America's Talking - Episode 20: White House Releases New '$1.75 Trillion' Spending Plan

Episode Date: October 29, 2021

White House releases new '$1.75 trillion' spending plan. New corporate minimum tax proposal gives hope to Democrats on reconciliation. Manchin likely kills proposed tax to fund reconciliation bill. Polls: Biden and Congress hit new lows among voters. 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 and Focus, powered by thecentersquare.com. I'm Cole McNeely. Coming up, we'll take a quick look at one of the top stories from thecentresquare.com and later, executive editor of the center square, Dan McAulb, and DC reporter Casey Harper will take a deeper dive into some of the top stories of the week. Coming up right after this on America in Focus, powered by thecentresquare.com. Hi, this is Chris Krug, publisher of the Center Square. Our team produces the nationally read and recognized news stories at thecenter.com, the country's fastest growing, non-profit,

nonpartisan, state-focused news and information site. We deliver essential information with a taxpayer 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 the Center Square That's thecenter square.com. Thecenter square.com. New polling shows that President Joe Biden has hit new lows in approval this year. 538, a polling analysis group, reported that Biden's approval rating hit a new low this week

at just over 43%. Biden's approval numbers are better than former president, Donald Trump's, at the same point in his term, but well below former President Barack Obama's approval rating at this point in his presidency. To read more about this story and many others, visit thecentersquare.com. Now for a closer look, Dan McAulb and Casey Harper. Thank you, Cole, and welcome back to American Focus, powered by the Center Square. I'm Dan McAulb, executive editor of the Center Square Newswire Service. Joining me today again is Casey Harper, the Center Square's Washington, D.C. Bureau Chief.

We are recording this on Friday, October 29th. Casey, Halloween is Sunday. Are you a candy corn guy or a popcorn ball guy? I am a caramel apple guy, Dan. You know, here at the center square, we don't take the left or the right narrative. We go right down the middle, just the facts, caramel apple. I hope that's not what you're giving out to trick-or-treaters on Sunday. No, I'm trying to create a business for the local dentist. There you go.

All right. As usual, Casey, busy week in Washington, D.C. Some developments this week on the massive reconciliation bill that President Biden is trying to get voted on in Congress. What's the latest there? Sure, it is massive. You're right. But now it's a little less massive, actually.

Half is massive. So President Biden has been facing this deadline, a lot of maybe voters, Americans didn't know. but he's going to Europe and he's there now, going to Italy, met with the Pope. And it was really a self-imposed deadline to really make some big progress before he went. And so on his way out the door, he dropped a $1.75 trillion framework. That's important to emphasize this is a framework, not legislative text. So in some ways, there's a lot of details missing, especially on how to pay for it. But this new plan is $1.75 trillion, which is half the original plan.

is the target number, notably that Senator Joe Manchin had asked for, which is $1.75 trillion. You know, he's one of the main swing vote Democrats who said he could just not vote for a $3.5 trillion bill. So some things that are, again, emphasizing this is a framework and in negotiations, things can change, things could be added back in or taken out. You know, it has, it still has publicly funded preschool, extends the child tax credit, the monthly child tax credit. Home care spending, climate change spending. You know, one big thing that's taken out is the quote-unquote free community college. But it's, you know, when you cut the bill in half, the total number on things goes down and certain provisions just had to be eliminated entirely. But for a lot of progressives were worried that Biden would cut out the climate change.

change spending, but it's one of the biggest parts of the bill now is the climate change spending. So that's probably going to make them feel a little better, but they were unwilling to give their support for the plan after just based on a framework. They want to see the text. They're not willing to vote for the infrastructure bill until they see the text of the bill and have time to review it. So that's going to probably be after the president returns home and then another round of negotiations. But Democrats are really on the clock here. So we'll see if they can get it across the finish line.

So after the president cut the bill from $3.5 trillion to $1.75 trillion, did that swayed any Republicans to jump on board? No, none that I've seen have been willing to do that. They don't support really any more spending in that regard. There are some who supported the bipartisan, of course, infrastructure bill. But this new spending is pretty much entirely social spending and they're not willing to spend over a trillion dollars on. climate change and expansions of social programs when, you know, they point into things like the rising inflation, which we may talk about a little bit more if we had time. But, you know, we've already spent, if we spend the, do the bipartisan infrastructure bill and we've already done the COVID bill this year, we're up on $3 trillion in additional spending just this year alone. And so Republicans are saying that's more than enough. And my understanding too is that the reason that it's, 1.75 trillion

down from three, one of the reasons that it's 1.75 trillion dollars down from 3.5 trillion dollars is some of these social spending has deadlines attached to it. And some people are calling those gimmicks that if these social programs are meant to be universal

and last forever, then that spending is going to increase because the 1.75 trillion dollars, some of these programs, programs expire. Yeah, that's right. And what, you know, if you're progressive, you could argue that that sets you up to renew them, potentially. But I think they'd much rather just have the programs going longer because if the program

expires when, you know, Republicans during the majority, it's probably going to be in a bad way. Although it's a lot harder to kill an entitlement after it already exists than it is, you know, in its inception. So it is kind of a gimmick in the sense that you're, going to promise Americans this program, but actually you're only going to promise it for a few years and it's going to go away. And you probably don't mention that in your speech. But the upside for progressives could be that if Americans get used to getting this federal benefit, then it's going to be,

you know, Republicans are quote, quote, the bad guys you have to take it away in a few years by not re-upping it. And that's harder politically. So you could see more long-term strategy there, but I think still any progressive would rather just take the spending now when they have, you know, it's not very often you get the House, the Senate, and the White House in your party, and so they want to go big. A lot of them are very frustrated with Mansion and cinema, but Mansion in particular has been very outspoken and just said, you know, this is crazy. He even has reportedly said that he'd be okay not doing this bill at all. So he's trying to whittle it down and make it more reasonable. He's very concerned by inflation as well. So.

And I did see a report this week, too, that Manchin, you know, a lifelong Democrat was asked about if he was going to switch to the Republican Party. And he said he doesn't know what party he should belong to just because of all the mayhem in Washington. Well, so we have a new framework again, as you mentioned, no details, no budget, no actual bill with details in it. a framework of a new reconciliation bill as part of President Biden's Build Back Better program. You have to pay for it still. And there have been some developments this week, too, on the tax front. Senator Elizabeth Warren came out with a new plan this week about a corporate minimum tax plan. What is that?

Sure, this is an interesting plan. It's really backed by progressives. in the Senate, but it's risen to prominence because Kirsten's cinema of Arizona, she has given her support for it. So any tax that has gotten would get cinema or management support is a big deal and could act, you know, because Democrats are probably back it just to get a way to pay for the bill. But this tax in question would impose a 15% minimum tax on corporation profits. And so, you know, Democrats claim that it would raise hundreds of billions of dollars over the next decade. And it's really would be targeted, they say, at roughly 200 companies at the top.

And those are companies that report over a billion dollars in profits. And so they would point to companies like Amazon that managed to not pay anything in taxes. They would, you know, or pay very low in taxes. They would, you know, they would point to companies like that who are able to work around the tax system and have this tax targeted at them, basically. And so, you know, I think many of our listeners be familiar with Liz Warren's tone towards corporations, but she says, you know, this is a quote, giant corporations have been exploiting tax loopholes for too long, and it's about time they pay their fair share to help run this country,

just like everyone else. The corporate profits minimum tax would end corporate double dealing and ensure companies pay something in taxes when they report billions and profits to their shareholders. So, and then, you know, I think this is interesting, you know, they keep pointing to the loopholes, deductions, and exemptions that corporations use. So this is really a pretty targeted tax at the top 200 corporations. There are pros and cons to it, but Cinema expressed our support. So it's one of the leading tax proposals right now before Democrats.

Right. So there's already an existing 21% corporate tax on businesses. earlier proposals had Democrats wanting to increase that to 21% or excuse me from 21% to taking it to 28%. That was a no-go, certainly for all Republicans and corporations and many Democrats. Now this one would create, impose the minimum 15% tax. So just help our listeners understand us. If there's already a 21% corporate tax on businesses, how does the minimum 15% tax fit in? It has to do with the loopholes that corporations are using to get out of paying that 21%.

Is that right? Right. It's really targeted at the loopholes. And so, you know, one thing that was pointed out is the company's report, you know, they report billions of dollars in profit. to their shareholders, but they won't pay any taxes on the profits. And so they're saying that corporations need to pay taxes on these profits. So there's a lot of things that corporations can do to, you know, depreciation is a really big

way that corporations write off things. So when you can estimate the loss in value of your assets, right? And it's really hard to validate and say, like, you know, so if, you know, corporations on businesses and car or buildings and cars and or machinery of all types, you know, and a corporation big enough to qualify for this tax is going to have just an incalculable amount of assets. I mean, it's calculable. But they can say that the value of those assets may be depreciated five or 10 percent because they're a year older. There's wear and tear. but if you know that could be I think it's you know that could be a billion dollars

I mean if you depending on many assets you have so there are ways that the corporations like that where they're not really actually losing any money per se like out of their bank account cash is not flowing but their assets depreciated and they're able to write that off and then say well we don't have to pay tax on a billion dollars because our assets depreciated a billion dollars and therefore you know we

we didn't actually make profit and so So I think this is going to be kind of targeted at these. Like the framework, all the details of this are not released. I mean, a lot of these taxes, the devil is in the details. It sounds good. And say 15% minimum tax, get rid of some of the zoopoles. Like, that makes sense. But the devil is often the details, how they, you know, end up, what tweaks are made.

This is really in the text and is approved is going to be a big part of just how effective it is if it can be dodged and what kind of economic fallout it'll have. Well, that was going to be my next question. What's the argument against this plan? Sure. I mean, the biggest argument is that these corporations can just leave. I mean, that's a big one and take all their jobs with them. And if you think, oh, people won't leave America.

Just remember what, you know, happened in manufacturing in the last 100 years in this country where, of course, rising wages and, you know, unions did a lot of good for the country. But the corporations just left and went to do. other places and left, you know, much of the Midwest without an economy. So that's one argument, but another is that corporations are some of the biggest hires, you know, top 200 corporations. I mean, it'd be interesting to see. I don't have the date on how many jobs that is, but it's a lot of jobs across the country right from top to bottom. And it's not just guys in Manhattan wearing suits to the office to run these corporations. It's guys who work in

distribution plants. It's guys who work in delivery trucks. you know, all kinds of stuff, truck drivers who are shipping goods to back and forth to market, all this stuff. And so if the corporation has to pay this big tax bill, the next board meeting, you know, the next shareholder meeting is going to be, okay, how do we cut costs? Because costs just went up big time. And one of the biggest, easiest ways for corporations to cut costs is to cut labor. And so it will almost certainly lead to people losing their jobs because you can't pay this big, tax bill and hire as many people. And the other side will be you can't pay this big tax bill and grow as quickly and hire you people. Right. So maybe it's not just, well, they shouldn't fire

people. They should take cuts and their profits. And, you know, maybe that's true. But they also can't grow as fast. Those are a couple of the big arguments that are made. I think it's about there's this kind of a balance. We do have a corporate tax rate of 21%. I think that that's agreed on by both parties. There's an agreement that corporations need to pay some level. But finding that level and keeping it competitive with what the rates are in other nations is what we have to keep an eye on. All right. Thanks for that explanation. There was another tax proposal put forth this week that seemed to be almost dead on arrival, a tax on unrealized capital gains of the wealthiest Americans. Tell us about that. What are capital gains? What are unrealized capital gains?

And where's that plan at? Yeah, I hope. I hope so if your eyes are glazing over this, I'm going to try to make this simple. I know we're talking about a lot of tax stuff, but it really impacts the economy. Maybe it impacts you if you're listening. And it's going to decide large part if this bill actually passed if we do have universal pre-K and all these things that Biden's been talking about for months. So I just the reason is likely dead, not definitely, but likely dead on a rival is because Joe Manchin said pretty much out the gate that he doesn't like it. So it could be tweaked or changed, but if Manchin's vehemently opposing it, it's probably not good.

But a lot of Democrats were really excited about it before Manchin came out opposed to it. And they're calling it a billionaire's tax. Some people are calling it a wealth tax. They're saying, again, this is one of those. The details are not quite all published. It's not in text. But they're saying it would target. only billionaires are the wealthiest, wealthiest Americans. And so attacks on unrealized capital

gains is kind of the opposite of what I talked about, the other ones. So it's a tax on the appreciation of assets in the same way that corporations will write off assets that lost value the way your car loses value every year because it's older. Some assets gain value like stocks. And so normally if you have a stock, you buy a stock and it's worth, just keep the numbers, say, you know, simple, $10. And then that stock increases to $20. You don't have to pay taxes on the stock until you sell it, right? So when you sell the stock, you'll have to pay taxes on the $10 you made.

So you put in $10, you got $10. So when you take out 20, you have to pay tax on the $10, which are, but if you, many of the wealthiest Americans never take the stocks out. I mean, one, they don't need to. They just, they have to have a place to store their hundreds of millions of billions of dollars of wealth. So they store it in the stock market where they can get a predictable eight or 10% return. And so you might have a billionaire, but if they have half a billion dollars in the stock market and it's just, you know, they're getting maybe, you know, it's doubling every 10 years over their lifetime, but they're never paying taxes on it because they don't withdraw it. It's just a way to store their wealth and they don't need to withdraw it.

And when they die, it's passed to their heirs. And so then it will be taxed on their death. But the way it's set up right now is actually they don't, the heirs can step up the basis. And so it's kind of complicated. But when the person inherits that those stocks, they actually don't have to pay nearly as much taxes as they could if they had to pay the total value increase over that time. And so another example would be art, you know. If you have a painting, it's worth a million dollars. A lot of wealthy people buy art.

Maybe they like it, but it's actually a really good way to store wealth. And it just hangs on your wall and it looks nice and it's worth all this money. And so you can sell it at an auction later. And it's kind of arbitrary how much it's worth. And so people use it for that for tax reasons. So if that painting increases in value, but you don't sell it, you would still have to pay taxes on the increase in value, even if you haven't sold it. Am I making sense?

I know it's... Yeah, no, you are, and I appreciate you breaking it down this way. It seems like it's very complex, of course. How does the IRS gauge whether a piece of art has gained value or not? There's certainly not going to go out and audit every single piece of art. So, one, I don't know how enforceable this plan would be in the first place. And using your simple $10 stock that gains value, in one year, it doubles in value and it's now worth $20.

The plan would put place, and taxes are not collected on that rising value of that stock that goes from $10 to $20. But this plan for billionaires, for the wealthiest of Americans, each year they'd have to pay a tax on that increased in value. Now, I can ask you a silly question. Let's say, let's say it's a bad, we're in a bad recession, and those stock values, that stock actually loses value. Does the federal government, does it work the opposite way?

Are they going to pay you back for the lost value on that asset? Actually, it probably does, yeah. They don't actually write you a check, but you would be able to write it off on your taxes. Oh, gotcha. Okay. Yeah, yeah. So, you know, the thing about these taxes are, is the average American just sits down, and maybe they have one accountant, but a billionaire is going to have a whole team of lawyers and accountants creating different accounts.

And they have a way of always finding a way around these taxes. So the enforceability thing, like you said, is big. I mean, they're not, no, taxing the stock market is actually, it's pretty hard to just not be in the stock market for people that's wealthy. So that may work. But a lot of the other things, there's just ways that they can get around it that most Americans don't even know it's in the tax code. Different things they can do.

Like the painting thing has been. good example for a long time, a way that it's avoided because how do you determine the value of a pain and, you know, you just have, it's just worth this because some, it's worth because someone, because someone is interested in buying it. Right, right. But it's just a praise that value, you know, by an art expert. But it's, it's an interesting idea. I think that Democrats liked it because it was called a billionaire's tax and it was likely going to be targeted at the most wealthy Americans. but Manson said he didn't like it. Maybe he'll change his mind.

So I don't know, Nancy Pelosi suggested that it would probably not generate enough revenue, which was really interesting to see her publicly saying that. So it may be that she doesn't want to fight the political fight over something that is not really even going to fund the bill regardless. So I think right now the previous tax we talked about, the minimum corporate tax has a lot more legs and more chance to actually be enacted inbound. Got it. Let's move on, Casey. New polling this week shows that both President Joe Biden's and the 117th Congress have hit new lows in their approval ratings. What more can you tell us about that? Yes, imagine this. People are tired of politicians. So this new polling from 538 is a very reputable. Polling firm, they do polling, but they also do analysis. They take all the polls.

polls that are out there and they collate them and they rank them based on their reliability and they take results from that. So it's a poll of polls, really. And they found that Biden's approval rating hit a new low this week since he took office. So it's at 43%. His disapproval is at about 51%. Being over a 51%, 50% disapproval is a big marker for presidents. So 43% approval, you know, a thing I compared it to in the story is the same. time during Trump's presidency, I believe he was at 38% and president at 38% approval, but President Obama was over 50% approval. And so that kind of gives you an idea. Trump was kind of an uncharacteristically controversial president. Obama was more

traditional. Yeah, breaking news. So, and then there's a Gallup poll release this week that's found that Congress's approval has also hit a new low for 2021. So this is just the overall, you know, how people feel about Congress, you stop on the street, 21% approval. Wow. And so that is very low. Believe it or not, that is slightly higher than it has been in recent years. So the average over the last decade has been 18%. 18% of Americans on average have approved of Congress. Congress had very low approval ratings for a long time.

Interestingly, though, people have high approval ratings for their congressmen. but they generally just hate, they disapprove or unhappy with Congress as a whole and what they're doing. So it's 21%. The main reason for that, and this has political implications, 2022 implications, is that Democrats' approval of Congress has fallen from 55% to 33% of Congress.

And so what it looks like happening earlier this year, especially in, I think in April, there was a lot of optimism. is the honeymoon period of a new president, a new Congress, a new Senate. So overall approval was up. But then, you know, they passed the COVID relief bills. Like, okay, we're going. We're going to get infrastructure done. And they missed a big deadline. And Congress, you know, Democrats have actually missed several big deadlines. And every time you miss one of those deadlines, you lose a lot of political will, a lot of political inertia to actually make

something happen. But missing these deadlines has dropped them down to just 33%. And so, it doesn't vote well for 2022 when you have all three branches of government and yet your own party is only at 33% approval of Democrat, you know, of Congress. And so you referenced 2022. That's, that's of course the midterm elections. Every single member of the U.S. House of Representatives will be up for election. About a third of U.S. senators will be up for election. Democrats have a slight advantage in the House, in the U.S. House. It's a 50-50 split in the U.S. Senate, but with Vice President Kamala Harris casting a Democrat casting the tie-breaking votes, it's a slight advantage for Democrats. Republicans will be looking to take back one or both chambers next year. That's right. And, you know, McConnell has really pointed this out in his messaging, Senator Mitch McConnell, the Republican leader in the Senate, has hammered this very idea that we're talking about saying,

You know, the language he uses is kind of funny, but he says, you know, Democrats are acting like this is the New Deal. And they have super majorities and a, you know, a mandate from the American people to enact huge legislative social reform and change. And he says, he's just saying, that's just not the case. You know, they have a razor-thin majority. Americans are unsure about this last plan. They like infrastructure. You know, it's unclear. You know, they're less excited about the.

larger reconciliation bill. You can't even get your own party on board. And yet you're trying to pass this major sweeping social plan. And so McConnell's point of these poll numbers and saying, you're trying to make this happen when it's not really, it's just not there for you. When they get the votes, maybe it's very possible to get the votes. But this fault, you know, McConnell's argument is that the American people aren't excited about this. They did not send you here with a mandate. And you're kind of forcing this, forcing this through. Well, we're just almost near the year mark until next year's elections the first week of November 2020. So this is going to be a year-long storyline.

But that's all the time we have this week. For Casey Harper, I'm Dan McAulb. This has been America in Focus. We'll talk to you next week.