8 big problems with BBB

By BRIAN RIEDL
Posted 11/16/21

House Democrats continue working to secure the necessary votes to pass “Build Back Better,” their massive reconciliation bill. Consider the following eight major flaws of the …

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8 big problems with BBB

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House Democrats continue working to secure the necessary votes to pass “Build Back Better,” their massive reconciliation bill. Consider the following eight major flaws of the proposal:

1. No cost estimate. Lawmakers are not even waiting for the Congressional Budget Office to score the bill. The White House and others have pegged the 10-year cost at around $2 trillion, but that is surely an underestimate because of …

2. Gimmicks to hide the cost. The White House intends for the new policies to be permanent, but is using fake expiration dates to score only the first year of the extended child tax credit, the first four years of new health care expansions, and the first six years of child care and early pre-K subsidies. The stated goals of extending these provisions will add approximately $2 trillion to the 10-year cost, likely pushing the total past $4 trillion.

3. Less economic growth. The nonpartisan economists at the Penn-Wharton Budget Model calculate that — if Congress follows White House policy to make most provisions permanent — then Build Back Better will reduce the long-term GDP by 2.8 percent, reduce wages by 1.5 percent, and reduce work hours by 1.3 percent. The only thing it will expand is government debt, by 25 percent.

4. Expanded SALT deduction. The House bill would hike the cap on the state and local tax (SALT) deduction from $10,000 all the way to $72,500. This $500 billion tax cut (relative to keeping the $10,000 cap) would provide 84 percent of its benefits to the top-earning 10 percent of households (saving as much as $19,000 each), while the typical median-earning family would save just $20.

5. Child tax credits for undocumented immigrants. The legislation would end the requirement of a valid Social Security number and thus extend the refundable child credit to undocumented families. It is not anti-immigrant to note that even legal immigrants (such as green card holders) have typically had to wait five years to receive public assistance benefits.

6. Child care “reform.” While many families surely struggle with child care costs, the Democrats’ solution has been slammed across the political spectrum. It would create a one-size-fits-all system that would drive up the cost of daycare centers with new regulations and large mandated salary increases for child care workers. This could raise child care prices by as much as $13,000 per year, according to the left-wing People’s Policy Project. Many of these new costs would then be passed on to the government (i.e., the taxpayers) in order to cap costs for families.

7. Historic new taxes. The corporate tax increases would be nearly triple the size of the tax cuts they received in 2017. For households, the top combined marginal income tax rates (including federal, state and payroll taxes) would soar to the highest in the OECD (the 38 countries in the Organization for Economic Cooperation and Development).

8. Marriage penalties. The House bill would extend the American Rescue Plan’s expansion of the earned income tax credit (EITC) that broadened age eligibility and increased benefits for childless workers.

However, this new design expands a marriage penalty in which the simple act of getting married would cause two individuals to forfeit as much as $2,700 in annual EITC benefits.

Lawmakers should kill this bill.

 

Brian Riedl is a senior fellow at the Manhattan Institute. A longer version of this article appeared in the New York Post.

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