Ordinarily, life in Washington has a rhythm, just like all cities focused on a single industry. Almost every December in the nation’s capital, lawmakers assemble to pass a massive omnibus spending bill that no one has read (or had time to read) and spends taxpayer dollars in questionable ways.
This year, however, the coronavirus has juiced Congress’s profligate ways into overdrive. The “negotiations” over the omnibus bill—on to which lawmakers now want to attach a “stimulus” measure—have become so chaotic few people can keep developments straight. And the ill-considered ideas being discussed, including another round of government checks to people who may not need them, show that prudence and efficiency remain far from minds when Congress gets to spending other people’s money.
Who’s on First?
A series of developments that came fast and furious on Tuesday made the entire legislative process look like a Marx Brothers film, with offers and counter-offers contradicting each other:
- Senate Majority Leader Mitch McConnell, R-Ky., proposed leaving both a bailout for state and local governments—to which Republicans (rightly) object—and liability protections for businesses—to which Democrats object—out of the legislative package.
- Treasury Secretary Steven Mnuchin immediately followed up with a $916 billion proposal that included a bailout for state and local governments and liability provisions.
- McConnell quickly endorsed Mnuchin’s package, which 1) had a price tag of $916 billion, above Pelosi’s offer of $908 billion and 2) included the state bailout and liability protections he had said hours ago should be removed from the package.
- After receiving the $916 billion proposal from Mnuchin that exceeded her own most recent offer, House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., immediately rejected it as insufficient.
Beyond the sheer chaos and disjointed conversations, the headlines show Republicans—as per the usual practice—negotiating against themselves. After spending months promoting a plan in the neighborhood of $500 billion, and watching Pelosi come down in her offers from $3.4 trillion to $2.2 trillion to $908 billion, McConnell suddenly decided to endorse a plan that exceeded Pelosi’s latest request—only to watch Pelosi in turn demand even more.
Worse yet, McConnell’s comments in seeking removal of the bailout and liability provisions implied that he wants to consider another “stimulus” bill next year: “What I recommend is we set aside liability and set aside state and local [bailouts] and pass those things we can agree on knowing full well we’ll be back at this at the first of the year” (emphasis added).
With comments like that, little wonder reporters note that “several GOP senators have pushed their colleagues to accept a more expensive package in lieu of no agreement at all.” And if Republicans cave now, Pelosi, Schumer, et al., will come back right after the holidays to demand even more, as McConnell admitted.
Highly Inefficient Spending
As the cost of this legislation spirals ever-higher, the things lawmakers want to spend money on present just as much a concern as the overall price tag. In recent days, some Republicans have joined forces with Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez—no, those aren’t typos—to promote another round of “stimulus” payments to individuals, a costly yet ineffective subsidy.
Of course, many Americans have suffered greatly from the economic chaos rendered by the COVID lockdowns. But some Americans have suffered little if any financial damage. In fact, white-collar families who can easily work from home have in many cases improved their financial situation by not having to spend on things like commuting costs, dry cleaning for work clothes, lunches at the office, etc.
The income-based cap on the checks—in March’s CARES Act, only individuals with adjusted gross income (AGI) below $75,000, and couples with AGI below $150,000, qualified for the full payments—ensures the checks won’t go to the most affluent families. But sending checks to everyone below the income thresholds doesn’t ensure they will go to those who actually need the economic help—quite the contrary, in fact.
‘Take My Check, Please!’
Based on my business earnings and deductions for the year, my adjusted gross income will likely fall below the $75,000 cutoff to receive the full “stimulus” payment, assuming lawmakers rely upon the March parameters. Instead, I will likely take the opportunity to convert part of my old 401(k) into a Roth IRA. The income from that conversion would push my income over the $75,000 threshold, making me ineligible for the “stimulus” payment.
Why would I do such a thing, and pass up “free money” from the federal government? Precisely because of the cumulative effects of all these giveaways. I would rather pay taxes on my retirement savings now, when tax rates remain low, than when I retire, when tax rates will almost certainly have to rise to pay for all of these “free” goodies Washington is giving away. That fundamental calculus drives my decision-making far more than a one-off check from the federal government.
In other words, choosing to pay taxes now rather than later constitutes my own personal no-confidence vote in lawmakers’ ability to manage deficits and debt over the balance of my working life. If Congress doesn’t have the willpower to regulate its spending—and year after year, it has proven that it doesn’t—then all of us as citizens must act, and hopefully vote, accordingly.