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April 29, 2021: The Final First 100

The Deficit Obsession is Back

That old deficit hawkery threatens the promise of Biden presidency

 

President Biden hands Nancy Pelosi a copy of his address, which fully
pays for itself within the 10-year budget window. (Andrew Harnik/AP
Photo)

The Chief

**** The surprisingly hidden truth of American politics is
that voters like laundry lists. The speechwriters and political
professionals prefer the soaring rhetoric and falling in love with their
own words, but people want to know what their leaders will do for them.
In this sense, Joe Biden had a successful speech last night.

I would point you to Harold Meyerson's recap

of the address, which makes a number of good points. He spent the first
100 days surmounting the potential logistical crevasse of the vaccine
rollout, more than doubling his initial projection for shots in arms. (A
bad break on the Johnson & Johnson vaccine has coincided with a pullback

that might be connected to hesitancy, and will be a major hurdle of the
next 100 days.) And he got money to those in need (mostly
)
through the American Rescue Plan.

Having established that government can work, he's pushing for more of
it, and associating that project with the ability for democracy to
function, setting up a race between democracy and autocracy for control
of the globe. It sounds pretty stark, but FDR used this rhetorical
technique in his day to good effect, at a time during the Depression
when people wondered if democracy was worth salvaging and openly pining
for an American dictator. Harold brilliantly deconstructs all that, go
read it
.

**Read all of our First 100 reports here**

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**** This is a comparison to Roosevelt that feels right, not
strained or pollyannish. It is a recognition that neoliberalism as a
counter to Reaganism failed, and that we must remake the country to save
the country. But some old habits die hard. And the biggest whiplash of
the First 100 days came when Biden turned away from all the investments
he wants to make and toward how we must "pay for" them all.  

You'll recall that there was a lot of celebration over how Biden
slayed the deficit dragon
,
how he not only didn't bother to pay for anything in the American
Rescue Plan, his team actively rejected the usual nonsense arguments
about runaway inflation and "targeted" relief. Well, look, I think
we can now say that this only applies to emergency legislation in a
pandemic.

"So, how do we pay for my Jobs and Family Plan?  I made it clear, we
can do it without increasing the deficits," Biden said last night.
"What I propose is fair, fiscally responsible, and it raises revenue
to pay for the plans I have proposed." This was in a section where
Biden attacked trickle-down economics, but even there, he condemned
Trump for adding "$2 trillion to the deficit" with his tax cuts.

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This is not limited to Biden himself. Here's White House adviser
Karine Jean-Pierre
saying we
have to pay for the plan and "not put the burden on the American
people." Council of Economic Advisers member Jared Bernstein has
consistently made appearances

touting how the deficit will not increase. There's just no question
that this is a preoccupation of the White House. In fact, if you go back
to the campaign, this was the plan: emergency funding to rescue the
country, and then back to the days of paygo politics.

I think the problem here is obvious: there's no consensus on the
pay-fors. Republicans don't want any of them, so forget a compromise
measure. It's welcome that Democrats have quickly recognized that
.
But there's no consensus among Democrats on these tax measures,
either. This nightmare piece from the Wall Street Journal

sets the scene. We already knew that the corporate tax increase was
being whittled away; now Democrats are skittish about equalizing capital
gains and income taxes for the top 0.3 percent of the population.

The thing about Congress is that everyone's a self-styled tax expert.
They have their own pet ideas on how to raise revenue, and their own
ideas about what should be left untouched. Every tax plan sounds good
until the one person it affects complains. And you end up with the
Hamlet-like indecision displayed by Sen. Jon Tester (D-MT): "I don't
want to raise any taxes, but I don't want to put stuff on the debt,
either... But if we're going to build infrastructure we have to pay
for it somehow." Yikes.

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There's one potential out here: the Biden proposal to have the IRS
simply collect what it's owed, investing $80 billion toward that end.
This appeals to a lot of members because it doesn't change the tax
code ("without raising taxes a dime," as California Rep. Ro Khanna
puts it) yet
could yield trillions in revenue. The IRS Commissioner said in open
testimony that the gap between money owed and money collected is $1
trillion a year.

The problem is that if you're doing this precise pay-for accounting
you have to rely on the Congressional Budget Office. They looked at this
last July
,
and found that increasing IRS funding for collections by $40
billion-half the Biden plan-only gets you $103 billion in revenue
over 10 years. That's ridiculously low; they're saying that $40
billion in funding only closes 1 percent of the IRS tax gap. But
they're the scorekeepers, and unless they change their mind, tax
enforcement just won't get you far.

If you can't get consensus on the pay-fors, and if your vestigial
rhetoric of "fiscal responsibility" demands that everything be
offset, the only result is that narrowing of the tax plan necessarily
reduces the spending. That's a ridiculous box for Democrats to put
themselves into. Especially because, if there's any type of spending
that doesn't require "paying for" it, as they are investments that
pay off in the future, it's infrastructure spending, be it physical or
human infrastructure. The fact sheet

on the American Families Plan cited a paper showing that every dollar
invested in early childhood education yields $7.30 in benefits
. So why are you paying for it then?

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Not that there aren't unanswered questions
about the
structure of the spending; why you need three child care benefit
programs is baffling, as is why families must pay a share of child care
expenses but not pre-K, or how to put states with wildly different
community college tuition

into the same free program that they must help fund. We've been
digging into a lot of these design questions in our Building Back
America series
. But I'm
far more concerned that we're putting deficit concerns over needed
investments to save the planet, give dignity to care work, get the
country moving, and more. Solving problems is far more important than
the long-run deficit picture in 2045. The entire logic of the Biden
project collapses if you yoke it to deficit concerns.

Amazingly, the old Obama team is more forward-thinking on this. Jason
Furman notes
that these
are investments and we have fiscal space. Peter Orszag wrote two months
ago

that Biden must put climate concerns over the deficit. Larry Summers
wrote in 2014

that infrastructure spending pays for itself. Biden's team has gotten
totally away from Obama-era thinking, but the Obama team has evolved on
this point.

And progressives need to evolve too. There's not enough appreciation
of how this deficit thing could really and truly blow up this entire
package. It's time to loudly state that the government was put in to
solve problems. Inequality is a problem and I strongly support attacking
capital income to counteract that. But the deficit blind canyon is a bad
place to be. That needs to be made perfectly clear.

We Can't Do This Without You

And In Closing

So this is the final edition of First 100, and as that emerged out of
our Unsanitized series, it's the end of 14 months of daily writing on
our world-historical times. Doing this work was definitely challenging
but also a real honor. It was a first draft of history, an attempt to
understand a changing and confusing world. That it received national
recognition

gives me great pleasure. But it's time to move on.

I'm not going anywhere. I'll be writing about COVID and the Biden
administration and all of the other things that interest me, over at our
main site . You can always check my author page
for new material. And let me
make a pitch for the Prospect. We tell great stories about ideas,
politics and power every day. The entire media world is struggling in
the post-Trump era, as less engaged people break from talk of politics,
and we're not different. But we need you to stay involved. As the
saying goes, you may not be interested in politics but politics is
interested in you, and staying informed ensures that you have a shot
against political and economic power.

I know it's easier to have this pop up in your email. And we will
continue that, with our On Tap series from Bob Kuttner and Harold
Meyerson. I expect we will sprinkle in some pop-up newsletters along the
way. But if you want to see the work we put our soul into, deep
reporting about what really matters in policy, who has power and what
they're doing with it, and the big ideas that can change the world,
please visit us at prospect.org . And if you're
so inclined, join us in the project, by donating to keep us going
.

It was my unique pleasure to carry this through. Thanks to all the
readers, and I welcome your feedback on Twitter
or through email
.

What Day of Biden's Presidency Is It?

Day 100.

That's A Wrap.

David Dayen's Reddit AMA Today!
Join David on Reddit for an ask-me-anything session, beginning at 1 pm.
eastern on Thursday, April 29.
CLICK HERE TO FOR THE DETAILS

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