If Democrats’ tax-and-spend proposals are as popular as they claim, why do they have to lie about them?
When President Biden claims his $3.5 trillion “social infrastructure” bill will cost “zero,” he is clearly assuming Americans are morons, since there is no way the government can spend trillions of dollars without hiking taxes or increasing borrowing, for both of which there is indeed a price tag.
And when he tweets, as he did recently, “It’s simple: a teacher shouldn’t pay a higher tax rate than an oil company,” he is again wandering off the truth-track. Since the average teacher earns $31,000 per year, and since the income tax rate at that level of income is 12 percent, compared to the current corporate rate of 25 percent, this claim is another Joe Biden whopper.
You have to wonder: Does anyone in this White House even try to get the facts right?
This is not just a Biden phenomenon. When Sen. Elizabeth Warren (D-Mass.) hawked her proposed 2 percent wealth tax on the campaign trail, claiming it would cost the richest Americans “just 2 cents” on every dollar of their net worth above $50 million, she must have known that any educated person would understand that in fact levying that sort of fee on assets year after year would end up costing well-heeled people a fortune.
Indeed, Warren blew her boast by projecting “this small new tax on the tiny sliver of ultra-rich families will bring in $3.75 trillion over the next 10 years.” So, actually, a lot more than two cents.
And when, most recently, Treasury Secretary Janet Yellen describes Democrats’ latest brainstorm for raising revenues — a tax only on 700 of America’s wealthiest people — as not a wealth tax, she’s playing us for chumps.
As Democrats toss the federal sofa cushions searching for ways to pay for their $3.5 trillion progressive goody bag, they have become ever more inventive, and dishonest.
Since Sen. Kyrsten Sinema (D-Ariz.) balked at raising revenues the old-fashioned way, through conventional tax hikes, Democrats have launched a new idea: taxing unrealized capital gains.
House Speaker Nancy Pelosi (D-Calif.), who apparently missed the talking points memo, told a Sunday CNN audience: “We will probably have a wealth tax.” Minutes later, on the same show, Yellen contradicted the Speaker, explaining that, “it’s not a wealth tax, but a tax on unrealized capital gains of exceptionally wealthy individuals.”
Yellen wants us to believe that unrealized capital gains are income. That is not true. If you have a stock that doubles in value, plumping up your investment portfolio, you feel pretty chipper and indeed wealthier. But unless you actually reap that gain by selling your shares and receiving the proceeds from the buyer, you can’t buy a ham sandwich.
Until you sell, the gain is theoretical. Just ask people who bought Bitcoin in 2020 at $9,000, celebrated when it surged to $45,000 a year later by buying a Maserati and then took out a loan when it dropped back to $31,000. You have to cash in your winnings to spend your gains, just like at the casino.
Yellen said further: “It would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals.” She is right that realized investment gains indeed pump-up income for well-off people. But the IRS already “gets at” capital gains by taxing those winnings when the stocks or other assets are sold.
Yellen knows that, and she also must know that a wealth tax may be unconstitutional, as well as unproductive. She is simply playing ball with Democrats, who have not only egg but entire omelets on their faces.
Democrats have promised progressive voters the moon, since without them their party would not be in power. The problem is that some people don’t want the moon, while others want the entire galaxy. Sen. Bernie Sanders (I-Vt.) was pushing a bill in June that would have cost $6 trillion, and complained that spending $3.5 trillion would not come close to solving our country’s needs.
Some of his more grounded colleagues have objected to massive tax hikes and specific policies, like the clean power rules, that could jeopardize our recovery. As a consequence, the bill has shrunk dramatically in size and scope. Once priced at $3.5 trillion, now Democrats are looking to spend about $1.8 trillion.
Progressives are not happy with this state of affairs. Sanders, never one to compromise, has drawn more red lines than Mark Rothko over the past several months. Most recently, he argued that adding hearing, dental and vision benefits to Medicare is non-negotiable, as is including a plan to lower prescription drug costs.
But Sen. Joe Manchin (D-W.Va.) is balking at the Medicare add-ons and also at a controversial proposal requiring that banks reveal new information to the IRS; he claimed that he objected to the measure in a meeting with Biden, and that the president agreed with his argument.
The truth is that Democrats are battling each other over Biden’s bill because voters are not on board with spending trillions more, on top of the $5 trillion already doled out on COVID-19 relief. They are worried about inflation, and think huge government outlays contribute to the problem.
In a recent Quinnipiac poll, 40 percent of Americans said “the federal government should be doing more to help Americans, but shouldn’t spend too much” while 24 percent responded that “the federal government doesn’t need to do more to help Americans.” Only 33 percent thought the feds should be “doing a lot more to help.”
That is not exactly a resounding cheer for breaking the bank on new “social infrastructure” programs. In the same poll, though 92 percent of Democrats back the $3.5 trillion bill, independents are roughly split on the measure and Republicans are decidedly against it.
It appears that Joe Biden isn’t lying only about taxes and the cost of his program; he’s also not being truthful about its popularity, either.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.