another $833 billion.

Why the March 2021 American Rescue Plan?  The US economy was not in recession, unemployment had fallen to 6.2%. There was no economic crisis to alleviate and only about 75% of the previous $2.8 trillion COVID relief had been spent.  It is estimated that 95% of the March 2021 “relief” package will actually be spent after 2021, after the economy has recovered and after unemployment drops further.  And, as we have discovered, the “relief” in terms of increased unemployment benefits has become a plague to small businesses who are again open for business but cannot find enough workers. 

One example of questionable “rescue” in The American Rescue Plan is child tax credit rescue.  $3,600 for each child under age 6; for each child ages 6 to 16, it’s increased from $2,000 to $3,000. It also makes 17-year-olds eligible for the $3,000 credit. This includes families making $150,000 per year.  This is not a “safety net” for the poor, it is designed to pull the middle class into a dependency mind-set for government handouts.

What we now know is the American Rescue Plan was just the beginning of a colossal spending spree by the Biden Administration and the Democrat -controlled Congress.   

AMERICAN FAMILIES PLAN, $1.8 trillion dollars:  Generally, it includes four new programs:  1) Two years of free pre-kindergarten; 2) Virtually free child care for everyone; 3) Paid family and medical leave; 4) Two years of free community college.  Three comments:

First of all, they are not “free”. Second, President Biden’s sales pitch is that, “they will create jobs and growth”.  How?  Third, the defining word never used by the proponents is “entitlements” but that is what they are or will become. Entitlements can be a scourge on the nation forever.

• Entitlements always start small but rapidly grow.  Medicaid was once a safety-net program but now, for example, covers 37% of Californians. Medicare started as a program for seniors; democrats now want to cover everyone over age 55 while the socialists want Medicare for all.  Social security benefits have steadily increased since the program began in 1935. Food stamps and nutrition programs started as help for the poor, now cover tens of millions.

• In 2019 entitlements consumed 56% of the federal budget. The Congressional Budget Office tells us spending on the three big entitlements, Social Security, Medicare, and Medicaid, is growing unchecked on autopilot. By 2028, spending on these programs will claim over 73 percent of all federal revenues. These programs are simply unsustainable in their current form and the new entitlements in President Biden’s expanded welfare-state will exacerbate the whole entitlement issue.  

• Another downside is that the growth of entitlements will, without fail, negatively impact financing for national security issues such as military readiness. For example, at the end of the Obama/Biden administrations the US Army had exactly one “fully combat ready” brigade and 50% of Air Force and Navy combat aircraft could not get off the ground.

• Entitlement reform is a recurring Congressional idea but it just never happens.

THE AMERICAN JOBS PLAN, aka the Infrastructure Bill, $2.3 trillion, from a 12,000-page White House fact sheet:   The Biden administration says the plan, “….is a historic investment that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China”. 

Infrastructure as many people think of it (construction or improvement of bridges, highways, roads, ports, waterways, and airports) accounts for only about $157 billion, or 7%, of the plan’s estimated cost. So, what is the other 93%? Here are some examples.

$400 billion to solidify community-based care for aging and disabled Americans. Please go back to the opening paragraph to get reacquainted with what $400 billion dollars represents. My purpose here is not to debate the merits or deficiencies of the proposed program but rather to point out that a US commitment to spend $400 billion should not be buried inside an infrastructure or any other bill.  Where is the committees’ reports on this?  Where is the input from experts testifying before those committees?  Is there any national debate or polling on the issue? What are the reasons for not having this as a stand-alone bill? Have those voting on the bill even read it?  What the hell has happened to the legislative process? 

$300 billion would give targeted aid to manufacturers and small businesses across industries, regardless of any infrastructure connection. Ditto the questions in the previous paragraph. 

$180 billion for public investment in technology and research and development including $50 billion for the National Science Foundation to establish a “technology directorate”.  This is not about infrastructure.  Again, if worthy, write a stand-alone bill and debate it.

Additionally, the fact sheet says the plan “tackles inequities based on gender,” though it doesn’t say how. 

An added note on the Jobs Plan, aka the Infrastructure Bill, $2.3 trillion:  The infrastructure plan in the Senate has, for some time, been undergoing bipartisan negotiations; meaning Republican Senators are insisting the Democrats strip out various tax and spending proposals that have nothing to do with “infrastructure”.  While the Democrats are agreeing to some of the Republican demands, the issues being weeded out are being stuffed into the Democrat’s follow-on $3.5 trillion dollar budget reconciliation bill. That turn of events is what has prompted Speaker Pelosi to insist that the House will not vote on an Infrastructure Bill until the $3.5 Budget Reconciliation Bill has also passed the Senate.  The Democrats want it all and have figured out how to make it happen. 

THE $3.5 BUDGET RECONCILIATION BILL:  As if all of the above is not a disaster in the making, President Biden and Congressional Democrats have come to an agreement on an additional $3.5 trillion budget package. They are calling it the “Human Infrastructure” budget proposal.

If passed it would be the largest budget in US history. The broad provisions address climate change and expanded Medicare.  Included would be federally-funded child care, home care, housing investments as well as a $120 billion “pathway to citizenship for the millions of illegal immigrants”; aka amnesty.  One hundred and twenty billion dollars!!

Amnesty for illegal immigrants has the potential to become the largest domestic disaster in our history.  The signal amnesty would send around the world would unleash a stampede of millions to US borders. Amnesty would set a precedent and precedent is a powerful force that once put in place cannot be erased in the minds of those planning to be physically in the US and in line for the second round of amnesty. 

Included in the $3.5 trillion package would be an unleashing of major elements of the Green New Deal. These initiatives would likely ravage the existing fossil fuels industry prematurely and, experts believe, result in severe power shortages across America. 

The Democrats expect to get the $3.5 trillion package through Congress by using a back-door provision.  That is, rather than try to get 60 votes in the Senate this bill will be processed as “budget reconciliation”. As opposed to needing 60 votes reconciliation bills need only a simple majority. This bill is expected to pass the House by a party majority and the Senate with the Vice President breaking the 50-50 party tie.

WHERE ARE THE RESCUE PLAN, FAMILY PLAN, JOBS PLAN AND THE 3.5 TRILLION DOLLAR PLAN TAKING US AND WHAT ARE THE CONSEQUENCES?

• This array of Democrat proposals represents the largest re-working of the American economy and federal funding since FDR’s New Deal. 

• This incomprehensible amount of money must come from somewhere and that is from American taxpayers.  But “soaking the rich”, increased capital gains tax, increased corporate taxes, wealth taxes, death taxes and ultimately taxing the middle-class etc. are not without downsides for the country.  The current inflation spike is driving up every-day costs for all Americans and is considered by many economists to be a direct result of this reckless spending.

• All of the thousands of individual programs in these legislative actions will automatically require thousands of pages of new government regulations which will in turn require thousands of bureaucrats in new and/or larger government departments and agencies.

• “Government mandated” will become the everyday bi-line for Americans with out-of-control regulatory restrictions and unfathomable bureaucratic oversight for everyone, every day.  Initiative, innovation and the American dream has guided us to the top of the world in terms of opportunity, standard of living, freedom and justice.  All of that is in jeopardy with big-government becoming out-of-control bigger.

• In a welfare-state, disincentivized upward mobility and equity become the norm, displacing the freedom to be all you can be.

• Americans will find themselves, at every stage in their lives, passing from one set of government controls to another.  

• The Congressional Budget Office has pointed out that federal investment is grossly inefficient. It produces half the return of private sector investment and it reduces state and local government investment that otherwise would come into play

• In 2019, pre-pandemic median household income grew 6.8% with higher increases among blacks, Hispanics, Asians and women. Unemployment for these classes hit historic lows. The Democrat’s socialist economic growth-inhibitor agenda will kill all of that momentum.

• The pandemic has provided new insights into Americans, one of the most revealing is that a government check can disincentivize millions from going back to work.

• “Tax and spend” was the baseline for the Obama/Biden administration for eight years and it was an economic disaster. When the economy is over-regulated, over-supervised and over-taxed there will always be very limited GDP growth.  When the economy grows everyone wins.  In 2017 taxes were cut, deregulation was set in motion, the economy grew, wages went up, family income went up, unemployment hit historic lows for minorities and women.  This resulted in the greatest federal revenue in history in 2019.  Growth, not increased taxation is the path to success. 

Marvin L. Covault, Lt Gen US Army, retired, is the author of VISION TO EXECUTION, a book for leaders, a columnist for THE PILOT, a national award-winning local newspaper in Southern Pines, NC and the author of a blog, WeThePeopleSpeaking.com.