West Virginia Senator Joe Manchin had it partly right when he called for a “strategic pause”. But now it is clear that the $3.5 trillion price tag seriously understates the Bernie Sanders/AOC/progressive reconciliation bill through which they will try to remake America into their socialist image.
Early on, Sens. Rick Scott, R-Florida, and Bill Hagerty, R-Tenn., both recognized that the price tag was artificially low for all these socialist goodies revealed in the initial budget resolution. And that’s just the start. They and many others are pegging the actual price tag at $5 or even $7 trillion. The reason for the discrepancy is found in the entitlements, the actual details of which are still embargoed in the massive 10,000-page bill.
What we do know comes from the budget resolution that outlines the Bernie Sanders/AOC “leftist wish list” and seeks a complete remaking of the American economy. It is key to remember that congressional budgets are blueprints for the actual spending – advanced ultimately in this case in a reconciliation bill – which will take place later this month.
Reconciliation was originally adopted as a provision of law to cut overall government spending to fit into the federal budget. But today it is a chance for another bite at the apple for tax increases and for new entitlement spending that cannot be cut since entitlement spending is automatic as provided by law. Today reconciliation serves another purpose: adoption of new regulatory policies that effectively operate as taxes by imposing new costs on businesses.
And the current reconciliation bill blueprint is scary indeed. In addition to its non-budgetary attempt to advance illegal immigration amnesty, state voting law restrictions, and card check for organized labor, it is chock full of a wide range of “Green New Deal” programs including a “Climate Change Job Corp” to institutionalize the “climate religion” of the left and destroy a common-sense approach to energy across America, as well as expanded entitlement programs. What we know of this entitlement at this point is that the final bill is likely to include:
- Medicare expansion for dental, vision, and hearing
- Lowering of the age of eligibility for Medicare
- Paid family and medical leave
- Paid pre-kindergarten for 3 – 4 yr. old children
- IRS enforcement expansion
- Tuition-free community college
Most concerning are the tax increase details of this effort that have been revealed so far; more than $3 trillion in tax hikes that will impact every middle- and lower-income family from sea to shining sea. These include an increase from the corporate tax rate of 21% (under President Trump) to 26.5%, as well as an increase in the capital gains tax to 25%. And that’s just the beginning. The House mark-up includes increases on everything from air conditioning to vaping. The measure’s attack on the middle class is most pronounced in energy taxes that will only accelerate inflation, the cruelest of all taxes on the working poor.
In addition to re-establishing the top individual income tax at 39.6%, the measure also strikes at the heart of every small business in America by raising rates on all manner of goods and services, in addition to another Obamacare surtax of 3.8% and a resumption of the estate or “death” tax that will ensure that family farms and businesses are sold to pay the IRS. More than enough for every big government socialist to love.
Now the task falls on the House and Senate to find a path for this outrageous bill to pass. Any division among Senate Democrats threatens the entire bill as Sen. Joe Manchin holds the balance of power, and coming from a coal-producing state does not share Biden’s vision of climate change. He is estimated to hold sway among eight other Senate Democrats including Kyrsten Sinema of Arizona. Biden is counting on them to fall into line but at this time has little, if any, political capital to rely upon.
Left-leaning intellectuals at Brookings Institution and other liberal sources believe Biden can prevail on a complete restructuring of American society. We think that is poppycock because it ignores an iron-clad rule of politics that you need substantial political capital to advance such major change. Because of his recent policy disasters, Biden’s poll numbers have dipped significantly.
Nor does the thin Democrat control of Congress provide any spending mandate. And other House Democrats may follow the lead of Democrat Stephanie Murphy of Florida, a prominent House Democrat, who says she expects to vote no in the House Ways and Means Committee markup of the bill. With the mid-term elections just around the corner, other moderate Democrats may follow her lead.
Republicans can save the nation from this historic reconciliation bill but must stick together. The 19 Republican Senators who voted with the Democrats last month must “get religion” and withhold on the final vote as a means of stopping this profound attempt to remake America.
Nothing in the bill is pro-work or pro-prosperity. The only focus Republicans should have is to stop this reconciliation bill at all costs and focus on making the Trump tax cuts permanent when they regain power.
Lew Uhler is founder and chairman of the National Tax Limitation Committee and the National Tax Limitation Foundation (NTLF). Uhler was a contemporary and collaborator with Ronald Reagan and Milton Friedman in California and across the country.
Peter Ferrara served as a member of the White House Office of Policy Development under President Reagan, Associate Deputy Attorney General of the U.S. under President George H.W. Bush, and the Dunn Liberty Fellow in Economics at the King’s College New York.
Joe Yocca is NTLF’s national policy director. A long-time political and policy consultant, Joe served in the California State Senate as chief of staff to the Republican leadership for decades and directed statewide, legislative and congressional campaigns throughout his career.