Debating The Politics Around Biden’s Big Budget (The Other BBB)
Hello Hackaroos!
Happy Jobs Day! Another month of strong job growth even as the worry is still about inflation.
It’s also that time of the year again where Washington wakes up to debate the President’s budget proposal. Before our readers fall asleep reading this, we promise we have some fun debating the debate around what’s on the Biden books (and Murphy’s love for millionaires). That’s where we begin before some tidbits.
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Let’s begin!
THE BIDEN BUDGET BLUES
MURPHY: Ah, it’s budget season… a time-honored Washington ritual where the administration publishes a budget wish list only to have it quickly torn up by the Bad Santas on Capitol Hill. It’s no different this year though the Biden budget request had a particularly pungent whiff of political desperation to it; nearly no connection to the wreckage of Build Back Better and a pure politics move at a new tax on… wait for it… the Democrats’ favorite piñata: the RICH! This soak the rich caper was at least creative; the new idea is a tax on any income increase (even unrealized… think a stock or property bought and worth more, but not sold) on families worth over $200M. It’s crazy economics, a nightmare to try to enforce and a brilliant way to push the wealthy to Canada or other countries, but I’m sure it tested very well. Regardless, this heist is already dead on Capitol Hill (thank you, Joe Manchin). What I don’t understand is why not pick a smart fight over child care with the budget instead of DOA tax hikes. School me Gibbsie!
GIBBS: Well, first, I agree Democrats should start a fight on child care. The House started a fight on the price of Insulin passing a bill yesterday to cap its cost and got unanimous Dem support and a dozen Republicans, too. They could (and should) start a larger fight on the cost of prescription drugs. In a political world dominated by worries about inflation, legislation attacking rising costs is a good idea. And, yes, taxing the extraordinarily few people worth a billion dollars and paying little in income taxes (!) is quite popular and would raise a good bit of money. By the way, if you’ve been to Ottawa in January, you know they aren’t “fleeing” to Canada!
MURPHY: No, it’s not a tax on billionaires, it’s a tax on those poor, working multi-millionaires who are worth a mere $200 million or more! Again, the worst part is the new idea to try to figure out how much their assets rose in value and then tax that increase, regardless of whether that asset has been actually sold or not. Even your beloved Comrade Trotsky would have blanched a bit at that one. And, of course, we all know that any tax that starts as only for those worth over $200 million will be lowered and lowered to hit more people over time, since you cannot really ask the Government Dracula to stop at just one gallon of ultra-rich people’s blood once he’s actually made it into the blood bank. By the way, for 2020, 61% of taxpayers paid zero federal income tax. The top 10% of earners paid 80% of all federal income taxes received. So exactly who is not paying their fair share? And then there is inflation – currently surging – which will de facto lower the threshold a bit every month.
GIBBS: Murphy, I love that you’ve taken up the sword and shield to protect (checks notes) the down trodden person worth at minimum a quarter of a billion dollars! Phew! And here I thought no one would swoop in and save them! But, let’s get back to the larger budget debate for a minute. First of all, White House budgets, as you said, are mostly political documents. As this political document goes, let's go through what the administration proposed and its popularity. Taxing the ultra-wealthy: highly popular. Joe Biden ran on it and won the Presidency. Issue number two: deficit reduction to help try to take away Republicans suggesting that government spending is causing inflation. Check! Increasing defense spending so he doesn’t look weak on defense and foreign policy as Russia invades Ukraine. Check! A 30-plus billion dollar increase in funding for police to take away what the NBC poll suggested was the single greatest challenge for anybody running in 2022, and that’s the perception of being for defunding the police. Got that too! So, I think as budgets go, an Administration spends a lot of time on them, figuring out the funding levels, sending it to the Government Printing Office so these very nice budget books can be distributed on Capitol Hill, and they quickly become door stoppers because it's just a political document. And as political documents go, I think this one is a good one. My question is now how is Joe Biden and this White House going to use that political document to create some political traction?
MURPHY: It’s a good Dem talking point but giving President Biden (or any of the spend crazy appropriators on Capitol Hill) a merit badge for controlling spending is real stretch. The deficit reduction is mostly about the huge Trump/Biden COVID driven spending surge fading into the background. Giving Biden credit for that is like congratulating a python that ate a pig six months ago for slimming down. Biden’s policy for the last year has been to try to spend like FDR; it is only his failure to get this massive BBB spending deal done that has curbed the spending numbers he actually controls. (Though to be fair he did try to get tax increases to help offset his spending plans.) I do applaud the increase in defense spending, reversing a decade long Democratic trend of over-cutting our defense budget.
GIBBS: I don’t know if it’s credit per se. Undoubtedly, it is government changing from emergency pandemic spending levels to a more rational level of operations. However, it is, well, less money.
TIDBITS:
GIBBS: We shouldn’t forget the big news of next week and that is we will soon have a newly approved Supreme Court Justice. Though readers will see a long and somewhat messy week as the Judiciary Committee is likely to deadlock into a tie vote, meaning Democrats are going to have to spend extra time on the floor with a vote to discharge the nomination from committee. But, by week’s end, this will all be done and this country will have a Black woman poised to join the Court for the first time in its long history. This nomination probably hasn't gotten as much publicity because there isn't the political tension either in an ideological change in the Court, or in the ultimate outcome of the vote. But nonetheless, in the words of Joe Biden, it's a big f’ing deal!
MURPHY: Biden made a politically smart pick. Glad to see her on a path to being confirmed. And I predict there will be one more surprise Republican vote for her confirmation. Take that Kreskin! So stay tuned. Meanwhile, Putin seems to be in more trouble in Ukraine. Even though the Russians announced they were slowing down their attacks on Kyiv (only to attack some more) the Russian strongman isn’t looking so strong anymore. It’s too early to tell if Putin is really going to be forced to pull back or this semi peace offensive is just a reversal on the old joke about the warlike cannibal king, who sends a letter to a neighboring head of state saying, “Please send me a new Ambassador with your peace offer. The last one was delicious!”
Have a great weekend and we’ll see you on Tuesday!
Murphy and Gibbs