With all the activity surrounding the $1.2 trillion infrastructure bill and $3.5 trillion budget package, there were other things happening at the Taxpayers Protection Alliance (TPA). For example, the United States Postal Service (USPS) announced a $3.2 billion loss for the third quarter of the fiscal year. Read more about that below. The big news was that this week we launched a new Podcast, “Across the Pond,” Featuring Lindsey Stroud (Director of the Consumer Center) and Martin Cullip (TPA International Fellow). This was the first of many to come. Lindsey and Martin talked about tobacco harm reduction. And, it just so happened that during the live podcast, Gov. Cuomo announced his resignation. Coincidence? Of course it was, but Cuomo has been very bad on allowing smokers to choose safer alternatives. Cuomo stated that, "Vaping is better than smoking. Technically, yes, but so what?" Let’s hope the next Governor of New York follows the science and understands that vaping saves lives. In the coming weeks, Lindsey and Martin’s podcast will talk about a host of other consumer issues including plastic bans and silly science coming from the World Health Organization.
Double Death Tax Defeated
It was a wild week with massive amounts of spending approved by the Senate. As soon as the Senate voted for final passage of the infrastructure bill, they began debate on the $3.5 trillion budget resolution. The budget resolution expands the size and scope of the federal government’s tax and spending power. It is a poor reflection on the Senate that the legislation passed with hardly any substantive public debate. On the heels of a destructive global pandemic, the focus of lawmakers at all levels should be on recovery and mitigating the damage that’s been done. Instead, the bill was filled with divisive agenda items that will only plunge the nation further into debt.
There was some good news, as at least one tax increase was stopped (at least for the time being). Sen. John Thune (R-S.D.) offered an amendment that forced senators to go on the record regarding repealing the stepped-up in basis rule. A repeal of this rule would amount to the imposition of a second, steep death tax on the American people. Dealing with and processing the death of a loved one is already a trying enough time for any family. On top of this pain, the government implements a death tax on certain inheritances of up to 40 percent. With the repeal of the stepped-up basis rule, families would face a second distinct tax of 43.4 percent, as their inheritance would also be treated as a capital gain. The stepped-up in basis rule has been in place to protect families from having to pay taxes on gains they never made. The rule states the basis for any capital gains tax will be the value of the asset when they acquired it, as opposed to when it was first acquired by the previous owner. For example, if an inheritor acquires a home worth $2 million that was only worth $1 million at the time of original purchase, the stepped up basis ensures they would only pay capital gains on anything beyond the $2 million valuation. Without it, however, the tax code will tax the $2 million inheritance as part of the estate tax and the supposed $1 million capital gain.
The Thune Amendment to the budget resolution passed with unanimous support, 99-0. Given that this amendment was marketed as a repudiation of the administration’s plan to repeal the stepped-up basis, it’s lack of dissenters was surprising. However, it gets less surprising when the very next amendment offered was one by Sen. Catherine Cortez-Masto (D-Nev.), which would have essentially invalidated the Thune amendment. The Democrats wanted to have their cake and eat it too. Where the Thune amendment secured the stepped-up in basis rule, the Cortez-Masto amendment allowed it to be repealed and rates to rise so long as a separate fund was set up. One ran counter to the other, but Democrats tried to play it off as if they opposed the tax hike, but wanted an option in case of emergency or to apply to big businesses. However, the Cortez-Masto amendment failed 49-50, as Sen. Kyrsten Sinema (D-Ariz.) broke with her party to cast the deciding “Nay” vote. This is a signal that this is an issue moderates like Sen. Sinema do not want on their name come election time. This has become a toxic issue for those closer to the center of the spectrum, as well it should be.
Good to have a victory in a week where there wasn’t much good news.
More Billion-Dollar Losses at the Postal Service
As I mentioned above, last week was a bad week for the USPS. They reported a staggering $3 billion net loss for the third quarter of fiscal year 2021. This figure marks a sharp uptick in losses from the same quarter last year when the USPS incurred a $2.2 billion loss. Losses have continued to escalate despite a reduction in the number of postal workers being quarantined as a result of the COVID-19 pandemic. In total, the USPS has lost more than $80 billion since 2007. It is inexcusable that the USPS is losing even more money than they were at the same time last year, despite resumed economic growth and progress in fighting the pandemic. These deeply disappointing figures demonstrate a basic inability by America’s mail carrier to keep costs under control and adequately price their services to reflect delivery costs. Even excluding liabilities outside of USPS’ control, expenses have increased by nearly 2 percent from the same period last year. Meanwhile, transportation costs have surged more than 8 percent. Clearly, something must be done to get these skyrocketing expenses under control.
Postmaster General (PMG) DeJoy has acknowledged the need for wide-ranging cost reductions with the agency releasing a ten-year plan under his watch. While the reform plan contains commendable features such as a unified logistics platform, proposed service changes would diminish the reputation of the agency while barely putting a dent into costs. Slowing down first-class mail would send the disturbing message that the USPS is no longer committed to its primary goal of speedily delivering mail to all Americans. Instead of degrading service standards, the agency should commit to more routinely auditing its bloated middle-mile highway contracts. According to a 2019 TPA report, more sound oversight of these contracts could save taxpayers $1 billion per year.
The USPS needs to clamp down on surging operating costs to get back into the black. Pursing misguided reforms such as service standard changes will only deepen the challenges facing the agency to the detriment of the American people. Congress and President Biden need to take these losses seriously and pass real postal reform.
BLOGS:
MEDIA:
August 6, 2021: The Jacksonville Journal Courier (Jacksonville, Fla.) ran TPA’s op-ed, “Misinformation, distrust undermine fight.”
August 6, 2021: Issues & Insights ran TPA’s op-ed, “Franchises Need Freedom And Flexibility, Not Rigid Rules From Washington.”
August 6, 2021: National Review quoted TPA in their story, “One Way of Keeping Down College Tuition.”
August 6, 2021: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story, “Examining the Ethical and Legal Aspects of the Mosby's Legal Defense Fund.”
August 7, 2021: Townhall.com ran TPA’s op-ed, “No, the Opioid Lawsuit Is Nothing Like the Tobacco Master Settlement Agreement.”
August 8, 2021: I appeared on Canada National Radio to talk about the $1.2 trillion infrastructure bill.
August 9, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about unspent COVID relief funds.
August 9, 2021: I appeared on the Tim Jones Show on KWTO 93.3 FM (Springfield Mo.) to talk about the $3.5 trillion budget bill.
August 9, 2021: I appeared on WACV 93.1 FM (Montgomery, Ala.) to talk about the $3.5 trillion budget bill.
August 9, 2021: I appeared on WHO 1040 AM (Des Moines, Iowa) to talk about the $3.5 trillion budget bill.
August 9, 2021: County17.com ran TPA’s op-ed, “The many reasons to celebrate International Beer Day on Friday.’
August 9, 2021: The Center Square ran TPA’s op-ed, “Price controls are back-door funding scheme at the expense of taxpayers, seniors.”
August 10, 2021: I appeared on the Conservative Commandos radio show to talk about the $3.5 trillion budget bill.
August 10, 2021: I appeared on WFIL 560 AM (Philadelphia, Pa.) to talk about the $3.5 trillion budget bill.
August 10, 2021: I appeared on the Conservative Commandos radio show to talk about. The $3.5 trillion budget bill.
August 10, 2021: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story, “Baltimore City job vacancies continue as few plans emerge to fill positions.”
August 12, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about the eviction moratorium.
August 12, 2021: I appeared on WRVA 1140 AM (Richmond, Va.) to talk about the $3.5 trillion budget bill.
August 12, 2021: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the $3.5 trillion budget bill.
August 12, 2021: NTD television interviewed me about the tax increases in the $3.5 trillion budget bill.
Have a great weekend!
