“Hit the pause button,” Sen. Joe Manchin, D-W.Va., says.
Manchin made this remark to the West Virginia Chamber of Commerce, and again in a Wall Street Journal op-ed, with a headline saying he won’t support “spending $3.5 trillion” to help working families.
To cast the issues at stake in Congress right now as only about new spending is simply wrong. It is telling only half the story. Yes, the story is about investing in workers and their children and families by making child care, health care, elder care, housing and education more affordable. It is about investing in a clean environment and helping coal communities.
But this package of investments is not paid for by hitting the button at the U.S. Bureau of Engraving and Printing. That is, they do not grow national debt for future generations.
These investments are paid for by rolling back some of the tax cuts, tax breaks and tax loopholes passed in 2017 that helped the richest people and the most profitable corporations. These investments will be paid for by making the wealthy and corporations pay their fair share of taxes, without raising taxes on anyone making under
$400,000 a year. These investments will be paid for by allowing Medicare to spend less on prescription drugs by allowing the government to negotiate prices and leverage spending power over pharmaceutical companies.
Here is why Manchin is incorrectly focusing on the $3.5 trillion over 10 years figure. Yes, that sounds big, but it is the gross figure. It isn’t the net figure — it doesn’t include offsetting new revenue or spending reductions in the proposed budget reconciliation package. Talking only about the gross figure is like saying that someone can’t afford their mortgage and car payments without looking at the size of their paycheck or the savings from selling the old car in the driveway or from choosing not to write a big check every month to cousin Billy.
On the table in Congress is an effort to fix our dramatically unfair U.S. tax system and then invest the savings in programs that help working families make ends meet every month. Again, Manchin can stand with West Virginia working folks or with billionaires. Our nation can stop handing out money to billionaire Billies and pharmaceutical stockholders.
During the COVID-19 pandemic, the number and wealth of billionaires grew while many West Virginia workers had hours cut or lost their jobs. Nationally, over 86 million Americans lost their jobs in the COVID-19 recession.
Consider these findings from an Aug. 24 report based on data from Forbes: In March 2020, there were 614 Americans with 10-figure bank accounts; this August, there were 708. This billionaire-club members’ wealth increased $1.8 trillion over 17 months. And their wealth increase will go untaxed — wealth growth is not taxed like wage income.
This wealth growth would pay for more than half of the 10-year $3.5 trillion investment package.
Manchin also expressed concern about inflation. As an economist, I agree that inflation should be carefully monitored — but it is unwise to overreact to short-term data. According to Alan Binder, economics professor at Princeton University, “Much of this year’s inflationary surge can be traced to two transitory factors: bounceback from the anomalous negative inflation readings of early 2020 and bottlenecks as the economy reopens unevenly.”
Overwrought inflation concerns must not derail the opportunity to build a strong economy from the bottom-up by investing in help with the cost child care, health care, elder care, housing and education.
Chronic underinvestment in working families undermines our nation’s productive capacity and, in turn, demand greater than supply will increase prices over the long-term. The best way to prevent long-term inflation is to make smart investments in productivity.
The question for Manchin is whether he will support the net investments necessary to create an economy that works for workers, not just the wealthy. He must evaluate both sides of the federal budget spreadsheet — investments and revenue — and ask do the policies taken as a whole help hardworking West Virginians?
When you look at the whole story, the answer is clearly yes.
Kathleen Stoll is the policy director for West Virginians for Affordable Health Care (wvahc.org) and operates a policy and economic consulting business, Kat Consulting.