Early details are emerging on the Biden administration’s Build Back Better plan, and while many of these details are subject to change in the months ahead there is plenty already that should be concerning to America’s taxpayers. It appears the administration will propose spending as much as $3 trillion while only partially offsetting the cost with tax hikes that could harm the country’s ongoing economic recovery. This spending would immediately follow more than $5 trillion in deficit-financed spending to combat the effects of the COVID-19 pandemic.
One report indicates that “total new spending in the plans would likely be $3 trillion,” but that this “does not include the cost of extending new temporary tax cuts meant to fight poverty.” Indeed, the Tax Foundation recently estimated that permanent expansion of the Child Tax Credit (CTC) would cost $1.6 trillion in the first 10 years, increasing the cost of the President’s plan by more than 50 percent alone. NTU has argued before that extensions of the CTC expansion should be paid for, and that Sen. Mitt Romney’s CTC plan is one potential way to expand CTC while paying for it.
If the administration is going to propose spending nearly $5 trillion on their plan -- on top of the more than $5 trillion spent over the past year on COVID relief -- they should propose paying for it in full. NTU has offered policymakers reform packages that would save taxpayers hundreds of billions or even trillions of dollars before, and these options often have bipartisan support or have been recommended by nonpartisan entities.
Unfortunately, the administration appears to propose paying for this legislative package in part, rather than in full. What’s worse, they’re proposing to pay for some of the legislation with tax hikes that will particularly harm economic recovery and economic growth efforts in the wake of the disruptive COVID-19 recession. According to reports, this includes hiking the corporate tax rate by a third and targeting biopharmaceutical companies with an up-to 95-percent excise tax for refusing to accept a government-set price for their products. These proposals will punish innovators, job creators, and, ultimately, the workers and consumers that bear significant portions of these taxes.
There is plenty of wasteful, outdated, or improper spending to target throughout the federal government -- in programs and departments that Democrats prefer and in programs and departments that Republicans prefer -- and lawmakers can also address the current debt and deficit crises by stabilizing America’s entitlement programs for the long run. Unfortunately, the early details about the Biden plan indicate it will not build back America’s taxpayers better.