Global Affairs

Opinion | Don’t Believe Democrats When They Say a $3.5T Bill Costs Nothing

At a Wednesday news conference, House Speaker Nancy Pelosi repeated this argument with great confidence. “It’s not about a dollar amount,” she told reporters. “The dollar amount, as the president said, is zero. This bill will be paid for.”

White House chief of staff Ron Klain previewed this line at the SALT conference in New York City a couple of weeks ago — “the net cost of Build Back Better is zero” — and sympathetic journalists have picked up the mantra.

Trying to redefine the cost of a $3.5 trillion bill as zero must rank among the most shameless, patently absurd attempts to change reality through a talking point ever attempted.

It’s mind-bending logic that would mystify Lewis Carroll at the height of his creative powers.

It’s the kind of reasoning you’d expect of any bankrupt person or someone blissfully unaware that he or she is about to go bankrupt.

It’s the equivalent in its transparent, willful implausibility of Donald Trump’s pledge that Mexico would somehow, at some time, despite all its denials, pony up and pay for the border wall.

The fact is that spending money is by definition spending money.

Heretofore, this contention would have been uncontroversial. Indeed, before the reconciliation bill ran into turbulence, the point of it was that it would involve spending boatloads of money — like FDR and LBJ did.

Progressives haven’t gotten the memo. Bernie Sanders has said the bill should “at the very least” contain $3.5 trillion in spending, which is more than zero.

The best defense of the Biden/Pelosi argument is that it depends on what the meaning of “cost” is.

“If Democrats intend to invest $3.5 trillion,” Steve Benen of MSNBC writes, “but they also intend to pay for all that without adding to the national debt, then for all intents and purposes, the package costs nothing — since unlike the GOP’s 2017 tax breaks, the safety-net-and-climate plan will be deficit neutral.”

Put aside that the reconciliation instructions say that the bill can increase the deficit by up to $1.75 trillion over a decade, and that if Biden were truly adamant against new deficit financing, he could threaten to veto any bill adding a nickel to the debt.

He hasn’t and he won’t.

Regardless, even if the bill is fully financed through tax hikes, it still costs something — or the tax increases wouldn’t be necessary in the first place.

Think about it: Most of us who don’t live in San Francisco — notoriously hit by a shoplifting spree — pay for the goods we take from stores. Of course, that means what we bought cost something.

I defy any married man to go out and buy a Ferrari 812 Superfast/GTS with $340,000 in cash and then go home and try to tell his wife that it cost nothing because he paid for it.

That it was paid for doesn’t make it less costly — indeed, it had to be paid for exactly because it costs what you’d expect of a car that goes 0 to 60 mph in 2.8 seconds.

It would be cold comfort to a gambler if he lost $100,000 in the Legends Room at the Bellagio, but incurred no debt in the course of doing so. He’d still be down a hundred grand.

Catherine Rampell of the Washington Post has noted the alleged unfairness of the different accounting for Republican tax cuts and Democratic spending proposals.

Tax cut bills tend to be described by using their net cost — e.g., if a bill cuts taxes by $1 billion and raises taxes by $100 million, it’s called a $900 million tax cut.

On the other hand, increases in spending are identified with their gross cost — e.g., if a bill increases spending by $1 billion and raises taxes by $900 million to pay for it, it’s still called a $1 billion spending increase.

As even she concedes, though, it makes sense to refer to the net cost of a tax bill if it is offset by other tax increases. The net number is the figure for the overall cut — in other words, a tax cut offset by an equal increase in taxes wouldn’t be an overall tax cut at all.

If the $3.5 trillion reconciliation bill were entirely offset by spending cuts, it’d be fair to say that it’s overall cost is zero.

This, of course, is not what’s happening. If it were, Sanders and the House progressive caucus would be apocalyptic with rage — even angrier than they are now at the prospect of potentially losing leverage to try to force moderates to accept a $3.5 trillion reconciliation bill.

At the end of the day, assuming the bill doesn’t collapse, they will probably have to settle for more like $1.5 trillion to $2 trillion. And no matter what top Democrats are insisting right now, that’s not nothing.

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