America's Talking - Episode 10: Trillions of dollars are moving through the Senate

Episode Date: August 13, 2021

On the heels of passing a $1 trillion infrastructure bill, Senate Democrats passed a $3.5 trillion budget resolution Wednesday that sets Congress up for a major battle later this year. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to America in Focus, powered by thecenter square.com. I'm Johns Pataro, and this is the 32nd week of 2021. Coming up, we'll take a quick look at one of the top stories from the center square.com, and later, executive editor of the center square, Dan McAilip, and DC reporter Casey Harper, will take a deeper dive into some of the top stories of the week, including reaction to the Senate passing a $1 trillion infrastructure plan, concern from farmers over a proposed death tax on inheritance, and more vaccine mandates for workers in public offices. Coming up right after this on America in Focus, powered by thecentersquare.com. Hi, this is Chris Krug, publisher of the Center Square.

Our team produces the nationally read and recognized news stories at thecentersquare.com, the country's fastest growing, non-profit, nonpartisan, state-focused news and information site. We deliver essential information with a taxpayer's sensibility through reporting that's easy to understand and easy to share with your friends and family. We know that you need information that allows you to understand what the governor and your local legislators are doing. Get the news that you need to know at thecenter square.com. That's thecenter square.com. Thecenter square.com. back. Here are the top stories of the past week on the center square.com. Rising inflation levels could

lead to a pay bump for senior citizens on social security. The Senior Citizens League predicted this week that the annual cost of living adjustments for the 2022 Social Security payments could be the highest in four decades. The league predicted a COLA adjustment of around 6.2% for 2022, which would be the highest paid since it was 7.4% in 1983. This comes on the heels of the Bureau of Labor Statistics releasing new data, showing that a few key markers of inflation, such as the producer price index and the consumer price index are both up. President Biden and his administration argue that the inflation is temporary and will flatten out next year. Republicans refute the idea of it being temporary and say it's being made worse by out-of-control government spending.

To read more about this story and many others, visit thecentersquare.com. Now for a closer look, over to Dan McAulb and Casey Harper. Thank you, John, and welcome to the America in Focus podcast, powered by the center square.com. I'm Dan McAlep, executive editor of the Center Square Newswire service. Joining me this week, as he does every week, Casey Harper, D.C. Bureau chief for the Center Square. Casey, how are things? Doing good, Dan. How are you? I'm doing fine. It is Friday, August 13th.

Casey, of course, is a recording from the nation's capital, Washington, D.C. I'm usually in the Chicago suburbs during the podcast recording, but today, Casey, I'm down in the great state of Texas, getting ready to move my baby girl, my daughter, into Sam Houston State University's dorm for her freshman year. I don't know how to feel about it. It's a little bittersweet. Do you feel

sorry for me? I never feel sorry for you, Dan, but this is a pretty exciting news, and I'm very happy for you. Your daughter, she picked the best state in the country go to, so that's already. That's right. You're a former Texas. You're a Texas native, right? That's right. Born and raised in East Texas, so. Well, good for you. Decided to flee for Washington, DC. Not sure why you did that, but... All the Californians were pushing me out. Immigrating. So you moved from Texas to California to Washington, D.C.

Casey, I have to question your judgment. No, the Californians moved to Texas because they're fleeing. And then I moved to D.C. I fled east as they fled here. All right. Well, we'll have to talk offline about that, Casey. Okay. Lots of news to talk about this week.

shortly after passing with some with some Republican support the $1.3 trillion infrastructure plan. Senate Democrats jumped right back in and with no Republican support passed a $3.5 trillion spending plan that even some Democrats flagged as something that might be too expensive. This was just the first vote of what could become a big fight. it's going to be sent to committees next to hash out some of the details. But Casey, what can you tell us about this? Well, I can tell you're exactly right about right after the $1 trillion bill. So they've been negotiating on this infrastructure, you know, first round for for months, really,

and it looked like it was going to die, and then it wasn't. And then they finally got it through the Senate. And within minutes, you know, Chuck Schumer started talking about this three-refer. $3.5 trillion budget resolution. Now, people don't always understand how the budget resolution process works. So just real quickly, when the Senate passed that $3.5 trillion budget resolution, what it does is it tells the committees to start, the relevant committees to start drafting legislation that kind of fits the demands of things. So if there's certain several hundred billion dollars for this issue, they'll start drafting legislation on their topic.

and it gets all cobbled together. Now, this is going to be really interesting because the House has not yet passed the infrastructure bill that the Senate passed earlier this week. And Nancy Pelosi is basically saying, Senate, you guys have to pass the $3.5 trillion bill also before I'm going to get this infrastructure bill passed. Now, that's going to be really tough

because a lot of Republicans in the Senate don't want to vote for the $3.5 trillion bill is too big. They think that, I mean, it's very hard to see how they'll pass that bill without raising taxes, which is something a lot of Republicans don't want to do. You know, $3.5 trillion is a lot of money, and it's just going to be, it's going to be coming amidst concerns that several Republicans, and even some Democrats have raised about inflation, which you alluded to. Now, what it's really going to come down to for the,

these Senate Democrats, if they do try to pass this larger bill, is they cannot lose, they cannot lose Senate Democrats, because if they use the budget reconciliation process, which they've said, you know, they're likely going to do, they have to get, you know, 51 vote. So they're the simple majority, right, or 50 with the vice president. So they've already had Senator Joe Manchin, who's a pretty centrist Democrat, saying that he has, you know, serious concerns about the bill. that there could be grave consequences.

And he's pointing to the inflation data, which is just really the highest that we've seen in decades. Even just in June, inflation rose more, the most it had risen since the 2008 financial crisis. So this is just raising a lot of questions. And we'll dive a little bit deeper into the inflation question here. In a little bit,

you met your reference, Senator Joe Manchin, Democrat from the fines state of West Virginia. He did raise concerns about the massive amount of spending that's included in this $3.5 trillion Democratic plan, but he did vote for it to move it forward. Is that correct? Yeah, it's going to move forward. It's just going to be decided what's in it and if it's too big and how they pay for it. Right. And Senate Minority Leader Mitch McConnell, he said the federal government faces a debt ceiling limit this year. And Majority Leader Mitch McConnell has said that if the Democrats ram this $3.5 trillion

package through, then he will make sure that no Republicans, of course, the Senate is a 50-50 split between Republicans and Democrats. McConnell has said that he will make sure that there are no Republicans support increasing the debt limit if the Democrats ran this $3.5 trillion package through. So we're in for one heck of a fight this fall, right? Yes, unless something changes, that's exactly right. And it's starting to, you know, these kind of fights were pretty common in Congress a few years ago, but we've had some kind of reprieve, it seems, in recent years. but yes, we're talking about government shutdowns again,

which I don't think anyone really wants to talk about, but it's going to happen. And, you know, what McConnell is going to keep pointing to is, hey, Republicans are not being unreasonable. We negotiated and we voted on and passed a $1 trillion infrastructure bill. All right. And he's going to keep hammering that and keep pointing to that when Democrats inevitably accuse a Democrat.

accused Republicans of being obstructionist for not, you know, supporting the various spending items in the $3.5 trillion bill, which includes a lot of things that are kind of more on the progressive wish list than the, you know, standard infrastructure things like roads and bridges. So anyway, you know, Republicans are going to keep saying, hey, we voted on something, we negotiated, we passed it, and now you guys are trying to ramp through a partisan bill. And then basically I think they,

said what they did was they separated what they felt like they could get bipartisan support for, and then they took everything else. Right. Members like Bernie Sanders, who's really been pushing this $3.5 trillion dollar bill. And they wrapped it up and see, they're going to try to see if they can get it through, but it's really, it's not clear if they will. And in terms of concerns about the massive spending plan, in addition to inflation, which I said we'll talk about here in a minute,

the national debt has ballooned to $29 trillion. That's an amount that American taxpayers will be on the hook for at some point in the future. These combined the infrastructure package and this $3.5 trillion spending plan would add trillions of dollars to that national debt if there aren't large tax increases included in it. Is that correct? Yes, the taxing, I mean, even with tax increases, it's going to be really interesting how they pay for this because they're talking about raising the corporate tax rate. They're talking about upping IRS auditing. But as much as there's not a stomach to pass several trillion dollars in spending,

there's even more or even less of a conviction or, you know, support for upping taxes or this kind of thing. So adding to the debt at low levels, I think can be even kind of normal. But to do it at such a high level, is this really going to cause problems with them? And I'm not sure how they're going to face this problem. They were able to get the latest infrastructure bill down to just a few hundred billion dollars in new spending. You know, they took from different funds that had not been used. They, you know, so they could kind of justify to say, well, this money is sitting here not been used. We're going to use it for this, reassign it, do some accounting things.

But it's a lot harder to do that with $3.5 trillion. You can find a couple hundred billion here and there with a smaller bill. But this is just a lot more spending. And it'll be interesting to see to, you know, if the inflation data for August and September as we go into this debate, if it just continues to grow worse like it has been, or if it kind of tapers off, as the Biden administration says it will eventually do. Because that's going to be a big negotiating chip. The inflation rate has become a political football. Let's talk more about that inflation rate concern than Casey.

The Bureau of Labor Statistics came out with a new report this week that showed inflation again increased at a higher than normal average in July. What can you tell us about this report? Right. So like you said, BLS, saw that the consumer price index rose half a percentage point, which may not mean anything to some of our listeners, but that continues an inflation trend of a 5.4% increase in the last 12 months. To put that at perspective, the inflation rate for 2020 was a little over 1%. So to have 5.4% now is obviously five times larger than what we saw.

last year. Now, on one level, this is kind of a bad economic indicator that, you know, that economists and analysts and experts look at and say, how is this going to affect the economy as a whole, you know, job openings, that kind of thing. And that's all very valid. But for the average person, of course, the economic future has an impact. But what's more immediate and urgent for them is, you know, the price of goods. And what we've seen, just looking at this data. the energy index so the cost of energy rose 23.8% around the country. The big driver that has been gas prices, which is really, you know, hitting people, which affects a lot of Americans. We've seen, let's see, the index for use cars and trucks increased 41.7% over the last 12 months. So

if you want to buy a car and drive it, you're going to have to have an extra influx of cash. And this is just affecting the other things. Food prices have gone up. Natural gas rose 19%. You know, I'm just kind of cherry picking some examples here that affect a lot of people. But these prices are really going up. And it doesn't, you know, it doesn't look like this year that that's going to stop. The Biden administration has kind of said, well, yes, this is temporary. It's a blip. But by next year, it'll kind of taper off. So we'll see if that's true. But let me go back to that half percent increase figure. That was for the month of July only.

And that was after the consumer price index in June increased by 1%. So that's a 1.5% increase over two months. If these trends continue and you extrapolate that over a full year, 1.5% for two months, over 12 months would be a 9% inflationary. increase. And you said last year, inflation increased by 1%. Now, there's almost always going to be inflation. Prices are going to go up. That's normal. But 1 to 2% is closer to normal. 9% would be just outrageous. That would be, that's essentially would mean that the price Americans pay on just basic products, groceries, gasoline, you mentioned, new cars or used cars or whatever. Those prices,

in a year, again, this is extrapolating over 12 months, the past two months inflation and increases would be 9%. That would have devastating impacts on American families and on the economy in general. Yeah, and no one, I don't know about you, but most people's 401Ks aren't doing 9% a year. I mean, you can have a good year where that happens, but you can imagine that basically your 401K is not growing because if you do 8% growth in a 413, you're 411, you 1K over year over year, which is not bad. It's pretty normal. If you do that, you're actually still losing money because the value of your cash is decreasing. The buying power of your cash is decreasing by a net 1%. And it's even worse if you're putting the savings account. Sorry,

go ahead. And just tying this back to government spending, the first story we talked about this $3.5 trillion spending plan that the Democrats are trying for. One of the concerns of the increased spending is in order to pay for it, there has to be either tax increases or the government has to print more money or a combination of both. And when government prints more money, that leads to inflation. So the concern is, and help me out here, that if the government continues this pace of spending that they're on, that inflation is only going to continue to get worse. That's exactly right. And that's what people are concerned about. And that's how inflation has become a political football. A lot of senators, you know, like for example, Ted Cruz has been really outspoken about this.

You know, he said, well, I can read his quote, but he said Democrats are engaged in a $9.5 trillion spending spree. This week, they're spending nearly $5 trillion on an infrastructure bill. And he called it, he said, our country is facing an inflation bomb due to, in part to the Democrats money printing. Now, obviously, it's a partisan quote in, you know, Ted Cruz is an out. spoken Republican, but that gives you an idea of the rhetoric the Republicans are saying is calling an inflation bomb. It's also, you know, we talk about tax increase or printing money, but in a lot of economists when they talk about inflation, you know, inflation is a hidden tax because it's a tax on your

cash, really. The cash in your bank account becomes less valuable over time. And the beneficiary of that is the government because, you know, they get the first benefit by basically printing money to, uh, payoff debts and then the one who fills the impact is the average American. So it's really a tax increase either way, whether it shows up on your, in April or not. And so that's what they're pointing to. You know, then of course the Democrats say that it's temporary and it's worth it. You know, we're going to do the things we need to do. This $3.5 trillion dollar bill has things like

universal pre-K, free community college for two years. It has some amnesty provisions. It has a lot of things that Democrats care a lot about. And so they're going to say that, yes, it costs money, it's going to, but it's going to be worth it. And of course, Republicans disagree. Let's move on, Casey. Another plan by President Joe Biden, the Democrats would amend the inheritance tax, which is also known as the death tax. Now, this can get a little convoluted when you talk about tax law and whatnot, but there are plenty of folks and Republicans and others that are concerned about this plan. One group in particular is starting to get more vocal in their opposition to this plan, and that's farmers and farmer families. Tell us about this. Sure, farmers have become increasingly

concerned about a new, basically a proposal Joe Biden laid out to increase the death tax. And so, you know, debt tax, inheritance tax, interchangeable, but there is kind of complicated. I'm going to try to keep it simple because it can get complicated quickly. But Please keep it simple for people like me who just don't have a brain power to understand stuff like this. Right, right. Well, never mind. I mean, you better not. You better not.

You work in the media. I think people's expectations are low. So basically, Joe Biden proposed this year repealing what's called stepped up basis in tax law. Boy, you've already lost me. Go ahead. I know, I know. So stepped up basis is just a tax provision that allows an error, someone inheriting something, to report the value of an asset at the time of inheriting it instead of, you know, and basically not pay capital gains taxes on how much the asset value increase. I'll give an example to lay this out. So it allows the errors to avoid capital gains taxes altogether if they sell the inheritance immediately. So Dan, let's say you're my great grandfather, you know, a hundred and a year.

But I'm not, I'm not that old Casey. Well, just for the sake of argument, you know, I'll be a hundred eight. I know that's a bit high for you. So you, let's say you bought a farm for, you know, $10,000 in your lifetime. And now I, your great grandson, a young whippersnapper, full of life and vitality. and, you know, all that energy and those kinds of things. Get to the point, please. Oh, right, right. Okay.

So I inherit your farm that you bought at $10,000, right? Now, let's say it's worth a million dollars now because the price of real estate, you know, and that's not unreasonable, actually, you know. So the farm is now worth a million dollars. So under current tax law, I could step up the basis, which means I, I would not have to pay the, basically taxes on the $990,000 increase in value of the property. Because inheriting it, it's like I inherited $990,000. But that's not like I actually have it, $9,000.

So if I'm your great-grandson inheriting the family farm, all of a sudden, it's like, great, I have a farm, but I also have a tax bill for $990,000 that I can't. can't pay. So what am I going to do? I'm going to have to sell the family farm, split it up, sell it, and so that I can pay the tax bill. And obviously, you know, I'll still have come away with some money, but the only way I was able to do is by selling the kind of farm. And so a lot of farmers obviously are upset about that. And some people don't have a lot of sympathy because they're like, well, look, it's a million dollar farm. What are you complaining about? But if you want to maintain the integrity of the farm, the family lineage, passing it down, this is necessary to have a step

basis that allows me to not have to pay that. So what Biden has proposed is that for certain income earners, I would have to pay that tax on the increase in value. Right. On the increase in the value of what I inherited over the years. And so while some people might think, I'm sorry to interrupt you, while some people might think, oh, this farmer family, they've got a farm that's worth millions or a million dollars.

They must be rich. But actually, it's the property that might be worth a million dollars, but really they're not cash rich. That's not, that's just, you still have to pay taxes. You still have to pay for the seed and the cost of producing whatever. Corn, let's say it's corn farm. The cost to harvest it or whatever. And they don't have a million dollars in the bank sitting there to pay for all this.

The property is just worth that. So if they were to have to pay this tax that President Biden has proposed on the entire thing, there's a lot of family farms that would have to change hands. Most likely they would become corporate farms. Right. And this is kind of also hard to understand if you've never run a business. I mean, I've sort of run a very small business. And it's whatever, but these farms are very high capital.

or high capital businesses. So you have to have, you know, you could have a, you know, a $10 million farm, let's say. Because, you know, a smaller's farm and sort of closer to what we've been talking about, maybe exempt depending on where it is. But, you know, a $10 million farm, it may only make. I mean, it's not making $10 million a year, you know, just because it's worth $10 million doesn't mean that's actually what is generating in revenue for someone.

You can have a million dollar business that makes $50,000 a year for you because your expenses are so high. So a farmer's, you know, paying the land, paying taxes on the land already, right? So they're already paying tax on the land. They have these giant machines that are very expensive. They're expensive to, you know, repair. They're paying for all, you know, water. They're paying for seed, potentially paying for livestock feed. So they have all these expenses. And so even though they, it's just, you got to keep in mind that the profit is what they're actually getting, not the actual value of all their assets. So they may have a very expensive piece of machinery, but that doesn't generate money at the end of the end of the day. It's only when it's in the part of the whole system.

So, yeah. So something else that we'll be paying close attention to at the center square.com, Casey, we have a little bit of time left to talk about one more story. Another Bureau of Labor Statistics report coming this week regarding the massive amount of jobs that are available in the U.S. economy. What can you tell us about this report? Yeah, so if you've been listening to the podcast, we've talked a lot about how there have been more jobs, so many jobs that have not been filled, high unemployment and widespread job availability. And we have some pretty hard numbers to back that up now. So basically more than 10 million jobs are available in the United States despite millions of Americans being out of work. And so even beyond that, there's actually, actually more jobs right now than people who are unemployed. Now, it's worth, also,

the first reason I'll say why this is important is because presumably people are unemployed because they can't find a job, right? Or because when they apply, someone else beats them out for it. And so when there's, so there's, when there's actually more jobs than the number of people unemployed, you would expect the unemployment to drop or get down to, you know, pre-pandemic levels at least, get back to where we were when there's so many available jobs. So you might ask, okay, well, why aren't these, why aren't they going to these jobs? Well, to be fair, you know, the jobs can be in places other than where you live. So, you know, you're in Huntsville, Texas, you know, or somewhere recording this, but so a 10,000 job openings in New York City doesn't do a lot of good for the people

in Huntsville. So there is a little bit of that, like there's the geography or let's say a new a hotel opens up in Huntsville, but if the guy has worked in the oil field this whole life, he doesn't really want to work in an hotel. So there is a certain level of there's people don't want to move for a job or the job's not in their industry. But even then, when there's so many jobs and there's actually more jobs open than workers, which is kind of unusual, there's got to be another kind of reason or cause or what's going on here. And what Republicans are pointing to are these heightened government benefits, especially the weekly unemployment benefits. So we've been talking about how a couple dozen Republican governors have announced that they're

going to turn away those benefits. Those rejection of benefits did not take place immediately. They've been staggered over the summer and just now kicking in. A lot of the data that we're looking at for the story even won't really reflect that because it's taken effect so late. But I would say that it's really kind of adding some strength to that argument. If you actually have more available jobs than workers, and that's demonstrably proven in the data, and we also have a morning consult poll that I wrote about a while back that said that straight up,

1.8 million Americans had said they turned away a job because they preferred to live on unemployment benefits because they're generous. And so I'll just kind of wrap up this little soliloquy I've gotten into. But it's the weekly, this has kind of been a trial run for a form of universal basic income, potentially a form of what does it look like to do federal benefits instead of just doing state benefits. And, you know, you can point to some human, you know, empathy and compassionate benefits. But economically, we've seen that there's been some real consequences. Right.

And if, and the long-term impacts on the economy could be significant, these supplemental federal unemployment benefits that have been approved during the pandemic are, of course, on top of state benefits. And as you mentioned that Morning Consult, a survey, 1.8 million Americans have outright said that they're not returning to work because they can make as much or more or about the same sitting at home as they. do as they would if they have rejoined the workforce. Well, the American economy is driven by work, by production. If people aren't working or a significant number of more people aren't working and aren't producing, that has a long-term effect on the economy. So we have run out of time, Casey. Thank you, as always.

We'll be following this story and more. follow for developments log on to the center square.com for Casey Harper I'm Dan Mcaleb we'll talk to you next week