"Emergency" COVID Relief Spending: The Great Taxpayer Heist of 2021
Democrats Pass Sweeping Reforms and Special Interest Handouts in the Name of Defeating COVID-19
In the days since the 117th Congress passed a $1.9 trillion COVID “relief package,” there have been numerous conversations about the provisions in the spending package. The “relief package,” also known as the American Rescue Plan Act of 2021, includes numerous popular provisions such as another round of direct payments up to $1,400 to many Americans, “extends additional, enhanced unemployment aid to millions,” and substantial changes to the tax code “to benefit families with children,” according to The Washington Post. In highlighting some of the package’s successes, some corporate media outlets ran headlines like “Biden stimulus showers money on Americans, sharply cutting poverty” or “Champion of the middle class comes to the aid of the poor.” To the neutral observer, these headlines read more or less like official Democratic Party press releases.
While the corporate media was quick to shower the “relief package” with praise, they often buried the troubling reality that this “emergency COVID relief package” was stuffed with special interest pork. At Substack, Matt Taibbi equates some corporate media headlines with the former Soviet Union’s Pravda. Taibbi’s assertion is undoubtedly correct as even PolitiFact admits that “at the high end, direct COVID-19 spending represents about 8.5% of the bill’s $1.9 trillion cost.”
While the COVID “relief package” was touted as an outstanding achievement “sharply cutting poverty,” the bill was loaded with partisan priorities, some of which are entirely unrelated to the COVID-19 Pandemic:
According to The New York Times, the package contains $350 billion for state and local governments to account for lost tax revenues from 2020; this is despite data showing that many states “ended up collecting nearly as much revenue in 2020 as they did in 2019.”
$128 billion in federal aid for public schools; however, “only 5 percent of that money will be spent in fiscal year 2021,” according to Fox News.
$570 million in 15 weeks paid leave for federal employees. This money was allocated despite the fact that most federal employees did not lose their jobs due to lockdowns or to the COVID-related economic downturn.
$45 billion allocated for an expansion Affordable Care Act subsidies with no income limit. According to Senator Pat Toomey, this $45 billion includes $3 billion for “individuals over 750% of the poverty line, or $96,000 annually.” Senator Toomey cites the section (Section 9661) of the “relief package” in making this claim.
$4 billion to the Department of Agriculture to combat decades of discrimination against Black farmers.
$91 million to assist with outreach to student loan borrowers. According to Fox News, this money “would remain available through September 2023.”
Tax hikes on gig economy workers: To offset the costs of this massive spending package, Democrats inserted a requirement that online platforms would have to report to the IRS when they pay individuals $600 or more and regardless of the number of transactions. This lowers the previous reporting level of $20,000. Notably, lawmakers in the past three Congresses “have sought to lower the reporting threshold,” writes Roll Call.
According to The New York Times, the “relief package” includes “an $86 billion aid package that has nothing to do with the pandemic.” The $86 billion of taxpayer money bails out 185 union pension plans “that are...close to collapse.” Notably, the bailout money “does not require the plans to pay back the bailout, freeze accruals or to end the practices that led to their current distress, which means their troubles could recur.”
In a last ditch effort to pay for the spending package, Democrats inserted three new tax increases. According to POLITICO, “One takes away deductions for publicly traded companies that pay top employees more than $1 million. Another provision cracks down on how multinational corporations do their taxes. A third targets how owners of unincorporated businesses account for their losses.” In ensuring that these new tax hikes remained under the radar, Democrats chose three provisions that “had the political benefit of being arcane.”
There are numerous political pet projects attached to this “relief package.” An article at The Hill outlines some of the special interest pork. As The Hill’s Joe Concha writes, “Take a bill that symbolically is overwhelmingly supported by the American people on its title alone…Then attach every pet project possible, in this case by combining it with an omnibus spending bill, and away we go.”
In reviewing the more obscure elements of the American Rescue plan, it is important to note that Democrats passed this “relief package” using budget reconciliation. Under this process, a bill can be introduced and passed with a simple majority. Currently, Democrats effectively maintain a majority in the Senate with 50 Senators and Vice President Kamala Harris as the tie-breaker vote. The Senate can pass all sorts of things “so long as they affect federal spending and revenue,” write Vox. One important constraint for this process is the “Byrd Rule” named after former Senator Robert Byrd of West Virginia.
In critiquing the Democrat’s American Rescue Plan, it is crucial to note that Republicans used a similar means of narrowly passing their signature achievement under President Trump’s term, the Tax Cuts and Jobs Act. As Vox writes, this process has been used by past presidents going back to President Bill Clinton.
In concluding, the Democrat’s “emergency COVID relief package” contains a few very popular federal spending programs and lumps them together with special interest handouts, as well as political priorities that existed prior to the Pandemic. Since the beginning of the Pandemic, the federal government under both the Trump and Biden Administrations has spent a whopping $6 trillion in total taxpayer expenditures. According to FEE’s Brad Polumbo, “for the same $6 trillion in expenditure, the government could have given every federal taxpayer a $41,870 check.” Next time you hear that the federal government has not done enough to mitigate the economic and social distress caused by the Pandemic and associated lockdowns, please be sure to reference them to that $6 trillion figure.