Could This Be The Very Worst Piece Of Legislation Ever?
/On Saturday, the legislation currently going by the name of the “Covid-19 Relief” passed the Senate on a straight party line vote of 50-49. Now it moves on to the House where, despite the small Democrat majority, the Republicans have few to no options to try to stop the train wreck. Meanwhile, congratulations to the Senate Republicans on sticking together and unanimously voting no. This could be the very worst piece of legislation ever to get enacted.
I know that the contest for “worst legislation ever” has some extremely formidable competition. How about something truly abominable like Obamacare, or Dodd-Frank? Or, reaching back some years, how about the Bank Secrecy Act of 1970? (Read my thoughts on that one here.). You may have your own favorite. But this one is a very, very strong contender. It spends some $1.9 trillion, close to 10% of GDP in one shot, and almost none of it is anything that could ever make it through a normal budgeting process. All the funding is to be borrowed and added to the accumulated national debt. The basic idea is to go out and borrow a vast amount of money and then spend it as wastefully as possible and as fast as possible. Could any rational person really think that this is a good idea? (In case you are wondering, Krugman does not count as “rational.”)
The percentage of the spending that goes to actual public health measures related to the pandemic is tiny. An analysis by Reason here puts that percentage at 5%. In truth, the pandemic is just the cover story for a grand orgy of vote buying and giveaways to left-wing interest groups. “Vote buying” is the best description I can think of for the idea of passing out $1400 checks to essentially everybody. Free money! The Democrats in Congress think that the recipients of the money are too dumb to realize that they are on the hook for repaying this later in life; and probably that’s right. With the $1400 handouts, the link to the pandemic is tenuous at best, since payment does not depend in any way on having suffered economic downside from the disease or from the government response, and only a small minority of recipients would meet such a test.
And the $1400 checks are one of the less destructive items in this monstrosity. Two far more destructive items are the teachers union pay-off and the blue state bail-out. The teachers union pay-off is some $129 billion for K-12 education, which is about a year and a half worth of the pre-existing Department of Education budget, and which is not tied in any way to actually reopening the schools or teaching the kids anything. The basic formula is, contribute a few tens of millions to keep the Democrats in power, and you will be rewarded with a few tens of billions of taxpayer money.
The blue state bail-out is even bigger, at some $500 billion in hand-outs to state and local governments. The red states don’t need any bail-outs, and the blue states wouldn’t either, except that they have been overspending for decades, which was completely unrelated to this pandemic, and then when the virus hit they imposed extended “lockdowns” on the people and created vast amounts of forced and artificial unemployment. This being strictly an exercise in rewarding supporters and punishing adversaries, the state and local bail-outs will be allocated based on unemployment rate, meaning that the blue states with the high lockdown-based unemployment get the lion’s share. If you are a fiscally-responsible reddish state with a Democratic Senator or two (e.g., Arizona, Georgia, Montana, New Hampshire), your Senators have just sold you down the river.
But I want to focus today on yet another bad idea in this legislation, which is the expansion of something known as the Child Tax Credit. Under this bill, the pre-existing CTC is to be increased in amount to $300 per kid per month, and also made “fully refundable,” that is, payable in cash even if you don’t owe any taxes. The cost is somewhere in the range of $100 to 150 billion for one year. When Democrat mouthpieces talk about this legislation, they obviously want to spend as little time as possible discussing the teachers union pay-off and the blue state bail-out, so the CTC has become a focus. The official talking point is that the CTC expansion is “going to reduce child poverty by half.”
That talking point is completely false. The CTC expansion is not going to reduce child poverty at all. Not even by one child. That is so because of the definitions used by the Census Bureau when it determines who is “in poverty.” More detail at the end of this post. Yet it seems that every single Democrat talking about this subject has adopted the completely false official talking point. Let’s look at some examples:
Here is President Biden himself at some live-streamed remarks delivered on Saturday on the occasion of the Senate’s passage of the bill. At the 6:52 mark of the video: “This is going to make it possible to cut child poverty in half.” A few seconds later: “Let me say it again: This will cut child poverty in half.”
From The Washington Post, March 6, headline “Biden stimulus showers money on Americans, sharply cutting poverty. . . .” Within the article: “This legislative package likely represents the most effective set of policies for reducing child poverty ever in one bill, especially among Black and Latinx children,” said Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality.
From the Los Angeles Times, February 5: “The proposal, which could provide nearly all American families with monthly checks of up to $300 per child, would cut child poverty nearly in half, lifting nearly 10 million children up to or above the poverty line. . . .”
From USA Today, March 3: “The left-leaning Center on Budget and Policy Priorities estimated Democrats' changes would lift 9.9 million children above or closer to the poverty line. Many of those would be Black, Latino or Asian American children whose families did not qualify because their household incomes are too low to qualify for the tax credit.”
From NPR, February 21: “President Biden and Democratic lawmakers want to fight child poverty by giving U.S. families a few hundred dollars every month for every child in their household — no strings attached. A kind of child allowance. If this proposal survives the wrangling in Congress and makes it to Biden's desk, experts say it could cut child poverty nearly in half.”
You could go on with this all day if you want. Essentially every left-leaning news source has repeated this completely false talking point.
Perhaps you are wondering, how could a big cash handout like this going to people with little or no income not reduce poverty? If you are wondering that, you are one of the dupes who has not been paying sufficient attention. Let’s ask another question: How could the government prior to now have passed out $1.2 trillion in annual means-tested anti-poverty spending, which comes to over $30,000 per year per person in poverty, $120,000 per family of four in “poverty,” without eliminating poverty? The answer is that almost all of the anti-poverty spending is not counted when “poverty” is measured. And up there at the top is tax credits, which are specifically not counted when poverty is measured.
Don’t believe me? Check out the Census Bureau page on the measurement of poverty. Here is the key quote: “The official poverty definition uses money income before taxes.” Does that seem reasonable to you? In fact, the definition is specifically designed to exclude almost everything that the government passes out in the fake effort to reduce poverty, because all of that stuff is either “in kind” (i.e., not “money income”) or in the form of tax credits (i.e., not “pre-tax”). They say this explicitly:
Money income does not include: . . .
Noncash benefits (e.g. food stamps and housing subsidies)
Tax credits
There are actually 83 categories of federal means-tested anti-poverty distributions, and 76 of them are either “in kind” or “tax credits.” The CTC is one hundred percent a tax credit, and therefore not counted. It’s right there with the earned income tax credit, also not counted. Go ahead and pass out a trillion dollars of this stuff. Poverty — as measured in the fake government statistics — will not go down by one single person.
The whole idea here is to sell each program in turn to the public on the basis that it will supposedly reduce poverty, and then a few years later come back and announce that poverty remains the same, and demand yet another round of new programs, none of which will reduce the poverty (as measured) either.
There are some claims out there that this new increased CTC perhaps will reduce poverty not as measured under the usual official measure, but rather as measured under something called the Supplemental Poverty Measure. I’m not going to try to get into that in detail in this post. The SPM is even more fake and fraudulent than the official poverty measure, and is specifically designed to never be able to go down even if everybody becomes a millionaire. Furthermore, if by some chance the SPM actually did go down, I can assure you that the left-wing press would never mention that fact when, a couple of years from now, the push is on for some vast new program supposedly to reduce “child poverty.” It would be a dark secret, like the Hunter Biden laptop, not to be mentioned in polite company, and probably shadow-banned from Google and Twitter. For some of my prior posts on the SPM, see here and here.