Democrats say they’re working hard to pare back their $3.5 trillion tax and spending bill to $2 trillion to please House and Senate dissenters, but don’t believe it. What they’re really doing is working hard to pack $4 trillion in new programs into a $2 trillion disguise that sounds less radical than it is.
That’s the message from news reports that the White House on Tuesday offered Congressional Democrats a plan that retains nearly all of the entitlement programs they originally proposed. Instead of reducing this vast expansion of the welfare state, Democrats are merely increasing their use of budget gimmicks to pretend to fit them into a 10-year budget window. It’s still a mammoth fiscal confidence trick.
The leaks are piecemeal and the talks are fluid. But so far it looks like the White House is continuing to accommodate progressive demands and then bludgeon swing-district Members to go along. “Overall, almost every priority is included,”
Rep. Ro Khanna
(D., Calif.), a progressive leader, was quoted as saying. President Biden and
previously said they preferred to fully fund fewer programs. But they retreated, as usual, under progressive pressure.
Democrats appear to have dropped only two programs from their original plan: an entitlement for community college, and a nationwide renewable fuel mandate known as the Clean Electricity Performance Program (CEPP). Community college is one of the least expensive at some $120 billion over 10 years, and many states already subsidize it.
Killing CEPP is significant since it would force all states to meet a renewable fuel standard whether they want it or not. It is expressly designed to eliminate coal and raise the cost of natural-gas electric power. It’s essentially a carbon tax disguised as regulation. Credit
West Virginia Sen. Joe Manchin
for slaying this monstrosity, if it really is dead.
So much for the good news. The bad is that Democrats want to retain every other big-ticket entitlement in fiscal drag. The biggest trick is a false sunset. News reports say the child allowance of $3,000 or $3,600 will last for only one year instead of five as in the House bill. This will cost $120 billion instead of $556 billion.
But the sunset is a ruse, since Democrats plan to renew the child allowance ad infinitum. Its real cost over 10 years is $1 trillion and another trillion the decade after that. This is a huge addition to the structural deficit—an entitlement for the middle-class without a work requirement—that will eventually be financed by higher taxes.
The ObamaCare subsidy expansion would reportedly last three years, but that’s also a phony sunset. Paid family leave might be cut to four weeks from 12, but eventually it will grow to 12 or more and extend beyond maternity and paternity leave to elder care and more.
Another reported ruse would start
Medicare expansion to cover dental care as a pilot or more limited program. That could pretend to save $260 billion. But do you think a benefit provided to some seniors won’t soon be provided to all? Any program would create a political lobby of dental groups and others to make it universal.
None of this is lost on close budget watchers.
of Cornerstone Macro figures the full 10-year budget cost of the mooted White House proposal is $4 trillion.
As the talks and leaks continue, our advice is to follow the programs more than the top-line budget number that is sure to be phony. What matter are the new entitlements that will grow future spending and corrode the incentive to work, and the taxes that will reduce economic growth. Most of the rest is spin.
Correction: An earlier version misinterpreted a cost estimate from the Committee for a Responsible Federal Budget.
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Appeared in the October 21, 2021, print edition.