Thank you, Matt. Really appreciate this well-informed, thoughtful and pragmatic exercise in advocating for real changes that should be both achievable and helpful to most Americans.
Great article, and Matt lays out a few great options that Democrats could follow to pass BBB. But it is hard to reason with folks who live in an alternate universe and believe that the voters, despite loving progressive ideas and proposals, keep voting in non-progressives into office. Progressive candidates could not even win the 2016 or the 2020 Democratic Party presidential primaries, but they think that the majority of the voters support their policies regardless.
Many moderates, who would normally vote republican to keep progressives at bay, were forced to vote for the democrats in 2020 to keep Trump out of office. Progressives are taking advantage of this to push their own agenda. And, frankly, good for Manchin for standing up to them.
This should be a time when progressives join hands with the moderates and govern sensibly, and pass smart legislation. Allies must first secure victory before sparring amongst themselves. But the progressives are treating this as a once-in-a-lifetime opportunity that needs to be taken advantage of, no matter what. Incredible.
These are great ideas and I hope the blowup this past weekend doesn't mean the Joes can't come together and agree on one of these proposals. (And if Joe+Joe stand arm in arm outside the White House proclaiming agreement, I assume everyone else will fall in line.)
What I doubt it will do is help the Democrats in the mid-terms. And that's because of my Rule of Electoral Success: the good things you do legislatively don't help you and the good things that happen that you have no control over do help you.
No one really cares about what legislation passes when they cast their vote, especially if there's any kind of phase-in for the new laws. By contrast, huge improvements in inflation (especially gas prices), the job market, wage growth etc *will* make voters favorably inclined toward the ruling party, even though they have little to no influence over those trends.
So, pass good laws because it's good to pass good laws, and cross your fingers and hope that trends affecting people's lives go in your direction.
The insulin provision sure seems to be pretty underrated, but I'm glad it's cheap enough that it basically fits in any version of the bill. With the amount of attention insulin has had over the last couple of years as a symbol of everything wrong with Big Pharma, this seems to me like they should be touting how they are Doing Something about it.
The out of pocket cost to patients for insulin is really a symbol of what's wrong with insurance. Insulin is necessary medical care and should be covered by insurance. Pharma is at most secondary to the problem, just like hospitals and surgeons are secondary to the problem of making sure patients can afford surgery.
I feel for the President but think he’d be wise to take two steps. One is to Find a way of reminding people about how simple arithmetic limits his freedom of movement, and that this applies in both the Senate and the house. Many of us seem to have forgotten this simple fact.
Two, I wonder if he should not events some greater awareness of the playground aspect of political life. He needs to punch somebody in the nose, metaphorically of course. To my knowledge he hasn’t got rid of anyone on grounds of competence or lack of suitability. Similarly he might want to appoint some people with big personalities to important jobs, much as Nixon named John Connally his Treasury secretary.
All the attention is now focused on Biden when he’d do better to shift it onto people he can let go when they’ve outlived their utility.
The fallacy of high US child poverty rates is based on the "relative" metric, not an absolute threshold. It's the same problem with so-called racial income inequality. Basing conclusions on the median is problematic. Take away the wealthiest 1% of the population and both child poverty and racial income disparities disappear. Another prog trick to engender a crisis is to base child poverty on household income, absent government assistance like SNAP, TANF, EITC and Housing vouchers.
Between the two options, we should have spent the stimulus dollars on this BBB legislation, but we can't afford both, especially with interest rates rising. At nearly 6 trillion dollars in spending on COVID so far, Gen Z is going to face shrinking government programs for debt payments as it is now.
If it were me, I would not eliminate SALT deductions AND I would repeal Trump's income tax cuts to payback the COVID spending so far.
Actually the Trump tax cuts generated more revenue than was projected based on the prior tax code.
"in the 2021 fiscal year that just ended in September, federal tax collections soared. Specifically, this past year, the government collected $4.047 trillion in tax revenue, with corporate tax collections jumping 75 percent as the economy reopened. What’s amazing about that number is that in June 2017, the CBO projected that the government would collect $4.011 trillion in revenue in 2021. In other words, in the most recent fiscal year, the government raised $36 billion more than was expected before the Trump tax cuts were passed."
You're trying to not count the cost of extending what you view as a popular program. By that notion we should also figure out which Republican tax cuts are likely to get extended and score those too to figure out what we're actually realistically looking at for a future budget. Because in the real world people care about the actual deficit and its impact on the actual debt, not what a member of Congress gets the CBO to say their plan will cost by requiring them to score a bill based on their magic asterisk.
I agree that people may care about that at some point, but clearly they do not now. The American zeitgeist is to get a lot of benefits from government but to have low taxes - the present situation is the result.
Or the shorter version is the problem is us (The American people).
As someone who works in the tax-exempt bond world, it's always amusing to see the wildly different way the tax-exempt bond proposals are portrayed inside the industry vs outside in the real world. I've been getting in arguments with colleagues for years at this point that it's never going to show up in one of these reconciliation bills whether it's Democrats or Republicans. As you correctly note, no one in the general public is fired up about it and it costs money so in the world of finite funds via reconciliation it's always going to be rejected.
I feel like I'm taking crazy pills on this CTC thing. Someone please explain to me how a permanent CTC is a childhood poverty reducer and not simply pro-natalist. Now, I get that obviously a newly introduced CTC or CTC expansion reduces poverty by putting cash in the hands of people who have already made the choice to have children, but once it's a permanent program, and people adjust their expectations, doesn't it merely shift the perceived financial burden of parenthood however many thousand dollars down the income ladder? Don't you end up with the same number of children at the poverty margin? If anything aren't these children's parent's even less likely to be financially stable? If it has any impact at all I can't see how it doesn't exacerbate the damage of childhood poverty over time.
I get that plenty of people are on the pro-natalist or parenthood is a human right line of thinking in this argument, or maybe it's all just a cover for wealth redistribution, but if you're coming with one of those takes then own that shit. Stop pretending this is about poverty when the program doesn't actually have any incentives to promote more money going to children rather than going to more people having children.
Look up Lyman Stone's work on the pro-natalist effects of various policies, both in the United States, Hungary, and elsewhere. The effect is always smaller than everyone thinks. While people *are* responsive to financial pressures in deciding whether to have kids, and how many, they're not *as* responsive as people might think. There would need to be a *large* increase in the number of children in families *well* below the poverty line in order for the absolute number of children in poverty to remain the same, let alone the fraction of children in poverty.
It can be both. But you are right in the sense that this is really money for parents. It’s not clear to me, for instance, where the money goes in the case of divorced parents- presumably it’s to the parent who can claim the child on their federal taxes.
But I don’t know how you avoid that. Stricter means testing is a possibility but the federal government isn’t actually very good at doing that, particularly at the margins.
I think the underlying assumption, which is reasonable to my ears, is that the CTC is not large enough to convince someone to have children who would otherwise not have children. It just improves the lives of children who would be born regardless.
I don't know, I'm skeptical that the particular cohort of people in poverty having children without regard for financial constraint or incentives are capable of directing an impactful amount of their CTC towards their child's wellbeing. At the least it seems like an incredibly inefficient way to target funding.
Something like ~15% of current children live in poverty(googling a bit on 2 admittedly 'child poverty is a problem' sites). I'm not sure whether the CTC fully covers that, but suppose it gets 2/3 of those out (probably most of those are close to the line) so that's lifting 10% of children out of poverty.
There will be some pro-natalist part of the effect, but unless it increases number of children by > 10%, (unlikely in my view), then more is going to child poverty reduction than to more children.
Doesn't the reality that most children "in poverty" are clustered near to the poverty line imply that most of these parents are in fact likely to be responsive to the financial incentive of the CTC? If the marginal impact of parental income on births wasn't substantial wouldn't you expect a more random distribution of children across the poverty income spectrum? I take this to mean that for most people there is in fact an income floor below which they avoid having children.
Not necessarily. I don't assume the distribution of poverty ITSELF is random across the spectrum - I expect that it falls towards a tail, with most clustered closer to the high end - so a distribution of kids uniformly towards adults this way would also leave the kid distribution skewed.
So about 4,000 per each kid. Note that the poverty rate for kids is higher than the poverty rate over all (~15% vs ~11%) this is presumably at least partly because a household that was just over the line having kids pushes it below.
I wonder how it works/would work for immigrant children who make up a substantial portion of child poverty, particularly US born children to illegal parents.
Dumb question: what does "phase out gimmicks" mean? I thought "phasing out" referred to spending programs ending after 5 years or whatever, and I can see why this would bring down the sticker cost of the bill, but I don't understand why that's gimmicky? (I take it gimmicky means something more than just "bad policy" and rather means like, being disingenuous about the costs of the bill)
It's gimmicky because the taxes/revenue raises would go the full 10 years, and everyone has the intention of renewing the spending programs in 5 years, meaning we'd have to find new revenue raisers (so the implicit cost is higher than the numbers being thrown around now).
My stance on this is that Manchin is *right but also that the revenue raisers in the Bipartisan Infrastructure Law he supported were also pretty baloney so he's being a bit of a goon here.
I think the gimmick is that no one actually wants to phase out the program & they plan to extend it at the point of its 'expiration.' So from Manchin's perspective he doesn't want to pass a bill that 'balances' because it has a 1 year CTC then get called an asshole when he won't extend it unfunded after 1 year is up.
I guess your point is that whether or not it gets extended is a separate debate and should be considered distinctly from the merits of this bill? I could see it both ways, but in this case obviously all of the programs are intended to be permanent.
Dumb question: what does it mean for $250B in “deficit reduction” to be in the plan? How do you “spend” $250B in deficit reduction? Or is it an accounting thing where really the bill would be $1.5T instead of $1.75T because $250B is taken off the table?
Matt, I agree with you that something is better than nothing and would pare back BBB to something acceptable to Manchin. I tend to think that pre-K is especially important and should be permanent. But here’s a question about the CTC that I haven’t had the nerve to raise on Twitter: how are the benefits structured differently from the old AFDC, which died an ignominious death under Clinton?
I am less interested in the details of what, and more frustrated Congress and Biden can't prioritize. Pick one or two things, and kill it. Run on THAT in '22 and give themselves a fighting chance.
Instead Progressives are acting like they will never have a chance to run Congress again and Biden is acting like he's a lame duck one term president despite his protestations.
Thank you, Matt. Really appreciate this well-informed, thoughtful and pragmatic exercise in advocating for real changes that should be both achievable and helpful to most Americans.
The Dispatch's newsletter sent me here.
Great article, and Matt lays out a few great options that Democrats could follow to pass BBB. But it is hard to reason with folks who live in an alternate universe and believe that the voters, despite loving progressive ideas and proposals, keep voting in non-progressives into office. Progressive candidates could not even win the 2016 or the 2020 Democratic Party presidential primaries, but they think that the majority of the voters support their policies regardless.
Many moderates, who would normally vote republican to keep progressives at bay, were forced to vote for the democrats in 2020 to keep Trump out of office. Progressives are taking advantage of this to push their own agenda. And, frankly, good for Manchin for standing up to them.
This should be a time when progressives join hands with the moderates and govern sensibly, and pass smart legislation. Allies must first secure victory before sparring amongst themselves. But the progressives are treating this as a once-in-a-lifetime opportunity that needs to be taken advantage of, no matter what. Incredible.
The LTC medicaid money- seems to be not on the cost list? I thought it was still in play (altho not 400b in play).
These are great ideas and I hope the blowup this past weekend doesn't mean the Joes can't come together and agree on one of these proposals. (And if Joe+Joe stand arm in arm outside the White House proclaiming agreement, I assume everyone else will fall in line.)
What I doubt it will do is help the Democrats in the mid-terms. And that's because of my Rule of Electoral Success: the good things you do legislatively don't help you and the good things that happen that you have no control over do help you.
No one really cares about what legislation passes when they cast their vote, especially if there's any kind of phase-in for the new laws. By contrast, huge improvements in inflation (especially gas prices), the job market, wage growth etc *will* make voters favorably inclined toward the ruling party, even though they have little to no influence over those trends.
So, pass good laws because it's good to pass good laws, and cross your fingers and hope that trends affecting people's lives go in your direction.
I agree with this, but I am at the point I don't know what is true.
Does Manchin really agree to this?
It seems all hearsay.
The insulin provision sure seems to be pretty underrated, but I'm glad it's cheap enough that it basically fits in any version of the bill. With the amount of attention insulin has had over the last couple of years as a symbol of everything wrong with Big Pharma, this seems to me like they should be touting how they are Doing Something about it.
The out of pocket cost to patients for insulin is really a symbol of what's wrong with insurance. Insulin is necessary medical care and should be covered by insurance. Pharma is at most secondary to the problem, just like hospitals and surgeons are secondary to the problem of making sure patients can afford surgery.
I feel for the President but think he’d be wise to take two steps. One is to Find a way of reminding people about how simple arithmetic limits his freedom of movement, and that this applies in both the Senate and the house. Many of us seem to have forgotten this simple fact.
Two, I wonder if he should not events some greater awareness of the playground aspect of political life. He needs to punch somebody in the nose, metaphorically of course. To my knowledge he hasn’t got rid of anyone on grounds of competence or lack of suitability. Similarly he might want to appoint some people with big personalities to important jobs, much as Nixon named John Connally his Treasury secretary.
All the attention is now focused on Biden when he’d do better to shift it onto people he can let go when they’ve outlived their utility.
The fallacy of high US child poverty rates is based on the "relative" metric, not an absolute threshold. It's the same problem with so-called racial income inequality. Basing conclusions on the median is problematic. Take away the wealthiest 1% of the population and both child poverty and racial income disparities disappear. Another prog trick to engender a crisis is to base child poverty on household income, absent government assistance like SNAP, TANF, EITC and Housing vouchers.
Between the two options, we should have spent the stimulus dollars on this BBB legislation, but we can't afford both, especially with interest rates rising. At nearly 6 trillion dollars in spending on COVID so far, Gen Z is going to face shrinking government programs for debt payments as it is now.
If it were me, I would not eliminate SALT deductions AND I would repeal Trump's income tax cuts to payback the COVID spending so far.
Actually the Trump tax cuts generated more revenue than was projected based on the prior tax code.
"in the 2021 fiscal year that just ended in September, federal tax collections soared. Specifically, this past year, the government collected $4.047 trillion in tax revenue, with corporate tax collections jumping 75 percent as the economy reopened. What’s amazing about that number is that in June 2017, the CBO projected that the government would collect $4.011 trillion in revenue in 2021. In other words, in the most recent fiscal year, the government raised $36 billion more than was expected before the Trump tax cuts were passed."
https://www.nationalreview.com/2021/10/cbo-blows-up-democrats-spin-on-taxes/
Agreed....I would keep the corporate tax cuts, but repeal the personal income tax cuts.
do you have a source that isn't national review?
You're trying to not count the cost of extending what you view as a popular program. By that notion we should also figure out which Republican tax cuts are likely to get extended and score those too to figure out what we're actually realistically looking at for a future budget. Because in the real world people care about the actual deficit and its impact on the actual debt, not what a member of Congress gets the CBO to say their plan will cost by requiring them to score a bill based on their magic asterisk.
In the real world people don’t care about those things, which is why these gimmicks tend to work. See, for example, the Bush Tax Cuts.
They don't care, until they do. If interest rates increase just a fraction, and we are paying $1 trillion plus a year in interest, that's a problem.
Eventually you get crowding out where debt payments start to crowd out other government services.
People will care about that.
Or, if the Fed continues to monetize the debt, and inflation stays high, people will REALLY care about that
I agree that people may care about that at some point, but clearly they do not now. The American zeitgeist is to get a lot of benefits from government but to have low taxes - the present situation is the result.
Or the shorter version is the problem is us (The American people).
What do you think the chance is that Manchin goes for Matt's magic asterisk?
Honestly, I have no idea.
As someone who works in the tax-exempt bond world, it's always amusing to see the wildly different way the tax-exempt bond proposals are portrayed inside the industry vs outside in the real world. I've been getting in arguments with colleagues for years at this point that it's never going to show up in one of these reconciliation bills whether it's Democrats or Republicans. As you correctly note, no one in the general public is fired up about it and it costs money so in the world of finite funds via reconciliation it's always going to be rejected.
I feel like I'm taking crazy pills on this CTC thing. Someone please explain to me how a permanent CTC is a childhood poverty reducer and not simply pro-natalist. Now, I get that obviously a newly introduced CTC or CTC expansion reduces poverty by putting cash in the hands of people who have already made the choice to have children, but once it's a permanent program, and people adjust their expectations, doesn't it merely shift the perceived financial burden of parenthood however many thousand dollars down the income ladder? Don't you end up with the same number of children at the poverty margin? If anything aren't these children's parent's even less likely to be financially stable? If it has any impact at all I can't see how it doesn't exacerbate the damage of childhood poverty over time.
I get that plenty of people are on the pro-natalist or parenthood is a human right line of thinking in this argument, or maybe it's all just a cover for wealth redistribution, but if you're coming with one of those takes then own that shit. Stop pretending this is about poverty when the program doesn't actually have any incentives to promote more money going to children rather than going to more people having children.
Look up Lyman Stone's work on the pro-natalist effects of various policies, both in the United States, Hungary, and elsewhere. The effect is always smaller than everyone thinks. While people *are* responsive to financial pressures in deciding whether to have kids, and how many, they're not *as* responsive as people might think. There would need to be a *large* increase in the number of children in families *well* below the poverty line in order for the absolute number of children in poverty to remain the same, let alone the fraction of children in poverty.
It can be both. But you are right in the sense that this is really money for parents. It’s not clear to me, for instance, where the money goes in the case of divorced parents- presumably it’s to the parent who can claim the child on their federal taxes.
But I don’t know how you avoid that. Stricter means testing is a possibility but the federal government isn’t actually very good at doing that, particularly at the margins.
Yes, giving the money directly to the kids would probably be inadvisable.
Says you. I sell Pokémon cards for a living.
I think the underlying assumption, which is reasonable to my ears, is that the CTC is not large enough to convince someone to have children who would otherwise not have children. It just improves the lives of children who would be born regardless.
I don't know, I'm skeptical that the particular cohort of people in poverty having children without regard for financial constraint or incentives are capable of directing an impactful amount of their CTC towards their child's wellbeing. At the least it seems like an incredibly inefficient way to target funding.
Could be some of both but:
Something like ~15% of current children live in poverty(googling a bit on 2 admittedly 'child poverty is a problem' sites). I'm not sure whether the CTC fully covers that, but suppose it gets 2/3 of those out (probably most of those are close to the line) so that's lifting 10% of children out of poverty.
There will be some pro-natalist part of the effect, but unless it increases number of children by > 10%, (unlikely in my view), then more is going to child poverty reduction than to more children.
Doesn't the reality that most children "in poverty" are clustered near to the poverty line imply that most of these parents are in fact likely to be responsive to the financial incentive of the CTC? If the marginal impact of parental income on births wasn't substantial wouldn't you expect a more random distribution of children across the poverty income spectrum? I take this to mean that for most people there is in fact an income floor below which they avoid having children.
Not necessarily. I don't assume the distribution of poverty ITSELF is random across the spectrum - I expect that it falls towards a tail, with most clustered closer to the high end - so a distribution of kids uniformly towards adults this way would also leave the kid distribution skewed.
Also:
US. Poverty Line (hhs.gov)
People in household:
1 $12,880
2 $17,420
3 $21,960
4 $26,500
So about 4,000 per each kid. Note that the poverty rate for kids is higher than the poverty rate over all (~15% vs ~11%) this is presumably at least partly because a household that was just over the line having kids pushes it below.
I wonder how it works/would work for immigrant children who make up a substantial portion of child poverty, particularly US born children to illegal parents.
Dumb question: what does "phase out gimmicks" mean? I thought "phasing out" referred to spending programs ending after 5 years or whatever, and I can see why this would bring down the sticker cost of the bill, but I don't understand why that's gimmicky? (I take it gimmicky means something more than just "bad policy" and rather means like, being disingenuous about the costs of the bill)
It's gimmicky because the taxes/revenue raises would go the full 10 years, and everyone has the intention of renewing the spending programs in 5 years, meaning we'd have to find new revenue raisers (so the implicit cost is higher than the numbers being thrown around now).
My stance on this is that Manchin is *right but also that the revenue raisers in the Bipartisan Infrastructure Law he supported were also pretty baloney so he's being a bit of a goon here.
This was helpful, thanks! Didn't realize the taxes etc were being counted over a longer period of time/not phasing out the same way.
I think the gimmick is that no one actually wants to phase out the program & they plan to extend it at the point of its 'expiration.' So from Manchin's perspective he doesn't want to pass a bill that 'balances' because it has a 1 year CTC then get called an asshole when he won't extend it unfunded after 1 year is up.
I guess your point is that whether or not it gets extended is a separate debate and should be considered distinctly from the merits of this bill? I could see it both ways, but in this case obviously all of the programs are intended to be permanent.
Dumb question: what does it mean for $250B in “deficit reduction” to be in the plan? How do you “spend” $250B in deficit reduction? Or is it an accounting thing where really the bill would be $1.5T instead of $1.75T because $250B is taken off the table?
Matt, I agree with you that something is better than nothing and would pare back BBB to something acceptable to Manchin. I tend to think that pre-K is especially important and should be permanent. But here’s a question about the CTC that I haven’t had the nerve to raise on Twitter: how are the benefits structured differently from the old AFDC, which died an ignominious death under Clinton?
I am less interested in the details of what, and more frustrated Congress and Biden can't prioritize. Pick one or two things, and kill it. Run on THAT in '22 and give themselves a fighting chance.
Instead Progressives are acting like they will never have a chance to run Congress again and Biden is acting like he's a lame duck one term president despite his protestations.