Reviews | Don’t believe Democrats when they say a $ 3.5 billion bill costs nothing
In a press conference on Wednesday, House Speaker Nancy Pelosi repeated this argument with great confidence. “It is not a dollar amount,” she told reporters. “The dollar amount, as the president said, is zero. This bill will be paid.”
White House Chief of Staff Ron Klain previewed this line at SALT in New York a few weeks ago – “the net cost of Build Back Better is zero” – and sympathetic reporters took up the mantra.
Trying to redefine the cost of a $ 3.5 trillion bill as zero must be among the most blatant and patently absurd attempts to change reality through a talking point ever attempted.
It’s mind-boggling logic that would mystify Lewis Carroll at the height of his creative powers.
This is the kind of reasoning you would expect from any bankrupt person or someone who has no idea that they are about to go bankrupt.
It is the equivalent in its transparent and willful implausibility of Donald Trump’s pledge that Mexico, at some point, despite all its denials, would pay for the border wall.
The point is that spending money is by definition spend money.
So far, this claim would have been uncontroversial. Indeed, before the reconciliation bill got into turmoil, the aim was that it would involve spending tons of money – as FDR and LBJ did.
The progressives did not receive the memo. Bernie Sanders said the bill should “at the very least” contain $ 3.5 trillion in spending, which is more than zero.
The best defense of the Biden / Pelosi argument is that it depends on the meaning of “cost”.
“If the Democrats intend to invest $ 3.5 trillion,” writes MSNBC’s Steve Benen, “but they also intend to pay for it all without adding to the national debt, then for all intents and purposes, the package costs nothing – because unlike the 2017 GOP tax breaks, the backstop and climate plan will be deficit neutral. ”
Set aside the fact that the reconciliation instructions say the bill can increase the deficit by up to $ 1.75 trillion over a decade, and that if Biden were really adamant against new deficit financing, he could threaten to veto any bill adding a nickel to the debt.
He didn’t and he won’t.
Either way, even if the bill is funded entirely by tax hikes, it still costs something – or the tax hikes wouldn’t be necessary in the first place.
Think about it: most of us who don’t live in San Francisco – notoriously hit by a spate of shoplifting – pay for the merchandise we take from stores. Of course, this means that what we bought costs something.
I dare any married man to go buy a Ferrari 812 Superfast / GTS with $ 340,000 in cash, then go home and try to tell his wife it costs nothing because he has it. has paid.
The fact that it got paid doesn’t make it any cheaper – indeed, it had to be paid exactly because it costs what you would expect from a car going from 0-60mph in 2.8 seconds.
It would be a cold comfort to a player if he lost $ 100,000 in the Bellagio Hall of Legends, but incurred no debt during that transaction. He would lose another hundred thousand dollars.
Catherine Rampell of the Washington Post noted the alleged injustice of the different accounting for Republican tax cuts and Democratic spending proposals.
Tax reduction bills tend to be described using their net cost.
On the other hand, spending increases are identified with their gross cost – for example, if an invoice increases spending by $ 1 billion and increases taxes by $ 900 million to pay them off, this is always called an increase. spending of $ 1 billion.
As even she concedes, however, it makes sense to refer to the net cost of a tax bill if it is offset by other tax increases. The net figure is the overall reduction figure – in other words, a tax cut offset by an equal increase in taxes would not be an overall tax cut at all.
If the $ 3.5 trillion reconciliation bill were fully offset by spending cuts, it would be fair to say that its overall cost is zero.
This is of course not what is happening. If that were the case, Sanders and the Progressive House Caucus would be apocalyptic with rage – even angrier than they are now at the prospect of potentially losing their clout to try and force moderates to agree to a bill. $ 3.5 trillion reconciliation bill.
In the end, assuming the bill doesn’t collapse, they’ll likely have to settle for over $ 1.5 trillion to $ 2 trillion. And whatever the main Democrats insist right now, it’s no small feat.