To: Members of House Committee on Oversight and Reform
From: National Taxpayers Union
Date: February 12, 2021
Subject: Taxpayer considerations and amendment proposals for the Committee’s reconciliation bill
Introduction and Key Taxpayer Considerations for the Reconciliation Bill
National Taxpayers Union (NTU) is the nation’s oldest taxpayer advocacy organization. As the House Oversight and Reform Committee marks up its reconciliation bill, NTU believes this bill contains provisions that would deeply impact taxpayers and the federal budget. While we have supported previous bipartisan efforts to provide economic relief to the American people, including the COVID-19 Emergency Relief Act of 2020, we are concerned that current stimulus efforts aren’t targeted, potentially wasteful, and in some cases unnecessary. We wish to share some of our topline considerations for taxpayers regarding this bill. They are:
The level of funding for state, local, and tribal governments; and
Lack of guardrails for how governments can spend this money.
Additionally, this legislation features a $350 billion topline cost that appears to have no significant offsets; this is deeply concerning given the nation’s current deficit and debt situations and given the trillions of dollars already appropriated to combat the public health and economic impacts of COVID-19.
We thank the committee for including funding for the Government Accountability Office to ensure proper oversight of taxpayer dollars dispersed by this act, or any other coronavirus relief legislation.
Amendments That Could Improve the Committee’s Reconciliation Bill
Though we believe that several proposals in this reconciliation bill should not be advanced by the Committee under any circumstances, we hope to offer constructive amendment ideas that would, on net, improve the bill. They are:
Subtitle A - Coronavirus State and Local Fiscal Recovery Funds
Recommended Changes
Strike Subtitle A, or reduce the allocations to state and local governments. This section would allocate $350 billion in funding to state, local, and tribal governments to cover revenue shortfalls created by the COVID-19 economic downturn. In our view, this high level of federal funding to state and local governments is unnecessary and wasteful. Despite the current economic realities, many state governments are experiencing a budget surplus, including California and Connecticut, which often have fiscal imbalances. For the states that do have budget deficits, in many other cases, the budget deficits are far lower than previously estimated. According to the Wall Street Journal, “states overall will have a combined budget surplus.” Some of the states that have significant budget deficits are notoriously high tax, high spending states, or have severe public pension liabilities. States that have balanced their budgets by setting priorities and serving as good stewards of taxpayers’ dollars should not bail out mismanaged states.
Additionally, this legislation ignores the support the federal government has provided to states and localities since the start of the public health crisis one year ago. Numerous rounds of direct aid, unemployment assistance, or funding to cover health care expenses through Medicaid are just some of the benefits transferred from the federal government to states over the past year. This funding, according to the Heritage Foundation, totals “$360 billion and comes in addition to the nearly $800 billion provided to state and local governments in the base fiscal year 2020 budget.”
Add a provision placing guardrails on state and local spending: Congress should include safeguards so states cannot use them to address budgetary problems that predate the pandemic, like mismanaged pension funds.
NTU’s Thinking on the Combined Reconciliation Package
As the authorizing committees in Congress work on separate reconciliation bills, NTU wishes to inform Members and their staff that we have several significant concerns with the current framework of the overall, combined reconciliation effort. This proposed legislation would add $1.9 trillion to the national debt without meaningful offsets and includes several major initiatives that do not adhere to the narrow, targeted approach NTU has advocated for since the summer. Additional proposals may do active harm to the country’s economic recovery efforts in the years ahead.
If the combined reconciliation bill came to the House or Senate floor today without significant improvements, we would advise Members to vote “NO” on the legislation. The bill will be heavily weighted in NTU’s annual rating of Congress.
Contact Information
Should you have any questions about the recommendations in this memo, please do not hesitate to reach out to Thomas Aiello and Thomas.Aiello@ntu.org