Infrastructure bill depends on smoke and mirrors, but must bring tax increase

 

Gordon L. Weil

The U.S. Senate is lying to you (and possibly to itself).  Maybe it’s in a good cause, but it’s still a lie. 

The intentional falsehood is that the bipartisan $1 trillion infrastructure bill can be financed without raising taxes.

Its use of smoke and mirrors could help explain why people don’t trust government, an unfortunate sentiment when, at the same time, it’s urging you to get a Covid-19 vaccination.

About half the money for the bill will come from unspent funds previously allocated for coronavirus recovery.  But the rest must come from newly identified revenues.  The bipartisan backers of the bill have created some funding sources that don’t pass the straight-face test.

When Congress comes up with new spending, it must go to the nonpartisan Congressional Budget Office for a forecast of the effect of the proposal on the economy and the federal budget.  The CBO found the infrastructure bill undershot the needed revenues by $256 billion.

That means the Senate compromise failed to provide enough money to pay for its outlays. The result must be an increase in the federal debt, but the bill contains no payments for debt service.  The senators have wishfully assumed enough future economic growth to produce tax revenues that would cover the budget gap

Two of the bill’s key sponsors dismissed the CBO’s expert analysis, saying its rules limited it from considering the pie-in-the-sky accounting they use.  They simply ignored the fact that Congress had created the CBO to avoid just that kind of speculation. Several other independent reviews had come up with results like the CBO’s.

Why are some of the deal-making senators, a group that includes Maine’s Susan Collins, so willing to promote obvious “budgetary gimmicks” in light of the CBO’s official role in forecasting?  Politics.

Donald Trump, hailed for keeping his promises as president, had said he would come up with a $1 trillion infrastructure program, but did nothing. That inaction left Americans increasingly tired of potholes, crumbling bridges, inadequate telecommunications and other weak elements of the physical backbone of the country. 

President Joe Biden and the Senate dealmakers said they would do what Trump had promised.  It should make Biden and the Democrats more popular.  It could help some Republicans meet an urgent public need, possibly putting space between them and Trump, who now opposes the deal, mainly because it helps Biden.

This is a rare case where good policy and good politics exist for both sides and they could make a bipartisan deal.

The main opposition comes from most Senate Republicans.  They would accept a smaller bill using only what is already available from unspent funds and limited to items like roads and bridges.  That position insulates them from the sham revenue forecast, but falls far short of the need.

The alternative to the unfounded projections of new tax revenues from future economic growth is raising federal revenues.  A major new source of funding could have come from getting people to pay income taxes they owe rather than, well, cheating.  To do that would require strengthening the IRS.

It would seem difficult to oppose adding federal revenues by collecting taxes already due.  That’s not a tax increase, though some taxpayers would pay more.  But the Republicans refused to include measures to improve IRS tax collection, confirming the favorable GOP tax treatment of the richest Americans.

Paul Krugman, a Nobel-prize winning economist who’s now a liberal New York Times columnist, approves of using “smoke and mirrors,” because of the critical need, even if that really requires more borrowing.  Interest rates are now so low it won’t cost much, he claims. The declining value of the dollar and economic growth will allow future taxpayers easily to cover the cost.

The main problem in justifying the cost is that its advocates rely heavily on their own forecasts of congressional behavior, the economy and tax revenues.  Just two years ago, nobody could have forecast the impact of Covid-19 on the national debt.  Nor do we know what will happen in 2025 when personal income tax rates are supposed to increase.

Basing budget planning on wishful thinking is not the best way to run a government. But it may be the best way to make people believe, at least for one election cycle, that they can have something for nothing.

In the end, all government spending depends on taxes.  Taxpayers ultimately pay for debt.  But the U.S. now has an almost religious dislike of tax increases, even on the most wealthy.  Yet that’s just what’s required – now or later.

Even if it’s later, it will be a big bill. As the late Everett Dirksen, the GOP Senate leader, once supposedly quipped, “A billion here, a billion there and pretty soon you’re talking real money.”

Both Dems, GOP split in two as they seek big 2022 wins

Gordon L. Weil

It’s fascinating to watch a big-time gambler in high stakes games.  The risks are great, but the pay-off could be huge.

This week’s news reveals the high roller is Donald Trump.  Using remarkable appeal to raise cash, he has staked himself to over $100 million to spend in political games.  The games are the 2022 congressional elections.

Besides Trump, the other players are President Joe Biden’s mainline Democrats, the traditional Republicans and the Democratic progressives, the party’s most liberal element.

The games will decide who controls Congress.  They could show if Trump’s election and GOP takeover was an aberration or if Biden’s victory was a fluke. In either case, they might set the new normal in American politics for a few years.

Trump Republicans seek authoritarian presidential rule that produces powerful leadership at the expense of popular democracy. That type of government can produce change more easily than the intentionally inefficient democratic process.  That’s why Trump retains political appeal.

The temptation for the Trumpers is to oppose anything the Democrats propose.  As part of the Trump gamble, they even blame the January 6 insurrection on the Democrats. 

If Trump succeeds, he will not only change American government, but would likely destroy the traditional Republican Party.  He may have been a RINO – Republican in Name Only – but he would have stolen the party.

Trump’s GOP deploys voter suppression measures in some states to keep likely Democratic voters from easy access to the polls.  Across the country, Republican dominated state governments are hard at work passing restrictive voting laws using the thin excuse of improving ballot security.

Beyond that, Trump’s millions flow to his favored candidates.  If elected, they can flip Congress back from Democratic to Republican, proving that Biden and the Democrats are the aberration.  Even a thin margin of victory could pave the way to Trump’s run for the presidency two years later.

The first test for Trump comes in the party primaries.  He wants to scare away GOP candidates who are not Trumpers.  Failing that, he tries to tip the vote to his favorites by pumping up their campaigns, enabling them to reach more voters.

In a GOP primary for a safe Republican seat in Ohio this week, Trump’s cash created the frontrunner, who won. He defeated a crowded field of traditional conservatives, though he fell far short of an outright majority. The turnout was light, but Trump’s strategy worked.

Even if Congress hedges its bets and reaches some compromises this year, the battle lines for next year remain. One major question is where do anti-Trump Republicans like Wyoming’s Liz Cheney or Alaska’s Lisa Murkowski end up?  Both are up for reelection next year.

Biden has been trying to undermine Trump’s appeal to alienated voters through massive government programs designed to produce benefits for them. Much of the spending in his array of proposals will end up in visible, local projects. That’s pragmatic politics.

In another Ohio primary this week for a safe Democratic seat, the candidates included a Biden-style practical politician and an outspoken progressive promoter of universal health insurance.   The pragmatic candidate defeated the progressive, gaining a clear majority. But the margin was small with a good turnout.

If the progressives lose their challenges to Biden’s more centrist policies, they face the question of sticking to their beliefs, sitting out the elections, and risking GOP control.  Otherwise, they will have to endorse Biden’s plans for political survival and hope for another chance.

For the Democrats finally to end Trump’s influence, they have to win big. To prove they are the new normal, the Democrats would have to overcome the traditional loss of seats by the president’s party in the mid-term elections.

That will take a lot of cash and a strong effort to get out their voters and work around voter suppression.  They could make a last push for the national popular vote. If they win only by squeaking by narrowly in 2022, they remain in jeopardy for the presidential election. If they lose, Biden’s last two years could be a bust.

Biden needs to keep the Democratic progressives involved and supportive.  The Democrats – establishment and progressives – know how to raise money.  Ultimately the question must be if they can pool it to counter Trump’s millions.

In Maine, a similar situation exists. The traditional GOP has been weakened, and it looks like the Republican Party lines up for Trumpian former Gov. Paul LePage.

Gov. Janet Mills, a Democrat, could be somewhat undermined by a public power referendum, which she is likely to oppose.  With no ranked choice voting for governor, she has to worry about the possibility of a vote-splitting independent challenger.

No need to proclaim “Let the games begin.”  They have.

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Abortion case: Can Supreme Court protect rights not in Constitution?

 

Gordon L. Weil

A major new abortion case is coming.  Possibly even more important is the sleeper issue that arrives with it.

The case just brought by Mississippi for Supreme Court consideration next year is about both abortion itself and individual rights.  The abortion issue is widely understood.  Less so, individual rights.

Mississippi Attorney General Lynn Fitch wants the Court to reverse Roe v. Wade, its 1973 decision that blocked states from outlawing abortions.  She thinks the Supreme Court has no business dealing with abortion rights.

“The Constitution does not protect a right to abortion,” she wrote. “The Constitution’s text says nothing about abortion. Nothing in the Constitution’s structure implies a right to abortion or prohibits states from restricting it.”

She questions if the Court can protect a disputed right not mentioned in the Constitution.  The Court’s view has been, as even the late Justice William Rehnquist wrote while opposing Roe v. Wade, that the Constitution “embraces more than the rights found in the Bill of Rights.”

Mississippi says any right can exist only if is “deeply rooted” in history, which it says is not true for abortions.  If that view takes hold, other rights could be questioned. For example, the right of an American also to be a citizen of another country was not deeply rooted when the Court first recognized it in 1952.

The United States was created by uniting sovereign states.  The people turned the British colonies into those states by declaring their independence from King George III.  People expected the new states to protect their liberty not crush it as the British had.

The states decided to transfer some powers to a federal government and drafted the Constitution, which was approved by special conventions of the people in the 13 states.  All new states must accept the Constitution as it is.

The protection of individual rights was a basis for the founding of the U.S. “We the People” created the Constitution to “secure the blessings of liberty” for people in the U.S.  The Declaration of Independence says that government exists to “secure” the rights that, taken together, produce liberty.

Before the Constitution could be adopted, some states said they would only agree to it if they were assured that the new federal government would not violate individual liberty and would protect some rights.  They insisted on the Bill of Rights, protecting certain rights that had been overridden by the British.

The Bill of Rights protects only against actions by government, not those of other people. For example, an employer can limit speech or carrying firearms in the workplace.  Of course, there may be laws that control private actions.

After the Civil War, the Constitution was amended to so that state governments could be required to observe the Bill of Rights just like the federal government. Over the following years, the Court also decided that it could protect personal liberty if government took action against individual rights.

So here’s where we ended up.  People have liberty in America based on rights that belong to them, and no government can take those rights away from them. While certain rights are contained in the Bill of Rights, there are other rights, like the right to privacy, that governments must also protect.

Government may limit individual rights, if people harm the rights of others when they exercise their own rights. The Court decides what limits on rights, if any, the government can apply to the rights that make up individual liberty, whether or not they are in the Bill of Rights.

Famously, freedom of speech is said not to protect shouting “fire” without there being one in a crowded theater. Government may have what the Court calls a “compelling state interest” when the community as a whole may be seriously harmed by the unlimited exercise of individual rights.

Congress has not asserted federal control of abortions, but the Supreme Court has decided in Roe v. Wade that the Constitution’s requirement to protect individual liberty from government prevents states from outright banning abortions.  It has allowed states to impose some limits if there is a compelling state interest.

The Court can and does change its mind from time to time.  That’s what Mississippi wants it to do.  Fitch may believe that because the current majority of the justices seem to have personal reservations about abortion, their views will translate into a reversal of the decision that abortion is a federally protected right under the Constitution.

At the Supreme Court, the issue may be broader than whether abortion is a protected right. The case could determine what it takes to identify an individual right requiring protection, the federal government’s role in protecting it, and whether some decisions on protecting rights should be made by the states.