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**APRIL 12, 2021**

Kuttner on TAP

Paying for Biden's Program-Time to Get More Creative

****

President Biden is proposing

to spend $2 trillion on physical and human infrastructure, and more in
additional waves of social investment. He wants to pay for this with
some $2 trillion in revenue increases over 15 years, which will cover
the costs of the spending, and then begin to reduce deficits.

But some Democrats, notably Joe Manchin, are balking at some of the tax
hikes. In addition, more spending is still to come, especially for the
caring economy.

We need some alternatives to increases in tax rates. Here are several
revenue raisers that don't increase tax rates and also are good policy
on their own terms:

Allow Medicare to negotiate drug prices. According to a recent GAO
report, Medicare pays more than twice
what the VA does for
prescription drugs. Medicare is explicitly prohibited from bargaining
for wholesale prices by the Republican-sponsored legislation that
created privatized Medicare drug plans. If Medicare could negotiate bulk
discounts as the VA does, it could save at least $400 billion over 15
years.

Increase tax compliance, especially of the wealthiest tax evaders.
Because of the demonization of the IRS, Republican presidents and
Congresses keep reducing IRS personnel. Meanwhile, tax evasion maneuvers
get ever more complicated. Experts estimate
we could raise $100 billion a year,
or $1.5 trillion over Biden's 15-year horizon.

In other words, negotiated drug prices plus increased tax enforcement
roughly equals the sum that Biden hopes to raise through increased tax
rates. And here is one more idea:

Fifty-year infrastructure bonds. Biden has agreed that the next round of
spending needs to be paid for. But we could make a partial exception
with special 50-year infrastructure bonds that would take advantage of
today's very low interest rates and lock in low borrowing costs for
government. If 50-year bonds covered, say, one-fifth of the cost,
that's another $400 billion we don't need to raise with increased
tax rates.

Over to you, Sen. Manchin.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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