In 2010, during a news conference concerning the Affordable Care Act, Speaker Pelosi made perhaps the dumbest statement ever about a piece of pending legislation: “We have to pass the bill so that you can find out what is in it.” And it was only 2700 pages long. Well, she is at it again but this time the issue is exponentially more complicated and dangerous. At issue is the $3.5 trillion reconciliation, democrat-led wish list that is being processed in Congress at warp speed. Congressional committees are rushing through a mark-up in order to meet Pelosi’s scheduled House vote on 27 September.
There are five enormously important individual issues at play right now with the Biden administration and the Congress; 1) how Congress uses and/or abuses its legislative process, 2) entitlements, 3) taxes, 4) debt and 5) the impact on the overall economy. These issues, rolled together, may perhaps in days, not months or years, dictate the future of our country and it’s not a pretty picture.
CONGRESS’ LIES AND DECEPTION: First of all, it is a stretch to believe that this reconciliation method should even be in play. To qualify for passage under reconciliation any provision in the bill is supposed, “to affect the budget in a way that is more than incidental.” There are more and more indications that many of the proposals are not even budget related.
The processing of this bill disregards a couple hundred years of rules, protocols and tradition. Discussions of the specifics of a bill are to begin in the various committees with testimony from expert witnesses in open session laying out the pros and cons of moving forward. Committee members will discuss the issues, offer and debate amendments and finally vote as to whether or not the bill should be brought to the House or Senate floor for further consideration and a vote.
This bill is reportedly about 10,000 pages long. No one will read it. No one will know what all is buried inside the bill. The majority of the issues will not even be exposed before Pelosi’s 27 September vote. The American public will even be more clueless than our elected officials (if that is even possible). Issues costing hundreds of billions of dollars will not see the light of day, perhaps for months after the bill is passed.
Before diving in we should at least ask the question; is it really $3.5 trillion? For sure no one knows the answer because the hundreds of proposals included in the 10,000 pages have not been vetted. There are experts who are now suggesting is could be as much as $5.5 trillion. Let me give you a little perspective on $3.5 and $5.5 trillion. The whole federal budget 2021 was $4.8 trillion and the federal revenue was $3.8 trillion. About $3 trillion of the spending was mandatory entitlement. And now we are talking about a single bill that is potentially larger than an annual budget?
ENTITLEMENTS: The headline issues in the bill that have been reported are expanding Medicare and Medicaid, child care, preschool, more food stamps, 12-week family and medical for all workers and free community college. What do they all have in common? They will become entitlements. Entitlements are dangerous because they have two things in common; the never go away and they grow.
Fifty years ago (when Medicare and Medicaid were new programs) about 36% of federal spending was some form of welfare for individuals as compared with today at about 80%. Now consider the headliners in this bill (more Medicare, more Medicaid, child care, preschool, more food stamps, 12-week family and medical for all workers, and free community college.) These are new entitlements that will grow and not go away. The Congressional Budget Office has previously declared that additional entitlements are “not sustainable.” Where is the Congressional debate, where are the expert witnesses, are these necessary for our country to succeed? At what entitlement percentage point, 85%, 90%, 95%, are we obliged to admit that we live in a welfare state?
One way to describe some of what is supposedly in this bill is to say it is the culmination of Obama’s life-long plan for America. Recall the hot-mike while campaigning for president in 2008; Obama was asked by Joe-the-plumber about his goal for America. Obama summed it up by saying he, “wanted to spread the wealth around.” Well, that is certainly where we are headed .
HOW DO WE PAY FOR A $3.5- $5.5 TRILLION BILL? Taxes, taxes and more taxes. The House Ways and Means and the Senate Finance committees are hard at work putting together the largest tax increase since 1968.
At the top of the list is corporate tax. Before the Trump presidency, U.S. corporate tax was the highest in the developed world and it must be looked at for what it is exactly; it is a cost of producing a product, just like wages and raw materials. And just like every other cost it gets passed on to we-the-people, rich and poor. By extension, a high corporate tax makes us less competitive in the global market place. Trump reduced the tax from 35% to 21% resulting in higher wages, GDP growth and renewed global competitiveness. Biden will increase corporate tax to 31%; congratulation U. S. We will be back to the highest rate among developed nations.
The top income tax rate will go up from 37% to 39.6% and kick in at $400,000 for individuals and $450,000 for married couples. For those making over $5 million, there will be a 3% surcharge. For the high-bracket folks living in California and New York, the governments will be taking about 60% of your income. The fuel for capitalism is investment capital. Where does it come from? From folks who have a lot of money and don’t have a large enough mattress to hide it under. They are the source for investment and what happens when the federal government, through taxes and disincentivization, takes it away? GDP growth is negatively impacted.
Small businesses that pay through the individual tax code will pay the highest rate plus a new 3.8% surtax. The death tax exemption level will be cut in half. Higher tobacco taxes for everyone. And don’ forget about the inflation “tax”; July 2021 prices are 5.4% higher than July 2020. Gas prices are up 40% since Biden took office, which kick-started an inflationary hit on every American because every single thing we buy, at some point, comes out the back of a gas-guzzling truck.
In addition to the tax increases mentioned above that we have been hearing about, Larry Kudlow, in a recent article, succinctly articulated the pending tax assault; “stock buyback tax, a corporate alternative minimum tax, tax on so-called high salaries, tax on CEO pay disparity, a tax on unrealized capital gains, a tax on carried interest, an end to the 20% small business deduction, a tax on estate planning, limits to active business loses, a tax on so called mega retirement accounts, new bank reporting requirements for all depositary inflows and outflows, a plastics excise tax, a carbon tax and a fossil fuel tax,
And with these taxes comes thousands of pages of new regulations and big-government control that will strangle businesses, small and large, taking the economy rapidly into a Carter/Obama/Biden-like stagflation.
Over and over and over we have heard our president emphatically point his finger at us and say, “Anyone…. making…. less….. than….. $400,000 …. will …NOT …… pay …..any …. more…. income…. tax. If he knows that it is a lie but keeps saying it, we are in trouble. Conversely, if he believes it is the truth and keeps saying it, we are in even deeper trouble. As the overall economy slows and inflation spreads across all goods and services, businesses will not support increased wages and the middle class is going to get hammered.
An added note about, “billionaires paying their fair share,” a familiar Biden/Bernie Sanders refrain. According to Forbes there are 724 U.S. billionaires with a collective net worth of about $4.4 trillion. The democrats have lined up $3–$6 trillion in new spending beyond the baseline budget of about $4 trillion. It is impossible to make the numbers work. Assume we just take everything the billionaires have, cash it in and send the check to the feds. It wouldn’t cover the current Biden spending binge and then how do we get the billionaires’ taxes next year? And don’t forget about Bernie Sander’s Medicare for all which is not yet on the Biden/Pelosi/Schumer to-do list.
THE DEBT BOMB: Even before this year’s Biden multi-trillion-dollar spending spree, the federal debt was forecast to reach at least $33 trillion by 2024 and $45 trillion by 2031. We have to service that debt which is currently about $400 billion annually with historically low interest rates. Should the 10-year Treasury rate move to a reasonable 5%, as it was in 2007, the annual interest payment would be about $1.4 trillion. That plus entitlements suck up all the projected revenue. What then do we do about discretionary spending to run the government? That is one reason why the Congressional Budget Office continues to call our national debt “unstainable.”
BIDEN’S “BUILD BACK BETTER”: A White House economic analysis last spring asserted that the U.S. economy can’t grow faster than 1.9% over the long term. The Wall Street Journal concluded that 1.9% growth will, without a doubt, create a disconnect between the rising cost of the Biden entitlement state and a reduced ability to finance it. Where is the “build” and where is the “better” in Biden’s sound-bite economic policy?
The eight-year anemic Obama/Biden economy was lit up by President Trump in 2017. What happened is not rocket science. When taxes were cut, we-the-people had more disposable income and we bought more goods and services which caused increased production. Increased production caused an increase in wages and less unemployment. Unemployment for women and minorities became the lowest in history. Numbers of families collecting some form of government welfare plummeted. Gross domestic product went steadily up. And, pay attention democrats, even with lower tax rates the federal revenue in 2019 was the highest in history. What is it about this formula that is so difficult to understand? Oh, I almost forgot about the Biden number one governing maxim, if it was a Trump success it must be bad and therefore must be reversed.
TRANSFORMING AMERICA: Today, not tomorrow, today Americans should be worried about stopping this Biden/Pelosi/Schumer steamroller before (as someone recently wrote), “we wake up to a government that dominates and controls our lives in a country we don’t recognize.”
WHAT ELSE? 1) I will not be surprised to see somewhere in the 10,000 pages of the reconciliation bill a statement that grants amnesty to 20-some million illegal migrants. Why not, the issue will not get debated or exposed to we-the-people before it, all of a sudden, is the law of the land and thereby solidifies the Latino democratic voting block for years to come. Amnesty has the potential to severely damage this nation. Precedent is a powerful force, especially in government. Once amnesty is declared and the precedent set, every border will, in short order, be overcome with masses of illegals from all around the world, hoping to get in line for Amnesty #2. Our schools, medical and welfare systems will be rapidly overwhelmed.
2) There may well be tens or hundreds of billions of dollars allocated to education. Why? Because our education system is pathetic and the only solution politicians can see is to throw top-down money at the problem with little to show for it.
3) Student debt forgiveness is another democrat pet give-away idea that may see the light of day.
4) The democrats will likely throw some bones to organized labor to give them greater access and leverage in the work-place.
CONCLUSIONS:
Wake up America, the democratic leadership is hell-bent on controlling every aspect of your life by dividing the nation into identity groups, pitting one group against another, creating a general governmental dependency and thereby perpetuating their control.
National debt does not concern Congress, even though the Congressional Budget Office has for years been telling all of us that the projected debt levels are “unsustainable”.
Even with trillions of dollars on the table, it is doubtful the democrats will acknowledge the herd of elephants in the room; 1) lawlessness, 2) an open border, 3) tons of Cartel illegal drugs and China-produced fentanyl flooding our country and killing record numbers of Americans, 4) accepting and transporting tens of thousands of Covid-positive illegal immigrants to towns and cities across America every day.
The Biden American Rescue Plan, March 2021 clearly exposed an element of America’s human nature; those millions of able-bodied workers would rather accept a federal check and do nothing than answer any one of hundreds of local ads for employment. What does that tell us about the potential productivity of a disincentivized U.S. welfare state?
Any administration that attempts to lump their four-year policy agenda into a single bill and pass it without due process, debate or sufficient public disclosure is irresponsible and disregards the will of the people it represents. It is a dangerous precedent.
Senator Joe Manchin, democrat, West Virginia, tells us, “The purpose of the proposed $3.5 trillion in new spending isn’t to solve some urgent problems, but to re-envision America’s social policies.” In this case I believe re-envision is a euphemism for transformation.
For the past few years, I have not believed it possible for Congress as a whole and Congressional leadership in particular to act any more irresponsibly. But I have underestimated them. This moment is an historic low in terms of accountability, integrity, political bias, self-service and lack of concern for the general well-being of all Americans.
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