ChrisWeigant.com

It's Not The Big Number, It's The Taxes

[ Posted Tuesday, May 11th, 2021 – 17:10 UTC ]

This could be the week when we all learn whether bipartisanship is an achievable goal or whether it is merely a windmill not even worth tilting at any more. President Joe Biden is sitting down not only with all four congressional leaders (Nancy Pelosi, Kevin McCarthy, Chuck Schumer, and Mitch McConnell), but also with a delegation from the Senate Republicans who say they are making an honest attempt to come to a compromise on an infrastructure bill. Democrats have already signalled that this won't be an endless waiting game -- if nothing appears by Memorial Day, they are going to use budget reconciliation to pass their bills in the Senate with a simple majority vote, which will leave Republicans without any say over the final bill at all (which is exactly what happened on Biden's first major legislative achievement, the American Rescue Plan). So they've got roughly three weeks before their bipartisan dream bill turns back into a pumpkin.

Most media stories which have covered the give and take of negotiations have zeroed in on the overall size of the bills the two sides are proposing. There is quite a bit of difference between Biden's $2.3 trillion opening bid and the $568 billion the Republicans put on the table. But these sorts of issues are usually the easiest to compromise upon, because it is just an exercise in seeing who will give up more before a final number somewhere in the middle is agreed to. Joe Biden knows all about such haggling, from being in the Senate for so long.

That's not really the problem, though. What could be the irreconcilable difference between the two plans is how it will be paid for. And there hasn't been one inch of compromise offered up by either side yet. So that is really what is worth watching this week (and beyond).

Biden, of course, is really aiming for a total of $4 trillion in new spending. He divided this up into two bills, the American Jobs Plan (what the Republicans insist on calling "the infrastructure bill") and the American Families Plan. The dividing line was both ideological and practical.

In terms of ideology, all the items that the White House knew could never get a single Republican vote went into the families plan -- which everyone understands will be passed through budget reconciliation. The things Biden was hopeful some GOP senators could bring themselves to vote for went into the jobs plan. All the Republicans are doing now, really, is arguing that far more items should be moved from the jobs plan to the families plan, since they refuse to vote for anything which is not, by their narrow definition, "infrastructure."

Again, this all could conceivably work out in the end. Biden doesn't really care which bill each item actually winds up in, he just wants to see it all pass. The voters certainly won't care, as long as they see things getting done. But Republicans care a lot, so it'd be pretty easy to see Biden going along with their suggested division between the bills.

But what may be an unbridgeable chasm is how the jobs/infrastructure bipartisan bill will be paid for. This was the practical dividing line between the two White House bills as well. Biden would raise all the money for the jobs plan by modestly raising the corporate tax (to nowhere near where it was before the Trump tax cut). The families plan would be paid for by raising taxes on people making more than $400,000 a year, as well as a few other tax code tweaks.

But Republicans are already signalling that any change to the Trump tax cuts will get zero Republican votes. They suggest they can raise the money for their stripped-down version by raising so-called "user fees" (which is just a more obfuscatory term for "taxes"). The only ones they've admitted to so far are somehow (mileage-based, one assumes) instituting a new federal tax on owners of electric vehicles. And by grasping a political third rail and raising the per-gallon gasoline tax.

There are a few things wrong with the GOP bill's math, already. For instance, Biden's plan assumes a certain base level of spending on infrastructure will be passed by Congress anyway, so Biden's plan is all on top of this spending. The Republicans, however, count this base spending as part of their plan. This means the actual amount of increased spending they are proposing is far smaller than they'd like you to believe -- less than $200 billion, in fact. Some of their line items actually reduce the baseline spending that would happen on autopilot (without any new bill, in other words). They intentionally designed their plan to be oranges to Biden's apples.

To be fair, there are also some things wrong with Biden's math as well -- like the fact that the improvements are only planned for a number of years while the taxes to pay for them stretch out much further in the future (which is, admittedly, also obfuscatory).

But getting back to the Republican plan. Color me quite skeptical that the bipartisan moderate group can get anywhere near 10 Republican senators to vote to increase gas taxes. Both parties tend to shy away from doing this, which is why the federal gas tax hasn't been increased in decades. It is political poison, plain and simple. Or it used to be, at any rate. Campaign ads would take direct aim at any Democrat who voted to raise gas taxes, because it is one tax that ordinary people can immediately relate to and fully understand. And woe be to any Republican who voted for any tax hike period, much less a very-visible gas tax hike. It was only a few weeks ago that GOP leaders were trying to paint Democrats as the ones pushing for a gas tax increase, after all.

Even assuming (which I don't) that 10 brave GOP senators would actually vote for such a thing, this whole plan still represents a serious impasse with the White House. Joe Biden has sworn not to raise taxes on "anyone making less than $400,000 a year," and raising the gas tax would certainly fall afoul of that promise. The White House has already signalled to the GOP negotiators that such a tax would be unacceptable, period -- precisely because it would hit everyone filling their cars up at the pumps.

What this means is that the prime method either side has for raising the revenue necessary for the new spending has already been declared a non-starter by the other side. And this isn't some "well, you come down a bit and we'll go up a bit" part of the negotiations -- it is a core ideological difference with both sides drawing clear lines in the sand.

So how is this going to get resolved, if some magical bipartisan plan does emerge? Your guess is as good as mine. Republicans are digging in their heels on protecting the entirety of the Trump tax cut, and Biden has dug in his heels on refusing to accept any taxes which would hit even the higher ranks of the middle class (to say nothing of all the low-income drivers out there).

This is why this issue -- and not the overall dollar amount -- is the crucial one to watch, in all the meetings and bargaining going on for the next few weeks. Because so far it looks like a total impasse. Neither side shows the slightest sign of budging, but some movement by both sides will be absolutely necessary if any bipartisan plan ever does see the light of day.

-- Chris Weigant

 

Follow Chris on Twitter: @ChrisWeigant

 

25 Comments on “It's Not The Big Number, It's The Taxes”

  1. [1] 
    goode trickle wrote:

    A novel approach for the dems to resolve the budget impasse would be to propose a split tax hike targeted to the corporate tax rate.

    They could say fine GOP how about this, we will let corporations that invest 15 percent of their profits directly into wage increases for workers that make below $125,000 keep the current tax rate. Those that don't will need to pay the increased rate of 28 percent (which would probably end up at 25 or so percent).

    If done right it really would provide fodder for the Dems on just how the GOP tax cut has been yet another failure and allow them to beat them over the head with how big business profits are more important than fixing things that need some fixing that all of us including big business (yeah, I'm talking 'bout you Walmart.) utilize on a daily basis.

    It could even be marketed as a win win of sorts, corporations that invest in workers wages, are in some fashion helping to pay for this by increasing the workers revenues that taxes will be paid upon, workers tax rates will not go up (they may pay more but we are not increasing the taxes), companies not sharing the profits derived from the productivity efforts of their workers are paying the higher tax (loopholes will have to be closed for this to happen) and thus we are spending responsibly.

    After all, if we had been fixing these things all along and not raiding the transportation tax fund when wanted as well as allocating the required additional funds, we would not be in this situation and would also have had sustained blue collar jobs that paid well.

    For years the Dems let the GOP tar them with the " tax and spend" label like it is some sort of bad thing. Perhaps it is time for Dems to break out the "tax cut and deficit spend" brush and paint the GOP with it like Huck Finn painting the fence white.

  2. [2] 
    John M from Ct. wrote:

    Interesting angle on how to interpret the negotiations: not the budget items per se, but the payment provisions.

    However, what struck me was your certainty that raising the gas tax was political poison for both the Dems and the Republicans. Surely any plan to actually reduce net carbon emissions, in order to slow or stop global warming, should consider a carbon tax. That's where the free market (within the bounds of government regulation) redirects investment and consumption towards lower-carbon-producing activities, more efficiently than any number of targeted government regulations could.

    By your reckoning here, a carbon tax is simply impossible even for the Democrats, because it's too obviously a penalty on the very large number of people who will not have, for a good number of years, any immediate lower-carbon alternatives to their present ways of consuming electricity, home heating, and personal transportation.

    This does not bode well for the country and the planet, climate-wise, sea-level wise, food prices wise, storm-damage wise, and warm-region living outdoors wise.

  3. [3] 
    MtnCaddy wrote:

    [1]

    Great food for thought!

    (nypoet22 this promising thread is what your buddy Michale would muck up. You know he would.)

    Here's a wrinkle: Invest 15% into those making under $125,000 and they get to keep the lower tax rate so long as every worker's wages are automatically indexed to inflation. The Corporation keep being "good" to it's labor and Uncle Sam will keep being "good" to the Corporations.

    Or maybe allow Corporations to "buy down" their tax rate:

    For every percent that under-125Ker's wages are increased, a corresponding percent is deducted from their tax rate. Reasonable limitations, of course, and there'd be more than a couple of loopholes to close.

    goode trickle wrote,

    For years the Dems let the GOP tar them with the " tax and spend" label like it is some sort of bad thing. Perhaps it is time for Dems to break out the "tax cut and deficit spend" brush and paint the GOP with it like Huck Finn painting the fence white.


    Democrats have only had 40 years to use this to rebut Reaganism ®, dammit!
    Failure to do so to any consequence had me convinced that the Dems were in cahoots with the Repugs all this time. My Dear Board Mother Elizabeth -- this is exactly why I was so sceptical of Joe, ya dig? Tell the truth, nowadays I find myself rubbing my eyes in disbelief over how smashing things are going. Like with Trump all the time. Only but good.

    ***Dept. of
    Sunday Night
    Music Festival
    & Dance Party
    Suggested
    Theme***

    Live music, (whether covers of their own tunes or other's) and including Grateful Dead/Phish-style jams. I promise to show up If'n you say yes.

    Only Bernie et al, Trump beating Hillary -- and then flopping, Covid and millions unemployed finally got our Overton Window to where we can even consider these concepts. I mean, without hallucinogens.

  4. [4] 
    MtnCaddy wrote:

    [2]

    JMC wrote,

    By your reckoning here, a carbon tax is simply impossible even for the Democrats, because it's too obviously a penalty on the very large number of people who will not have, for a good number of years, any immediate lower-carbon alternatives to their present ways of consuming electricity, home heating, and personal transportation.

    So let's have our cake and eat it, too:

    1- We must have a carbon (gas) tax to deter it's use and move folks towards sustainable alternatives. Failure to do so is not negotiable.

    2- Problem is, most any kind of tax (or such) on 'Murican's automobiles is in 3rd rail territory. Just ask CA's ex-Gov. Gray Davis about 2003.

    3- So how do we pay for it? Soak the rich and Corporations by raising their taxes, and...

    vastly increasing the IRS's budget which without raising taxes a nickel would bring in hundreds of billions each year.

    4- Distribute that revenue via the same debit cards and checks that got us Stimulus. Means test to phase it out at, say, $400K -- there's that magic number again!

    5- The money would only apply up to the amount that the Green tax* added to the total, minus a penny or two. Therefore, 'Muricans are taking a two cent hit for Mother Earth. This might give it a snowball's chance of passing. Passing hell, yes, but passing Congress, too.

    6- Here's the trick:

    Each year right before Christmas everyone gets a check from Uncle Sam for some (or all) of whatever they didn't spend on the additional gas tax (less 2¢ or whatever.)

    That way, the folks driving economy cars get love, the folks driving electric get big love (perhaps a bonus for buying electric?) and the Hummer drivers and rich do their part as they're being fiscally accountable for their actions.

    But what if Grandma doesn't drive? Another way to put it is what if Grandma doesn't have any automotive carbon footprint? Keep your card, Granny, and get your money! Or give it to your Knuckleheaded Grandchild...kinda like "cap and trade" eh?

    **Summary**
    We incentivize lower carbon consumption without killing folks. A little pain now, subsidized by the greedy bastards who've been killing the American Dream for four decades.

    *Carbon tax, but I like "Green tax" better.

  5. [5] 
    MtnCaddy wrote:

    A side note!

    Is anyone else following the Witch Burning of Liz Cheney?

    Repugs are to decide her fate Wednesday via either voice vote or via secret ballots. Sure, the GQP has pilloried #SatansSpawnLiz in the press, as all good (fearful) Trumpanzies oughta, and better. But they haven't done the deed just yet...

    (thinking)

    As Repugs get to maintain their individual anonymity then theoretically they could decline to #CancelCheney.

    This is a move right out of

    ***Jungle Carnivore
    Avoidance 101***

    -- members of the herd that all bolt the same way are each far less likely to become tigerpoop. Especially if all Trump can do is bitch about the vote numbers rather than going after individual targets like #SheSuxButIsPrincipled.

    IF the Repugs are smart they won't miss this golden opportunity to at least begin to cut Trump out. Let The Donald thence go ballistic and maybe screw himself even more...fatally, even? Remember, Trump makes one say,

    [after killing a would-be assassin] "...I didn't like him anyway. He wasn't riiight in the head." -- Stephen (it's HIS Island) Braveheart So this damaged man could easily implode, giving the herd even more wiggle room. Best of all to the last person they can ALL swear they voted Trump's way, it was the RINO's fault... but, heck, it was a secret ballot, so whaddya gonna do?

    There. I've solved a pressing Republican dilemma. If only they had the cajones.*sigh*

    BACK here in Reality the rest of us have been waiting forever for the Repugs to: 1- grow a pair 2- get the divorce 3- come back to the rest of us And dwell here, once more. Like the Sacred Bison that now also return to us, yea verily.

    As an added bonus Repugs would not only get YUGE good press for coming to their senses, standing up for truth over lies, being "Constitutional" whatever that means, but also they would do themselves a favor with Suburban Lady Voters by retaining one of their top female talents. I hate her politics but I gotta respect Cheney's chops.

    America needs the GQP to get that Trumpectomy!

    If not now, when?

    As things stand this Republican Party is in no condition to take back either house of Congress next year.

    Election day is less than 18 months away. D'yall really think Trump will be out of their system in just a year and coin?

  6. [6] 
    TheStig wrote:

    It’s going to take more than an apocalypse to change
    Republican minds. They are a doomsday cult.

  7. [7] 
    TheStig wrote:

    I’m wary of simplistic solutions, but I think it’s time to strangle the filibuster.

  8. [8] 
    TheStig wrote:

    MtnCaddy-5

    I am still trying to parse this fever dream. I think there is something to it...but what is the next move and who makes it? Is this a restoration or a revolution?

  9. [9] 
    C. R. Stucki wrote:

    CW

    Actually, my guess (on "How will we pay for it?") is NOT "As good as yours", it's really a helluva lot better!

    You didn't even include the most realistic option of all among your choices, that being monetary inflation (creating immense amounts of new money out of thin air).

    It may well turn out that some (conventional) tax increases may be included in the ultimate package, but I guarantee you, monetary inflation will be the most prominent one, simply based on past history.

    And for the economics ignorant, monetary inflation (increasing the ratio of money in circulation to GDP), is simply a tax on the nation's savings, and manifests itself in the marketplace as price inflation.

  10. [10] 
    Don Harris wrote:

    It's not the numbers or the taxes, it's who does a better job of getting citizens to believe that their "side" is for ordinary citizens when they are both working for the corporations.

    It is SOP for the Republikillers to pass tax cuts and the Deathocrats pretending to be against them by shooting for taking back HALF of the tax cuts and then settling for less than that.

    It is just setting an argument that toys with the symptoms and ignores the cause of the problems.

    It is why the arguments are over things like 15% of corporate profits must go to a wage hike for workers making under 125,000 to get a favorable tax rate on the corporations instead of addressing the cause with a BMI and/or making corporations get a federal charter instead of state charters (unless they only make and sell their products or deliver their service entirley within the borders of one state.

    And the reason we get the symptom arguments instead of those addressing the cause is because both the Deathocrats and Republikillers work for the big money interests.

    We have to treat the cause by demanding small donor candidates so we are not left with the ridiculous arguments of whether we should close the barn door or the gate to the fence around the barn after the horses are already gone.

  11. [11] 
    James T Canuck wrote:

    Something remarkable is underway, the GQP is rewriting recent history to justify its narrative...

    Them folks arent' playing fair.

    Keep an eye on their say-so-ings.

    LL&P

  12. [12] 
    James T Canuck wrote:

    Today is the GQP 'night of the long knives.'

    As we sprechen, the revolution is devouring its young.

    There's a correct Hitlarian parallel if anyone's interested.

    LL&P

  13. [13] 
    goode trickle wrote:

    JTC 12-

    I think "Hitlarian" gives them to much credit for scientific and precise actions.

    I prefer the crude blunt force bumbling of Mussolini for this one.

  14. [14] 
    nypoet22 wrote:

    as they say:

    for every complex problem there is a solution that is clear, simple and wrong.
    h.l. mencken

  15. [15] 
    James T Canuck wrote:

    [13] you devil, how dare you split my hair.

    How about this; Why arent 18 Aircraft Carriers sitting offa St. Petersburg demanding the Colonial Pipeline resume its function?

    hmmm?

    LL&P

  16. [16] 
    John M from Ct. wrote:

    MtnCaddy your [4], replying to my [2] about a fair carbon tax:

    Thanks for the clever, if rather intricate plan. I have read about carbon tax plans that involve rebates, etc. to accommodate the facts of income and carbon-consuming lifestyle while driving people towards available alternatives. Yours is probably the most thorough I've seen - but it doesn't seem very easy to explain. In that, it reminds me of the abortive Clinton plan for a more equitable health-insurance system in the early 90s, with its exchanges, etc.

  17. [17] 
    John M from Ct. wrote:

    JTC on [15], using carriers to intimidate Russia,

    For some reason that doesn't work when I game it out. Something about a threat of naval air attack on Russia's second city, in a place where they have total control of all land and sea approaches and can effectively contest the air, seems to invite a major war, possibly including tactical nukes, whose consequences may include the loss of the US Navy's carrier force but will not, inevitably, include a reopening of the Colonial pipeline.

    Rather, why isn't the US Cyberforce ransoming an equivalent Russian energy facility, on the quiet side, on a tit-for-tat basis? Oh wait - on the quiet side. Like maybe that's what they're actually doing...

  18. [18] 
    TheStig wrote:

    JTC 15

    Answer: The US Navy only has 11 aircraft carriers. JMFC -17 also makes some good points

  19. [19] 
    BashiBazouk wrote:

    Not to mention with all the carrier battle groups on the other side of the planet, China would invade Taiwan so fast it would make heads spin...

    As for tit for tat cyber warfare, I would hope that we still follow the Bletchley Park standard and give as much thought to how much we can use intelligence without tipping our hand that we have it as we spend on collecting it in the first place.

  20. [20] 
    John M from Ct. wrote:

    TheStig [18] on JTC's planned assault on St. Petersburg --

    Only 11 carriers? No, give the man credit for calling an amphibious assault ship with a flight deck and airplanes an 'aircraft carrier' for the working purposes of a splendid little war in the Baltic Sea.

    Sure, the USN doesn't agree, but most independent analysts do: the navy has 11 or so full-featured attack carriers of the Nimitz and Ford classes, and 8 or so assault carriers. The latter are not called as such by the USN, presumably for reasons of budgetary dignity, etc. But in a threatening exercise or eventual attack on St. Petersburg to force the Colonial pipeline open, they and their Marine assault groups would be additional invaluable hostages to the Russian Air Force and Army's local superiority.

  21. [21] 
    goode trickle wrote:

    JTC- 15

    We are not at war with Russia, so the use of CVN (or even LH class) vessels is not the right tool.

    We are engaged in a low level asymmetrical conflict ( we aren't trying to kill ones troops directly).

    In both asymmetrical conflict and outright hot conflicts (or war if you prefer) the rules of the road tend to be towards a proportional response.

    In this case I would ask why should we send in the Guardians of the Galaxy when Felicity Smoak will more than get the job done?

    JMfC 20-

    Very close on the analysis of JTC's numbers, the Navy actually has 10 active aircraft carriers (the FORD is still undergoing certification, and problem fixing, as such it will not be available for conflict duty for a couple of more years). Of those 10, two of them are almost always out of availability due to long term yard refueling and and then the resulting shakedown and recertification which typically takes about 7 years (5 in the yard and two doing workups and recerts).

    Now when it comes to the amphibs we actually have 9 active ones and of those 9 only two are considered to be light carriers (one of which is till undergoing certification). To explain, there are two classes of amphib carriers one is AMERICA class and the other is WASP class, of the two only AMERICA class carriers are designed to be a light carrier as they have no well-deck and are built from the ground up to support the Harrier replacement with the F-35 variant. Not all WASP class can support the new F-35 variants and are undergoing flight deck retrofitting as they enter yard phases.

    In either case WASP class vessels will never be called light carriers by the Navy, as their mission is different from a carrier. WASP's are designed for multi-modal transport of troops into a conflict theater. CVN and AMERICA class ships are designed to provide extended airspace support to a battlegroup or conflict ( or bomb the bejesus out of someplace).

    At the risk of being overly pedantic, we really only have 9 active vessels that could be called carriers that are active and of those 9 only two or three could respond in a timely fashion if so required.

    Considering the accompanying battlegroup ships and accompanying supply vessels you would never have more than one BG in the area as no full size carrier could operate in the space given the requirements for carriers to conduct air operations.

    As you rightly point out there is that whole hostage thing. Thank God this is a soft conflict.

  22. [22] 
    John M from Ct. wrote:

    goode trickle [21]

    Ah, a fellow sufferer, I see. Thanks for the excellent details, and that reminder that operations are not the same as inventory.

  23. [23] 
    Kick wrote:

    goode trickle
    1

    I like the way you think. :)

  24. [24] 
    Kick wrote:

    James T Canuck
    12

    Today is the GQP 'night of the long knives.'

    Would we call this a purge, though? Ernst is alive and well and now brandishes a giant klieg light.

    As we sprechen, the revolution is devouring its young.

    Would this even qualify as a Red Wedding? Not today.

    There's a correct Hitlarian parallel if anyone's interested.

    So, who died? Rhetorical question. :)

  25. [25] 
    Kick wrote:

    John M from Ct.
    17

    Rather, why isn't the US Cyberforce ransoming an equivalent Russian energy facility, on the quiet side, on a tit-for-tat basis? Oh wait - on the quiet side. Like maybe that's what they're actually doing...

    I wouldn't put it past them.

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