After passing a $1.2 trillion infrastructure spending bill on a bipartisan basis — which is filled with liberal spending priorities — Congress is now considering a budget resolution that is the largest tax-and-spend bill in history. If enacted, it would permanently expand government control over almost every aspect of American life, from childcare responsibilities and health care, to flexible work options and energy costs. In lieu of bipartisan support, the Democrats’ plan is to use a process called “reconciliation,” which allows the majority party in the Senate to pass certain budgetary measures with just 51 votes instead of the normal 60 required for legislation. 

President Biden campaigned on unity and bipartisanship, yet is trying to ram through the most expensive and extreme agenda of all time by circumventing Republican opposition. The $3.5 trillion spending blowout is the product of Bernie Sanders’ lifelong socialist vision for our country, and we simply can’t afford it. Here’s a breakdown of some of the major proposals inside, along with IWF’s take.

Note: This blog post is subject to regular updates, as details in the budget bill are still being worked out. 

PROPOSAL: Universal prekindergarten and government-funded daycare.

The mammoth budget resolution allocates hundreds of billions of dollars for childcare and preschool. It would likely require states to develop and submit childcare plans. Universal pre-K would be secured through block grants and expanded funding to Head Start. 

Our Take:

  • Parents have every reason to fear that a government-approved preschool and daycare program would create the same problems parents face in K-12 public schools. Those disgusted with public schools’ COVID-era failures and curriculum controversies should reject the idea of putting the government in charge of daycare and preschool. 
  • Greater daycare or preschool enrollment does NOT improve outcomes and may cause harm. A federal study of Head Start (the existing, childcare/early education program meant to help low-income children) showed no academic benefits and some emotional harms. While intensive programs can help very at-risk students, there’s no evidence of benefits for the general population.
  • Daycare can be made more affordable. Regulations make daycare needlessly expensive and scarce. Between 2005 and 2017, the number of home-based childcare providers fell by about 50 percent. A Mercatus Center study concluded that eliminating ineffective child care regulations could “reduce the annual cost of child care by between $850 and $1,890 per child across all states, on average.”
  • Policymakers should support all families. Just 6 percent of parents think a quality daycare center is optimal. Most working mothers would prefer to work less and spend more time with their children. Rather than increasing subsidies for daycare, the least-preferred childcare option of most parents, policymakers should help all families with young children by reducing tax and regulatory burdens and supporting strong, flexible labor markets so families can make the childcare decision that they feel is best.

    >>> More: Inside Democrats’ Plan To Indoctrinate Your Toddlers In Preschool

PROPOSAL: Paid family and medical leave to allow employees to care for a new child or ailing relative, funded by taxpayers instead of private employers.

Under the president’s proposal, the U.S. Treasury Department is tasked with setting up a program to pay up to 12 weeks of leave for all workers, including the self-employed. As WSJ points out, “This is not a maternity benefit, but a broad program for both sexes to care for new children or an ailing relative ‘by blood or affinity.’ Benefits are supposed to replace about two-thirds of wages on average.”

The plan calls for Treasury to “reimburse employers who offer comprehensive paid leave up to 90% of average costs.” WSJ calculated that a new parent earning $200,000 a year could be eligible for more than $1,000 a week for 12 weeks every year, “no matter if this person is married to another six-figure earner, who can also claim the leave.” This means taxpayers will be subsidizing time off for some of the nation’s highest income earners, while low-wage workers would only receive a fraction of those benefits.

Our Take:

  • The new, proposed federal paid leave program doesn’t target assistance at those who need it, but rather would sweep away privately-funded existing paid leave packages for all American workers and disproportionately benefit higher-income earners, as California’s state’s paid family leave program did
  • The program would create another unfunded entitlement. President Joe Biden called for $225 billion to provide a new paid family and medical leave program. Yet, as The Daily Signal pointed out, “the Congressional Budget Office put a $573 billion price tag on a similar plan that didn’t call for sending potentially hundreds-of-billions-of dollars to private employers and state governments. Just as Social Security was supposed to be self-funding and its payroll taxes were never supposed to exceed 6% (they’re more than twice that now), a federal paid family leave entitlement will require either rationing of benefits or massive tax hikes.”
  • Government-dictated benefits reduce flexibility and will leave millions of employees worse off. Millions of workers who currently have benefits through a private employer will find benefits reduced under new government rules. Workers will have fewer options and less ability to customize their compensation and benefits.
  • Government-mandated benefits impose costs on employers that get passed on to workers and employees. Employers will offset extra costs by increasing prices, reducing worker hours or take-home pay, consolidating jobs, or outsourcing.
  • To boost access to paid leave benefits, we should empower people and give them new and better options without imposing the costs of a new entitlement. 
    • Help people SAVE by modernizing tax-preferred savings accounts. 
    • ADVANCE Social Security benefits.
    • Increase FLEXIBLE work arrangements.
    • TARGET government support to low-wage workers who cannot afford to save or may lack access to paid leave benefits.
    • ALLOW workers to take paid leave in lieu of overtime. 

PROPOSAL: Shore up the Affordable Care Act by making enhanced subsidies permanent, expand Medicare, and/or move toward a “Medicare for All”-style model, as championed by Sen. Bernie Sanders.

The $3.5 trillion Biden-Sanders spending spree includes at least $1.1 trillion in new health care spending, including $200 billion to lower the Medicare eligibility age to 60, $300 billion to add new dental, vision, and hearing benefits to Medicare, $163 billion to expand the Affordable Care Act, a $400 billion giveaway to home healthcare unions. 

This will supposedly be “paid for” with $492 billion from Medicare prescription drug price controls, a recipe to destroy innovation and reduce the supply of life-saving medicines; $186 billion in wasteful Washington budget gimmicks (things like using fake expiration dates to hide long-term cost); and half a trillion in deficits.

Our Take: 

  • Expanding Medicare would increase the government’s power over health care and worsen Medicare’s already unsustainable financial state. Lowering the age of those eligible for Medicare would mean that there are fewer resources for the truly elderly and for vulnerable seniors, creating the possibility of dangerous, bureaucratic rationing.
  • Expanding the Affordable Care Act would threaten private health insurance plans that hundreds of millions of Americans prefer, because many employers will find it more profitable to stop offering health benefits and instead ask workers to rely on government programs like Medicaid and Obamacare. Expanding Obamacare subsidies would also benefit higher-income individuals who already have private insurance, funnel more taxpayer dollars to insurance companies, and induce employers to drop coverage options for workers.
  • Expanding government control of U.S. prescription drugs would lead to pharmaceutical shortages and fewer new breakthrough therapies.

PROPOSAL: Green New Deal-style climate policies.

Sen. Bernie Sanders is spearheading a massive push for climate policies inside the budget bill that would have drastic implications on the American economy. As detailed by The Daily Signal, examples include a clean electricity standard payment program, a new tax on imports that emit carbon dioxide, new taxes and fees on conventional energy resources like oil and gas, more subsidies and tax breaks for green energy and electric vehicles, a new Civilian Climate Corps, and climate research and development programs across the federal government. 

As The New York Times noted, the proposed tax on imports from countries with high levels of greenhouse gas emissions “could violate Mr. Biden’s pledge not to raise taxes on Americans earning less than $400,000 a year, if the tax is imposed on products such as electronics from China.”

Our Take:

  • The cost of these climate plans will clearly fall on American families. Biden promises that individuals with incomes less than $400,000 a year will not face higher taxes, but everyone will pay higher prices for gas, electricity, and other sources of energy. And while the majority of Amerians see climate as an important issue, they do not see it as an immediate threat worth prioritizing over more immediate financial needs.
  • Clean, renewable energy sources are playing a growing role as a source for energy in the United States. This is a trend we want to continue. However, quickly replacing fossil-based energy (coal, oil, and natural gas) with renewables like wind and solar faces a range of technical hurdles that will lead to higher energy costs and a less reliable energy grid. Renewable energy sources are limited because we do not have the energy storage technology to make them sufficiently reliable. This leaves populations particularly vulnerable to blackouts and price hikes during extreme weather events.
  • The climate proposals encompass a massive takeover of the nation’s energy sector, along with a massive expansion of government bureaucracy. The private sector, which has led the way in developing clean energy innovation, is much more equipped to tackle the global challenges of climate change. Instead of regulations and mandates, the government should look to private-public partnerships to support clean energy innovations. 

PROPOSAL: Finance the $3.5 trillion spending bill with taxes on corporations and individuals with incomes over $400,000 a year, negotiating the price of prescription drugs, and other budgeting gimmicks.

The proposal would increase the federal corporate tax rate to 26.5% from the current 21% (on top of that, corporations would still face state tax rates ranging from 2.5% up to 11.5). The top individual federal tax rate would be bumped to 39.6% from 37%, and the proposal includes a 3% surcharge on individual income above $5 million and a capital gains tax of 25%.

Our Take:  

  • Biden’s promise that “no family making under $400,000 a year will pay a penny more in taxes” is patently false. Expert analyses found that the plan offers no tax relief at all; instead, the reconciliation bill will include damaging tax increases that will be borne by middle-income families and small businesses.
    • A top income tax rate to 39% will hit some entrepreneurs and small businesses organized as pass-through entities such as LLCs, sole proprietorships, partnerships, and S-corporations. Women and people of color, like others who own businesses, “pass through” their income to be taxed under individual income taxes. The Tax Foundation finds that more than half of all pass-through income would be taxed at this new, higher rate.
  • Inflation, including soaring food prices, is already skyrocketing, with spikes not seen since the Great Recession of 2008. This new package will only accelerate inflation in our country — hitting poor, elderly, and minority families hardest. The result of the current pace of inflation is that Americans’ earnings are getting wiped out, and low- and minimum-wage workers are poorer than they have been in decades
    • Inflation is essentially a tax on everyone that disproportionately hurts poor people. Lower-income families spend a greater share of their budget than wealthier families on everyday goods and services like food, housing, and health care.
  • The combined federal and state taxes rate on U.S. corporations would be higher than the United Kingdom’s 19%, Russia’s 20%, China’s 25%, Canada’s 26.5%, and even higher than France’s 32% rate, essentially wiping out all the gains made from the Trump Tax Cuts and Jobs Act. This damaging tax hike would harm workers, make America a less attractive place to do business, and burden small businesses. A review of the economic research shows that “workers bear a majority of the economic burden of the corporate income tax in the form of lower wages.”
  • This plan increases the publicly held debt by more than $4.16 trillion, bringing it to more than 118% of gross domestic product. This is a recipe for inflation and fails to tackle the nation’s most important fiscal challenges like unsustainable entitlement programs, including Medicare, Medicaid, subsidies for private health insurance, and Social Security. And that’s not to mention the new entitlements, such as universal pre-K and paid family and medical leave the president wants to add.
  • The proposed spending amounts to $24,252 per U.S. taxpayer ($3.5 trillion divided by 144.3 million taxpayers in 2018, the latest year for which IRS data is available). Even on a broader measure of the U.S. population, the proposed spending amounts to $10,525 per U.S. resident ($3.5 trillion divided by 332.5 million), or $1,052 per resident per year for the next 10 years.