The Unpleasant Impact of an Unserious Budget

Josh Hoxie

Josh Hoxie Project on Taxation and Opportunity, Institute for Policy Studies

If you can get past the fuzzy math, Trump’s budget means certain pain for most families — and big tax cuts for the wealthiest few.

Federal budgets, while boring and wonky, can have a serious impact on our lives. They dictate our collective priorities for how we choose to spend our public resources in support of the common good. That is, good budgets do that. But you’d be hard-pressed to call the most recent budget from the Trump administration good.

 

To be clear, it’s hard to even refer to this budget as serious. Sure, it’s written in official-looking thick blue books, and it outlines spending figures using precise numbers. But that’s about where the formality ends. Tucked into the formal budget is a set of assumptions that present a fantastical approach to simple arithmetic.

Estate Tax Two-Step

Take the estate tax for just one example, also known as the inheritance tax. The estate tax is a pretty straightforward idea: a levy on the inter-generational transfer of immense wealth that only the very wealthy pay. It’s been on the books for about 100 years.

If left untouched, it will generate an estimated $174 billion over the next 10 years, precisely $0 of which will come from anyone who could reasonably be considered middle class.

The Trump budget proposes to eliminate the federal estate tax. Trump’s own family stands to benefit enormously from this gift to the wealthiest households.

The budget also proposes to dramatically cut federal student loan programs by about $143 billion. Notably, the Public Student Loan Forgiveness program is eliminated, a program that hundreds of thousands of graduates signed up for expecting their student loans to be eliminated after 10 years of service in the public sector.

Do the Math?

Trading a massive tax cut for the ultra-wealthy in exchange for massive cuts to programs that help young people go to college is bad enough. But then there’s the math.

The Trump budget, despite proposing to eliminate the estate tax, still counts the estate tax revenue as part of its revenue projection. In fact, the administration expects estate tax revenue to top $300 billion, nearly double the normal projection. This lie is critical to their absurd claim that their budget will balance.

News flash: If you cut taxes, it means you don’t get the revenue from said taxes.

Mathematical Menagerie

The estate tax double-count is just one of the many mystical components of their mathematical menagerie.

A poll of top-tier economists by the University of Chicago (which has among the most conservative econ departments in the country) found practically unanimous agreement that there’s no way the budget will balance. The administration’s assumptions are just too far-fetched — no matter how many times you spin in a circle, squint, and pray that the numbers on the page change.

Unfortunately, while the administration’s struggle with basic arithmetic can be amusing, the potential impact of this budget is far from humorous.

It will mean millions of families pushed off their health coverage, millions of mothers blocked from receiving nutritional assistance for their babies, and millions more families in our northern states forced to choose between heating their house and affording their groceries.

Long-time Rep. Barbara Lee of California put it well: “I have never seen a budget so devoid of compassion and empathy for families struggling to make ends meet,” she observed.

There appears to be no law barring Congress from enacting a budget with fundamentally bogus assumptions, and many of Trump’s supporters on Capitol Hill are happy to play ball. One hopes their constituents will be much less willing to go along with the morally bankrupt mathematical mess this administration calls a budget.

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Reposted from Our Future.

Posted In: Allied Approaches

Union Matters

The Big Drip

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

A rash of water main breaks in West Berkeley, Calif., and neighboring cities last month flooded streets and left at least 300 residents without water. Routine pressure adjustments in response to water demand likely caused more than a dozen pipes, some made of clay and more than 100 years old, to rupture.

West Berkeley’s brittle mains are not unique. Decades of neglect left aging pipes susceptible to breaks in communities across the U.S., wasting two trillion gallons of treated water each year as these systems near collapse.

Comprehensive upgrades to the nation’s crumbling water systems would stanch the flow and ensure all Americans have reliable access to clean water.

Nationwide, water main breaks increased 27 percent between 2012 and 2018, according to a Utah State University study.  

These breaks not only lead to service disruptions  but also flood out roads, topple trees and cause illness when drinking water becomes contaminated with bacteria.

The American Water Works Association estimated it will cost at least $1 trillion over the next 25 years to upgrade and expand water infrastructure.

Some local water utilities raised their rates to pay for system improvements, but that just hurts poor consumers who can’t pay the higher bills.

And while Congress allocates money for loans that utilities can use to fix portions of their deteriorating systems, that’s merely a drop in the bucket—a fraction of what agencies need for lasting improvements.

America can no longer afford a piecemeal approach to a systemic nationwide crisis. A major, sustained federal commitment to fixing aging pipes and treatment plants would create millions of construction-related jobs while ensuring all Americans have safe, affordable drinking water.

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