Sen. Grassley Explains what Dems are Trying to Do to our Nation

Senator Chuck Grassley spells out in a letter to a constituent exactly what the Democrats are trying to do with the "Infrastructure" and "Budget" Bills and why they need to be stopped.


Dear XXXXX,

Thank you for taking the time to contact me about President Biden's reckless spending proposal. As your senator, it is important that I hear from you.

I agree with your opposition to President Biden’s enormous multi-trillion dollar “infrastructure” bill. Contrary to the claims of many commentators that the partisan tax and spending spree will cost approximately $3.5 trillion, the real cost of the plan is close to $4.2 trillion. There is broad bipartisan support in Congress for addressing our core infrastructure needs. But this new $4.2 trillion reckless spending spree is not infrastructure. Free college is not infrastructure. Amnesty is not infrastructure. Senator Sanders’s plan to massively expand Medicare is not infrastructure. While there are policies where bipartisan support can be found, we do not need a multi-trillion dollar plan of raising taxes to pay for enormous new entitlement programs.

On August 10, 2021, the Senate came to an agreement on an actual infrastructure package. Although it was not perfect, this earlier bipartisan bill focused almost entirely on fixing potholes, rebuilding bridges, upgrading water systems, and bringing broadband to rural corners of our state. In short, it provided funding for actual, physical investments in our state. However there was a great deal of confusion about what was and was not in this first bill. Controversial provisions in the initial Biden plan, such as mass amnesty or huge tax increases, were not included in the bipartisan plan but are part of the $4.2 trillion package instead.

While the earlier bill ultimately passed the Senate with the support of 69 senators on a bipartisan basis – including the support of Senator McConnell – Senator Schumer has struggled just to get his own caucus on board with the new proposal. This is because the new bill contains everything that was not considered actual infrastructure and did not make it into the bipartisan bill. Instead of roads and bridges, this bill is free college and tax hikes. If you are interested, I encourage you to read a speech I recently gave opposing this reckless tax and spending spree: https://www.grassley.senate.gov/news/news-releases/grassley-on-democrats-reckless-tax-and-spending-spree

As a result, Senator Schumer is attempting to pass the bill through a process called budget reconciliation. Normally, it takes 60 votes to end debate on a bill and move to final passage, as was true with the bipartisan bill. However, during the reconciliation process, debate in the Senate is limited and there is no opportunity to use a filibuster to prevent the bill from moving forward. Consequently, the bill can be forced through on a party line vote with no need to seek bipartisan cooperation.

But, there are serious limits on what can be included in reconciliation. The budget reconciliation process is meant to allow Congress to change current law to bring revenue and spending levels in line with a budget resolution. Because it is meant for budgetary measures, reconciliation provisions cannot include policies with "merely incidental" impacts on the budget. For example, earlier this year, the Senate Parliamentarian blocked the inclusion of a minimum wage increase in a budget reconciliation bill.

This time, supporters of the bill have tried to argue that a mass amnesty should be allowed in the package. As the Ranking Member on the Judiciary Committee, I have been leading the fight to ensure that these unrelated provisions are not included in the bill. Thankfully, the Senate Parliamentarian has issued initial guidance that follows common sense and states that this type of sweeping change to our immigration laws is not appropriate for inclusion in a reconciliation bill.

However, even though it appears amnesty cannot be included, I also have a litany of concerns about the policies that are actually related to spending that cannot be blocked on procedural grounds. President Biden wants sweeping federal intrusion into in areas deeply personal to American families such as child care, community college, and preschool that work well in large part because the federal government has a small role.

For example, the estimated $200 billion that this proposal would spend on creating universal preschool and the $225 billion on a new child care program could result in fewer choices for many American families. The federal government does not need to create new one-size-fits-all program. Last year, the federal government spent tens of billions on Child Care Development Block Grants (CCDBGs), which provide resources directly to working families to select the childcare option that works best for their specific needs. These grants provide funding to states to subsidize child care for children under the age of 13 whose parents are employed or participating in education or training programs, and have been expanded to ensure that parents who work in essential jobs are able to find child care while they work. This program has a proven track record. The last thing we need is to reinvent the wheel, undo this work, and take choices away from working parents with a new one-size-fits all, government preschool program.

This is the case for many of the bill’s new programs, such as the proposal to grant all Americans two free years of community college. Community colleges are able to adapt to local needs, offering courses and trainings to fill the jobs that are available in their areas. Creating a new top-down federal system would reduce this choice at great expense, despite the fact that community college is already free or close to free for low income students because of need-based aid.
 
To pay for this type of unprecedented expansion of federal involvement into local and private decision-making, the Senate Majority has also proposed over a trillion dollars in tax hikes that would disproportionally fall on small businesses and discourage capital investment, which would lead to a long-term contraction of GDP and lower wages for American workers. The Senate Budget Committee, led by Chairman Bernie Sanders, recently published a memorandum detailing their proposed tax hikes in greater detail. These hikes include increasing the corporate tax rate from 21 percent to 28 percent, which would undo the tax relief passed in 2017 by the Tax Cuts and Jobs Act. Their plan would also strike another blow to American job creators by imposing a global business tax, which would make U.S. based companies less competitive around the world and make it a less attractive place to invest and locate operations. As a result, these proposals could actually spark a resurgence in corporate inversions, where companies move U.S. headquarter overseas for tax purposes, which have subsided since the passage of TCJA.

Moreover, many of their proposed tax increases tax direct aim at small business and family farms, which generally pay tax on their business income at individual rates. Both they and President Biden have repeatedly supported hiking the top income tax rate, nearly doubling the top tax rate on capital gains, and subjecting unrealized gains – including any appreciation on paper in the value of a family farm or small business – to tax upon death.

The increase in the capital gains rate in combination with the immediate taxation of gains at death would be especially devastating for Iowa family farmers and small business owners looking to pass operations on to the next generation. Often times a family farm or family business is asset-rich and cash-poor with much of their wealth tied up in business assets, including land, that may have appreciated significantly in value over the years in part due to inflation. As a result, these proposed changes could result in the need to sell off all or part of the business or family farm to pay an oversized tax bill to the government.

President Biden and the Senate Majority claim their proposal will not include an increase in taxes on any household making less than $400,000 per year. However, you can’t raise taxes on small business owners and corporations without a significant portion of those taxes ultimately falling on the backs of the middle-class. There is a well-documented principle in tax policy that simply because the law imposes a tax directly on an individual or business entity that doesn’t mean the ultimate burden of that tax won’t fall on others indirectly. Every analysis of President Biden’s tax plan by independent third parties, from the liberal Tax Policy Center, to Penn Wharton, to the American Enterprise Institute, shows taxpayers earning less than $400,000 will shoulder at least a portion of Mr. Biden’s proposed tax increases. This reflects the economic consensus that a significant portion of the corporate tax falls on workers in the form of reduced wages.

On top of these job killing tax hikes, the Senate majority’s plan calls for reckless spending and ballooning debt and deficits as far as the eye can see. In all, they propose over $4 trillion in new spending over the next decade and annual deficits would average $1.6 trillion over that period.

As a result, the national debt would reach 119 percent of our economy – shattering the World War II record of 106 percent. This new spending will throw fuel on the fire of inflation even as the Consumer Price Index for All Urban Consumers (CPI-U), the standard measure of price inflation in the United States, has increased 5.4 percent over the last year, including a 0.5 percent jump in July 2021 alone. This is the largest 12-month CPI-U bump the U.S. economy has seen since August 2008, in the midst of the Great Recession. Inflation is a hidden tax that erodes the value of the earnings and savings of hard working Americans.

I am committed to holding the line on unnecessary spending and looking for solutions to ensure the long-term fiscal health of the United States. America can’t tax, spend, and borrow its way to prosperity. Higher taxes, excessive spending, and escalating debt are not a recipe for our economy to “Build Back Better.” They’re just a recipe for the government to “Build Bureaucracy Bigger” at the expense of hard working Americans.

I will continue to fight against this reckless tax and spending spree. So far, my work appears to have prevented the inclusion of any mass amnesty in the bill, and you can rest assured that I will keep up this effort going forward.

Again, thank you for taking the time to contact me, and I encourage you to keep in touch.
 


 
Grassley Image by Tom Zawistowski is licensed under N/A N/A

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