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Groundhog Day, February 2, 2021

The Senate Filibuster Is Actively Harming COVID Relief Policy

Democrats are still on course to pass it anyway

 

A storefront in the United Kingdom where I believe Senators must buy
their filibusters. (Fishyfish_arcade/Flickr/Creative Commons)

The Chief

Six more weeks of winter, sorry, the groundhog said so
.

Democrats don't want to experience 2009 Groundhog Day all over again,
which is why, despite the two-hour meeting in the White House between
President Biden and Senate Republicans Monday night, they're moving
forward on budget reconciliation for the COVID rescue bill. I noted
yesterday

that Democrats may have a path to get the entire bill, including the
increase of the minimum wage to $15 an hour, through the reconciliation
process, because increasing the minimum wage has significant budget
effects. I mentioned that there was a forthcoming research paper that
would show a $65 billion annual savings to the federal budget from this
wage hike.

That paper came out

yesterday afternoon. It was from Michael Reich at the Center on Wage and
Employment Dynamics at UC-Berkeley. Specifically, he found $65.4 billion
per year in savings, through a combination of increased tax revenues on
higher wages and reduced federal expenditures on safety net programs due
to eligibility thresholds. The $65.4 billion in savings is at full
implementation in 2025, so for a "score" of the fiscal impacts of
the minimum wage increase over the 10-year budget window (2021-2030),
the total would not be just $65.4 billion x 10. I don't have my fancy
calculator on hand, but back-of-the-envelope math says that this would
have a fiscal impact of close to half a trillion dollars.

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An Economic Policy Institute paper

out today backs up Reich's research. It creates a range of savings
across three categories: government expenditures on major safety net
programs, increases to FICA revenue, and reductions in spending on the
Earned Income Tax Credit and Child Tax Credit. The range falls between
$27 billion and $65 billion; the top end is consistent with Reich.

I should say at this point that this is not necessarily a good outcome.
Increased taxes on higher wages still put a worker out ahead, to be
sure. But reductions in federal benefits could create a treadmill
effect, with the government taking away what the private sector is
forced to pay out. As $15 an hour isn't really a living wage in much
of the country, clawing back benefits isn't a perfect scenario.

It is, however, good because it lets you pass the wage hike with 50
votes. That's the massive positive in its favor. And it shows the
distorting impact of the Senate filibuster on public policy debates.
We're sitting here rooting for workers to earn out of food stamps
because it's the only way for them to get a raise.

You could always backfill this by recalculating the measure of poverty
to
make more people eligible. But this isn't the only way where using
budget reconciliation leads to harmful side effects.

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There's a law called the Pay-As-You-Go Act of 2010 which creates a
process for automatic cuts when the government creates new spending
without offsetting it. Congress has done a lot of that in the past year,
but every COVID relief package contained a rider that waived the Budget
Act, thereby eliminating the automatic cuts. However, you can only waive
the Budget Act with 60 votes in the Senate. If you use budget
reconciliation, you can't waive it.

Therefore, a large package using reconciliation would trigger the cuts
,
which would fall on mandatory spending like Medicare, farm subsidies,
and more. This actually happened on the Trump tax cuts, but Democrats
joined Republicans to avert $25 billion in cuts to Medicare. I doubt
Republicans would return the favor now, though Democrats would probably
love to hold that vote so they could say that Republicans are
responsible for cutting Medicare. Republicans, of course, would say the
same thing, because the reconciliation process created the problem in
the first place.

This does argue for a checks and shots strategy
,
by the way. If you get what you could get quickly, with 60 Senate votes,
you can waive the Budget Act in that package. Fully articulated, checks
and shots could be half the $1.9 trillion Biden package; even Senate
Republicans are offering $600 billion. Then you could do the rest in
reconciliation, and if the aforementioned minimum wage hike scores as
saving $500 billion, you'd wipe out a lot of that fiscal impact. That
would at least minimize any Medicare cuts, while getting checks and
vaccine money out quickly.

Of course, we have to step back and say that this whole thing is absurd.
Because of an artificial super-majority threshold that sprung from an
accidental deletion

to the Senate rules, Congress has to think about enacting bad policy so
good policy can be enacted. The whole thing can be avoided by just
allowing majority rule, which is good enough for practically every
government on Earth. Our obsession with the filibuster is actively
harming our people.

The absurdity is particularly acute during a national emergency, where
these questions of how to end-run the filibuster are happening while
thousands are dying daily, millions are at the edge of the financial
cliff, and we're in a race with infectious variants that will re-surge
the COVID cases and deaths. Why are we wasting our time with clever
concepts to get things passed with a simple majority, instead of just...
passing everything with a simple majority?

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Rescind the Rescission

As for that two-hour meeting between Biden and the Senate Republicans:
All indications

are it didn't do a whole lot. Democrats are still moving ahead on
budget reconciliation, and the vibes from the White House

were that their plan remains firm and intact. Biden specifically told
the Republicans he voted across the aisle for reconciliation bills
(which created the CHIP program and the Earned Income Tax Credit). There
appears to be wiggle room on the eligibility threshold for the $1,400
checks, though not the size
.
It would be a mistake to tighten eligibility but a bigger one to make
arbitrary cuts to direct payments.

The public, if they matter, is all on the side

of getting something big done and using whatever process-including
reconciliation-to do it. And when you have West Virginia governor Jim
Justice saying publicly
that
there's no need to skimp, including on checks, when "people are
really hurting," is a laser shot right at Joe Manchin and the
right-most wing of the Democratic Party. There's no need to deviate
the course.

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What Day of Biden's Presidency Is It?

Day 14. Today is the slightly delayed immigration day at the White
House, with the president signing some executive orders
.
With unaccompanied minors massing at the border
,
it's about time.

We Can't Do This Without You

Today I Learned

* Biden is warming to compelling drug manufacturers

to assist in vaccine production. (Daily Beast)

* The administration secured 8.5 million rapid at-home COVID tests
,
which is good until you realize that's typically how many tests are
done nationwide in like four days. (New York Magazine)

* CBO projects good economic news ahead

for the next year. All the more reason for a relief bill, to ensure that
good news is broadly shared. (CNBC)

* Arkansas' Republican governor describes Biden's vaccine rollout

as "seamless." (Associated Press)

* In his first trade move, Biden maintains an aluminum tariff

on the UAE. (Whitehouse.gov)

* Sen. Durbin raising alarms
about
delays to the hearing for Attorney General nominee Merrick Garland.
Amazingly, Republicans still control some Senate committees, as the
organizing resolution is not complete. (Twitter)

* Will Biden fire two late-appointed inspectors general
?
(New York Times)

* When I think about Rahm Emanuel, only one word comes to mind: diplomat
.
(NBC News)

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