The editors at Bloomberg are nervous about the Biden Administration’s agenda, dubbing it “ambitious but risky:
Biden’s intentions are admirable. He’s right to prioritize opportunity for the poor and disadvantaged — a consistent theme. He’s also right to match long-term spending increases with plans to raise taxes, because most of these outlays, however desirable, won’t pay for themselves. And it makes sense, as Biden proposes, to target those best able to afford it, hence pushing back against the trend of worsening economic inequality. In particular, he proposes roughly doubling the top rate of tax on capital gains and dividends to 43.4% (including the 3.8% Medicare tax introduced by President Barack Obama).
These goals are worthy — but Biden’s blizzard of proposals nonetheless gives cause for concern.
Spending on such a scale without waste is a bigger challenge than the president appears to think. And when it comes to taxes, the promise that the richest 0.3% will pay for everything is implausible bordering on dishonest. The danger is that the gains for the intended beneficiaries will be less than hoped, and the substantial cost won’t in the end be confined to a sliver of people at the top.
Value for money in public spending demands minute attention to detail. Promises to spend half a trillion here and half a trillion there suggest the outlay is itself the purpose — the bigger, the better — when the goal ought to be what the spending will buy, preferably at least cost. It’s worth noting that many aspects of Biden’s plans are actually expensive by design, for instance requiring federal contractors to pay higher-than-market wages, strengthening the bargaining power of organized labor, and raising new import barriers.
Done right, spending on infrastructure can boost private investment and growth; done wrong, it builds bridges to nowhere. Universal access to broadband internet is eminently desirable; it might be achieved economically and efficiently, or at inordinate cost. Two years of tuition-free community college could mean expanded training in skills demanded by employers, hence higher incomes and faster growth; or it could cause delayed entry into the labor force with loss of wages and no offsetting benefit. With so many American schools failing their students, fixing K-12 education is a more compelling priority.
In all these areas, management is everything. “Think of a number and double it†isn’t good fiscal policy.
What they’re saying should sound familiar because it’s very closely aligned with what I’ve been saying around here. I don’t have an enormous amount to add to their analysis. The private sector seems to be taking care of universal access to broadband already, at least if Elon Musk’s StarLink means anything. Maybe he’s counting on the federal government’s underwriting the program. It would be typical of him.
Does it really makes sense to pay additional subsidies to higher education when we aren’t creating enough jobs that require college educations as it is? And if it does make sense doesn’t a narrowly tailored program focused on needed skills and available jobs make more sense?
You can raise marginal rates but that doesn’t ensure you’ll raise additional income.
Finally, I think it’s better to pick one good thing and do it very well than to use a scattershot approach with no real intention of seeing your plans through to the end in the hopes that something will actually work. Maybe it’s just me.
“What they’re saying should sound familiar because it’s very closely aligned with what I’ve been saying around here.”
Hmmm. Shorter Bloomberg editors: Gee, Biden’s a swell guy for aspiring to help the poor, but given at least 60 years of empirical evidence his retread government programs will probably fail miserably. SNAFU.
Has no one learned their lesson? Talk about borderline dishonesty. This is usually, after pointing out the repeated folly of enlisting government yet again, where some reference to anarchy is made. Uh-uh. This is about power, control and reliable voting blocs. See: The public sector unions.
Off-with-their-heads Willie Sutton tax proposals, policies at cross purposes like open immigration vs low skilled wage structure or financing safety nets, or Solyndra-like social planning boondoggles is by design. Only one thing here is even close. If they must feed the Education-Industrial Complex, at least don’t harm those you profess to help; make it trade school.
From Whitehouse.gov
Building on the American Jobs Plan’s investments in school and child care infrastructure and workforce training, President Biden’s American Families Plan will ensure low and middle-income families pay no more than 7 percent of their income on high-quality child care, saving the average family $14,800 per year on child care expenses, while also generating lifetime benefits for three million children, supporting hundreds of thousands of child care providers and workers, allowing roughly one million parents, primarily mothers, to enter the labor force, and significantly bolstering inclusive and equitable economic growth. Specifically, President Biden’s plan will invest $225 billion to:
Make care affordable. Families will pay only a portion of their income based on a sliding scale. For the most hard-pressed working families, child care costs for their young children would be fully covered and families earning 1.5 times their state median income will pay no more than 7 percent of their income. The plan will also provide families with a range of options to choose from for their child, from child care centers to family child care providers, Early Head Start, and public schools that are inclusive and accessible to all children.
So, creating or supporting hundreds of thousands of jobs (including expanding public schooling to 3 and 4 year olds), will allow about one million mothers into the workforce.
I’m sure this will be wildly popular as most women no longer want to be burdened, (even for the early years it seems) with caring for their own children.
The plan also presupposes American women, especially women of colour, as they like to remind us, are disadvantaged in the art of raising children and the public schools have a sterling record so what could go wrong?
Will baby’s first word be intersectionality, or privilege?
BTW, you read it right. This is $225 billion for daycare, not healthcare.