This week is the one-year anniversary of the state and national COVID-19 lockdowns. The country was thrown into disarray as folks and government officials didn’t know what to do. Millions of people got sick and hundreds of thousands of people died in the United States. Last year, Congress passed multiple relief bills worth $4 trillion in an effort to fight the pandemic and help struggling Americans and businesses. Unemployment spiked at 17 percent and there was an immense amount of uncertainty both physically and fiscally. One year later -- we have three vaccines, states are starting to re-open, and unemployment is at 6.3 percent. With all of this progress, another $1.9 trillion will be spent on relief, bringing the total taxpayer tab to $6 trillion. The latest round of relief is more controversial than others because much of the spending is not related to COVID relief. For example, 21 percent goes to “arts, humanities, libraries, and other.” And, there is still $1 trillion in unspent funds from last year’s relief bills. During the pandemic, the Taxpayers Protection Alliance (TPA) was always been “open,” even if our physical offices were closed. TPA staff has been working tirelessly to expose wasteful and questionable spending during the pandemic. Thank you to the front-line healthcare workers and everybody who kept the country moving as the national dealt with the pandemic over the past year. A big personal thank you to Amazon and Netflix for keeping me equipped and entertained.
Roadmap to Fiscal Sanity
TPA released the 2021 Roadmap to Fiscal Sanity for the 117th Congress this week. With a $28 trillion debt, it is imperative that Congress get its fiscal house in order. In the publication we highlight 17 issue areas for Congress. And, we don’t just complain, we have recommendations on what to do and what not to do. This edition includes Antitrust, Budget Reform, COVID-19, Defense, Energy, FDA, Healthcare, Intellectual Property, International, Minimum Wage, NASA, Privacy, Section 230, Tax Reform, Telecommunications, Trade, and the United States Postal Service. I know you want to get to your weekend so I won’t outline all the issue areas in the Weekly Update, I’ll give you a sampling.
Antitrust
The word “antitrust” has re-entered the D.C. lexicon in an alarming way. With the emergence and success of tech giants like Facebook, Amazon, Apple, and Google, lawmakers have spent disproportionate amounts of time wringing their hands over what to do about these, and other companies. For decades, the standard for antitrust enforcement has been what’s known as the consumer welfare standard. All potentially anticompetitive actions are evaluated based on whether or not there is demonstrable harm to consumers. However, the federal government has begun bringing lawsuits against these tech giants alleging harm to competitors and citing sizable market shares as evidence of monopoly. Monopoly, however, represents nominally total, and in practice overwhelming, market control. None of the major tech companies under current antitrust scrutiny come anywhere close to singular control of the markets that butter their bread. A perfect example of this is Google, which generates its revenue predominantly through advertising, and faces significant and increasing competition from Facebook and Amazon. Antitrust law is also not about protecting competitors, but rather competition for the sake of consumers. Protecting competitors that would otherwise lose fair and square for the sake of bolstering the quantity of competitors necessarily comes at the expense of the quality of competition, ultimately harming the consumer. Congress needs to protect the consumer welfare standard and adhere to its spirit in its operating procedures with regard to antitrust. The 117th Congress cannot continue the trend of its predecessor of dragging CEOs before subcommittee hearings to berate them for their business practices. If businesses are punished merely for being successful, they will be dissuaded from delivering innovations that have wide-ranging benefits for people across the globe
Budget Reform
Budget reform is the most fundamental issue the new Congress and administration will have to tackle in the coming years. The Congressional Budget Office (CBO) estimates that the budget deficit will be $2.3 trillion, or roughly 10.3 percent of gross domestic product (GDP) this year. That amounts to the second largest deficit relative to the size of the US economy in 75 years—second only to 2020’s deficit of nearly $3.3 trillion and 14.9 percent of GDP. This will saddle every American household with tens of thousands of dollars in debt. Exploding deficits and burgeoning debt over the past couple of years show that red ink is a bipartisan phenomenon, with Republican and Democratic lawmakers pursuing their own expensive hobbies - with taxpayers picking up the tab. There has been increased chatter about fully bringing back earmarks. The late Sen. Tom Coburn (R-Okla.) has described them as the “gateway drug to a spending addiction.” This is a large part of the reason why former Speaker John Boehner (R-Ohio) and the rest of the Republican conference banned them in 2011. The new Congress has a chance to shine a light on fiscal accountability by reducing government spending without enacting large tax increases that would cripple economic growth. Lawmakers should enact hard caps on discretionary spending, ending the practice of creative “upward adjustments” that have led to a practically lawless environment of overspending. The new Congress can revert to a commitment to the “pay-as-you-go” (PAYGO) rules that require that new spending be offset by spending cuts elsewhere. Members of Congress – on both sides of the political aisle – need to remain resolute in maintaining the 2011 ban on the use of earmarks. These simple changes and policies would ensure that taxpayers are protected from the profligate spending habits of both current and future members of Congress.
Defense
Recent audits of the Department of Defense (DoD) indicate that the Department routinely wastes tens of billions of taxpayer dollars and suppresses evidence of said waste. The DoD also spends tens of billions of dollars per year in funds for “overseas contingency operations” (OCO). This is an additional and a separate tranche of money allocated to the DoD and the Department of State. Ostensibly to be used in case of overseas emergencies – originally for the wars in Afghanistan and Iraq – these funds have become a slush fund of sorts for the DoD. OCO funds are not subject to budget restrictions and receive very little, if any, oversight. Even former Secretary of Defense Ash Carter has recently called the OCO "a road to nowhere." The new Congress should finally require full transparency on Pentagon operations by ordering a more comprehensive audit and should target wasteful and redundant spending by the agency. Additionally, policymakers must pressure the DoD to curb no-bid contracting, which leads to ballooned costs and a lack of rigor by defense contractors. The share of Pentagon contract spending awarded competitively has steadily declined over the past decade to under half, driven by no-bid proliferation in areas such as human resources and Special Operations Command. Congress should also cease allocating tens of billions for OCO funds in order to increase transparency and accountability, as well as to get spending overall under control.
Tax Reform
The Tax Cuts and Jobs Act (TCJA) was one of the most significant pieces of legislation to get the economy back on track. Rates at every marginal bracket were reduced and corporate tax rates were slashed from the highest in the world of 40 percent (including state corporate taxes) to 21 percent at the federal level. Additionally, small businesses no longer face the need to “pass through” all their income at the highest individual marginal rate because many small businesses can now deduct 20 percent of their income before passing through their incomes. To make up for revenue losses, the federal government limits loopholes that disproportionately benefit the wealthy. Some members of Congress have signaled their intent to pursue a financial transaction tax (FTT). FTT proposals would target U.S. capital markets and, in the process, compromise funding for more than 60 percent of the American economy. Additionally, analysts project that a financial transaction tax would result in underfunded pensions. Each year, roughly $900 billion is invested by pension plans into hedge funds. The millions of Americans relying on retirement plans would thus be disproportionately harmed by any enacted version of the FTT. The new Congress should learn from the economic prosperity that came as a result of the TCJA and the recovery that was made possible by the tranche of taxes and regulations that were cut amidst the coronavirus pandemic. They should also allow for increased tax-free contributions to educational and healthcare savings accounts. Congress should embrace principles that strive for a simpler, flatter tax code. Thus, they should strive to reduce the number of brackets in the federal tax code. This would reduce confusion and save businesses and individuals onerous compliance costs. Cutting the number of brackets would also give an incentive for people to work harder, as workers would work extra hours, accept more promotions, and take on new clients without incurring a higher penalty rate on each new dollar earned. Congress should reject a FTT and should also work to end the system of citizenship-based taxation, in which Americans living abroad must pay US federal taxes and the taxes of their host country.
BLOGS:
Monday: Op-Ed: COVID ‘relief’ Brimming with Wasteful Spending
Tuesday: Coalition Urges Congress to Reject Financial Transactions Tax
Wednesday: New Study Shows Folly of Net Neutrality Regulations Around the Globe
Thursday: TPA Releases 2021 Issue Briefs: Roadmap to Fiscal Sanity for the 117th Congress
MEDIA:
March 5, 2021: I appeared on WHAS 840AM (Louisville, Ky.) to talk about H.R. 1 and taxpayer-funded campaigns.
March 5, 2021: The Livingston Parish News (Denham Springs, La.) ran TPA’s op-ed, “Regulators stifle broadband expansion with exorbitant pole attachment fees.”
March 8, 2021: WBFF (Fox, Baltimore) interviewed me about Baltimore City school issues.
March 8, 2021: The Center Square ran PA’s op-ed, “COVID 'relief' brimming with wasteful spending.”
March 9, 2021: I appeared on Rush to Reason on KLZ 560AM (Denver, Col.) to talk about H.R. 1 and taxpayer-funded campaigns.
March 9, 2021: WBFF (Fox, Baltimore quoted TPA in their story, “Baltimore City Schools employees earning $100,000 nearly double as graduation rates fall.”
March 9, 2021: Inside Sources ran TPA’s op-ed, “Federal Agencies Should Follow USPS’ Lead in Ditching Electric Vehicles.”
March 9, 2021: The Washington Examiner (Washington, D.C.) quoted TPA in their story, “Baltimore school officials making $100K despite failing test scores.”
March 9, 2021: The Center Square ran TPA’s op-ed, “Congress must steer clear of infrastructure boondoggles.”
March 10, 2021: I appeared on WJPF 1020AM (Herrin, Ill.) to talk about H.R. 1 and taxpayer-funded campaigns.
March 10, 2021: VP of Policy Patrick Hedger appeared on the Thom Hartmann Show on Free Speech TV to discuss waste in the Covid-19 relief bill.
March 10, 2021: The CW Baltimore (Baltimore, Md.) quoted TPA in their story about wasteful COVID relief spending.
March 10, 2021: VP of Policy Patrick Hedger appeared on the the Stever Gruber Show (nationwide radio) to discuss waste in the Covid-19 relief bill.
March 11, 2021: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the next COVID relief bill and unspent money from previous rounds of spending.
March 11, 2021: VP of Policy Patrick Hedger appeared on the Christ Stigall Show (nationwide radio) to discuss waste in the Covid-19 relief bill.
March 11, 2021: WBFF (Fox, Baltimore) interviewed me about state taxpayer funding of education in Maryland.
March 11, 2021: Issue & Insights ran TPA’s op-ed, “Keep PPP Targeted Toward Small Businesses.”
Have a great weekend.
Best,
David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
