Matt Bruenig on Joe Biden’s American Families Plan

On Wednesday night, Joe Biden gave his first presidential address to a joint session of Congress, though it was sparsely attended so that social distancing could be observed. Biden was there to pitch what he’s calling the American Families Plan, and as Deconstructed guest Matt Bruenig has long noted, support for families and children has been a blind spot in the United States. 

Bruenig founded the progressive think tank People’s Policy Project, which relies largely on small donors. In early 2019, he put out what he called the Family Fun Pack, a sweeping set of policies aimed at making raising kids in the U.S. somewhat less impossible than it is today. He modeled the policies on the most effective programs in operation in Europe and Asia. Matt is also the co-host, with his wife Liz Bruenig, of the great podcast The Bruenigs.

House Sergeant at Arms: Madam Speaker, the President of the United States.

Ryan Grim: I’m Ryan Grim, and this is Deconstructed.

On Wednesday night, Joe Biden gave his first presidential address to a joint session of Congress, though it was sparsely attended so that social distancing could be observed.

Before we get to the substance of his speech, one quick pet peeve: Basically every member of Congress and every Supreme Court Justice is vaccinated. Meanwhile, we have a national panic about people refusing to be vaccinated. Wouldn’t it have been good to have those seats packed with vaccinated representatives just to show people across the country that this is why you should get the jab, so that you can go back to doing the things you did before the pandemic started? That image would be worth more than 1000 shamings. Instead, what message does an empty chamber send? That even if you do get your vaccine, your life doesn’t really change? That’s absurd. And I think Democrats need to do a better job showing people the benefits of vaccination, beyond the obvious benefit of not dying, of course.

In any event, Biden was there to pitch what he’s calling the American Families Plan. And as our guest Matt Breunig notes, support for families and children has long been a blind spot in the United States.

Matt Breunig: This is the area where the U.S. welfare state lags the rest of the world by the most. We really don’t have childcare benefits. We don’t have paid leave benefits.

RG: Raising kids today in the U.S. is hard. Millions of people get no paid parental leave. Daycare is insanely expensive, and we do close to nothing to help make it affordable. You’re lucky if your school has pre-K. Until Biden signed into law a temporary refundable child tax credit, there was little in the way of financial help for parents, even though they’re doing the thankless task of caring for the next generation of humanity. (Now note that I said thankless, not loveless. I think you know what I mean.)

Once their children are old enough to go to school, the problem parents confront is finding a decent one. After that comes the exploding cost of college. The plan Biden laid out Wednesday night doesn’t do enough to address all of these obstacles, but it does try to deal with each one. The plan would extend Biden’s child tax credit, the one that cuts child poverty in half, through 2025. It would also subsidize daycare so that what parents pay is capped.

President Joseph R. Biden: Low- and middle-income families will pay no more than 7 percent of their income for high-quality care for children up to the age of 5.

RG: It adds four new years of free schooling:

JB: Two years of universal, high-quality preschool for every three-year-old and four-year-old, no matter what background they come from. When you add two years of free community college on top of that, you begin to change the dynamic.

RG: It reforms the unemployment system and extends benefits automatically if economic conditions deteriorate. It makes permanent the expanded subsidies for Obamacare and lowers drug prices by finally letting Medicare negotiate.

JB: The American Rescue Plan lowered health care premiums for 9 million Americans who buy their coverage under the Affordable Care Act. Let’s make that provision permanent, so their premiums don’t go back up. [Scattered applause.]

The Affordable Care Act has been a lifeline for millions of Americans. And the pandemic has demonstrated how badly it’s needed. Let’s lower deductibles for working families and let’s lower prescription drug costs. [Applause.] The last president had that as an objective — we all know how outrageously expensive drugs are in America. In fact, we pay the highest prescription drug prices of anywhere in the world right here in America — nearly three times, for the same drug, what other countries pay. Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower drug prescription prices. It won’t just help people on Medicare, it will lower prescription drug costs for everyone. And the money we save can go to strengthen the Affordable Care Act and expand Medicare coverage benefits without costing taxpayers an additional penny. It’s within our power to do it. Let’s do it now. [Applause.]

RG: One interesting note: That reference to the last president? That was ad libbed. It wasn’t in his prepared remarks.

The plan would also introduce 12 weeks of paid family and medical leave. It would include tax hikes on the rich.

JB: We take the top tax bracket for the wealthiest 1 percent of Americans, those making over $400,000 or more, back up to where it was when George W. Bush was president, when he started: 39.6 percent. That’s where it was when George W. was president.

RG: Families making $1 million and more would pay ordinary income taxes on capital gains rather than the current discount, which would impact private equity funds.

JB: We’re gonna get rid of the loopholes that allow Americans to make more than $1 million/year and pay a lower tax rate on their capital gains than Americans who receive a paycheck.

RG: Biden in his speech linked his climate plan to job creation.

JB: For too long, we failed to use the most important word when it comes to meeting the climate crisis: jobs. Jobs. Jobs. [Applause.]

RG: And linked that to being able to comfortably raise a family:

JB: The American Jobs Fund is going to create millions of good-paying jobs, jobs that Americans can raise a family on. As my dad would then say, with a little breathing room.

Biden’s address was a textbook example of what progressive, multiracial populism can sound like — populism that doesn’t rely on demonizing immigrants or welfare queens are thugs or whatever epithet a lazy right-wing populist needs to rally a narrow section of the country around him.

Biden even took the populace love a step further. Listen to this riff, and it’s worth knowing that the first part you’ll hear was ad-libbed by Biden and wasn’t in the prepared remarks shared with the media.

JB: I’ve always said, in this chamber and the other, good guys and women on Wall Street, but Wall Street didn’t build this country. The middle class built the country, and unions built the middle class. [Applause.]

So that’s why I’m calling on Congress to pass the Protect the Right to Organize Act, the PRO Act, and send it to my desk so we can support the right to unionize. [Applause.] And by the way, while you’re thinking about sending things to my desk, let’s raise the minimum wage to $15. [Cheers and applause.] No one working 40 hours a week should live below the poverty line.

RG: The way he talked about tax hikes on the rich could probably be played to the focus groups and find almost universal approval. Who could disagree with this?

JB: According to one study, CEOs make 320 times what the average worker in their corporation makes. The pandemic has only made things worse: 20 million Americans lost their job in the pandemic, working and middle class Americans. At the same time, roughly 650 billionaires in America saw their net worth increased by more than $1 trillion — in the same exact period.

Let me say it again: 650 people increased their wealth by more than $1 trillion during this pandemic, and they’re now worth more than $4 trillion. My fellow Americans, trickle-down economics has never worked, and it’s time to grow the economy from the bottom and the middle out. [Applause and cheers.]

RG: Here he is framing the increased funding for the IRS:

JB: And the IRS is going to crack down on millionaires and billionaires who cheat on their taxes. It’s estimated to be billions of dollars by think tanks on the left, right and center.

I’m not looking to punish anybody. But I will not add a tax burden — an additional tax burden — to the middle class in this country. They’re already paying enough. [Applause.] I believe what I propose is fair, fiscally responsible, and it raises revenue to pay for the plans I propose that will create millions of jobs that will grow the economy. When you hear someone say they don’t want to raise taxes on the wealthiest 1 percent or corporate America, ask them: Whose taxes do you want to raise? Instead, whose are you going to cut?

RG: To get a sense of just how hard this stuff is to counter from the right, take a listen to Senator Marsha Blackburn’s appearance yesterday on Fox.

Senator Marsha Blackburn: Three-year-old pre-K, they’re going to mandate this; two years of college, whether you like it or not. These are the things that take away choices from the American people.

RG: That is complete nonsense. Of course, nobody will be forced to go to community college. You’re not even forced to go to 11th grade. And Biden has been clear nobody under $400,000 gets a tax hike.

But let’s cut to what this is really about.

Stuart Varney: Senator, the President’s plan directs trillions of dollars to families and children. So why are you calling it the anti-family plan?

MB: Stuart, it is the anti-family plan. What this would do is incentivize women to rely on the federal government to organize their lives. It takes away from them the ability to organize their family life as they would like to organize it.

RG: And there you have it. What Blackburn is saying is that if a mother knows there’s help from the public available to her, she might not want to stay in whatever situation she’s in, whether she’s liking it or not.

Government help for young parents might seem like an obviously good thing to most people. But folks like Blackburn see it as a threat to traditional patriarchal family values. For background on Blackburn and the place she comes from, I’d encourage you to go back and listen to her episode from last October that looked at the movement behind Amy Coney Barrett, because that’s where the opposition to this plan comes from.

Senator Tim Scott of South Carolina delivered the Republican rebuttal and while Biden’s speech largely focused on class, Scott zeroed in on race and woke corporations.

Senator Tim Scott: Today, kids are being taught that the color of their skin defines them again. And if you look a certain way, they’re an oppressor. From colleges to corporations to our culture, people are making money and gaining power by pretending we haven’t made any progress at all, by doubling down on the divisions we’ve worked so hard to heal. You know this stuff is wrong! Hear me clearly: America is not a racist country.

RG: When Congress debated and passed Biden’s last $1.9 trillion Covid relief package, the GOP was focused on Dr. Seuss. This time, it looks like their ire might be directed at Coca-Cola. But either way, they seem unable to mount any serious opposition to Biden’s agenda the way they did against Obama.

Now, over the next few weeks, you’ll likely hear plenty of opposition from the left about what’s not in the package. An estate tax, for one, didn’t make the cut; nor did a wealth tax. On the health care front, Biden ran on offering a public health insurance option and lowering the Medicare age to 60. Neither of those made it in.

As listeners of this show know, its founding host Mehdi Hasan left to host his own show with NBC. On Wednesday, he interviewed Biden’s spokesperson Karine Jean-Pierre. I want to play a bit of their interaction:

Karine Jean-Pierre: As it comes to health care, President Biden has said this over and over again, he believes health care is a right not a privilege, which is why he expanded the open enrollment for ACA, which now we have more than 500,000 people signed up for it.

He has been wanting to make sure even with the American Rescue Plan, that we lower the cost of premiums when it comes to ACA, so he’s done a lot —

Mehdi Hasan: Karine, I have to jump in.

KJP: Yeah, absolutely. Jump in. This is your show, Mehdi. This is your show. [Laughs.]

MH: I’m jumping in. No, no, but you’re my guest. You’re my guest. I have to jump in to say: If health care is a right, then many people listening would say it should be free. You shouldn’t have to pay for it, if it’s a right. And if you don’t support Medicare for All, which we know he doesn’t, at least support lowering the Medicaid, bring more people into Medicare from 55 or 60.

KJP: And I get that, I hear what you’re saying. And Joe Biden has been pretty clear: He wants to take incremental steps, right? He wants to make sure that we take those steps forward and bring people along. I mean, this is — we’re talking about how polarizing this country is, you started saying that at the beginning of the segment. One of the things about Joe Biden, one of the reasons I would say he won, is because people knew he would bring the country together.

RG: To say that Biden wants to move incrementally is interesting. Now, lowering the age incrementally down to 60, of course, is by definition incremental. But she’s hinting at a larger phenomenon with Biden: Here he is proposing his second multi-trillion-dollar plan, one that would be transformative for kids and their parents. But because of his moderate brand, not only is he able to sell it as incremental, he’s going to get slammed for not including more, such as the lowering of the Medicare age.

And I’m happy to join in on that, because there’s really no good reason he shouldn’t include it. People between the ages of 60 and 65 face extreme age discrimination on the job market and way too often have to put off treatment or tests for years waiting for Medicare to kick in. That’s cruel, and it should be stopped. Nancy Pelosi, however, has pushed the White House hard not to lower the age and instead to invest its energy in strengthening the Obamacare exchanges, which she considers her legacy.

In a 50/50 Senate, Biden needs the vote of Bernie Sanders, though, and will find out whether he and progressives in the House are ready to play hardball.

OK, to take a closer look at the American Families Plan, I’m joined now by Matt Breunig. Matt founded the progressive think tank People’s Policy Project which relies largely on small donors. In early 2019, he put out what he called the Family Fun Pack, a sweeping set of policies aimed at making raising kids in America somewhat less impossible than it is today. He modeled the policies on the most effective programs in operation in Europe and Asia and, at the time, it seemed like a nice thing to talk about, but not the kind of thing that a country as barbaric as ours might actually take up and pass into law.

Matt is also the co-host with his wife, Liz Breunig, of the great podcast The Breunigs.

[Musical interlude,]

RG: Matt Breunig, welcome to Deconstructed.

MB: Thanks for having me.

RG: Thanks for joining us. As somebody who has spent so much time thinking and writing about these particular policies, what’s it like for them to actually be talked about in a mainstream way like this?

MB: Ah, you know, it is exciting! This is the area where the U.S. welfare state lags the rest of the world by the most; obviously on every facet of our welfare state, we are usually not near the top. But this is one where we’ve just big holes missing. We’ve got pensions for old people and disability benefits, but we really don’t have childcare benefits, we don’t have paid leave benefits and, until recently, we didn’t have a child allowance that at least partially extended to the poorest. So to see us sort of fill out the welfare state topically is exciting.

RG: The child tax credit is already in law for one year. This extends it through 2025. What do you think of that timeline? And also, what do they need to do to fix the child tax credit?

MB: Yeah, so one thing I’ve been trying to bring attention to is we have two tax credits for families with children that are basically for almost exclusively families with children: you’ve got the child tax credit and you’ve got the earned income tax credit.

For the child tax credit, they made it so that the poorest people could now get it. Previously, if you didn’t have enough money, you couldn’t get it. They did not do that for the earned-income tax credit. So we’ve kind of caught ourself in an interesting situation where half the benefit amount is still not available to the poorest kids. And I’ve kind of been pushing to say, look, whatever other problems exist with this structure, we should at least extend the EITC down, just like we extended the CTC down, and we are not seeing that in this proposal.

So you know, that’s a letdown.

RG: Right.

MB: And then, like you said, they’re letting the benefit cut down from $3,000 per kid to $1,000 per kid in 2026. That’s how they’re setting it up. They’re sort of pre-scheduling massive cuts to the program in 2026, as a budget gimmick, to kind of get the number down in the 10-year CBO scoring window.

And yeah, that seems like a really bad idea: 2026, we’ll have had a presidential election by then, we’ll have had two congressional elections by then. You have no idea what that’s going to look like. So for something that is our first time that, in a long time, we’re really giving kind of unconditional cash benefits to the poorest families, and then to set that up to expire, to kind of play chicken within five, six years is not inspiring.

RG: And part of it as a function of the artificial construct of the reconciliation process that it’s supposed to expire in 10 years, though, if you have it paid for, you can make policies permanent, but also the artificial construct around: Well, we’re not going to spend more than X amount. And you have competing factions, both in Congress and in the White House who say: Well, if we make that permanent, then we can’t do the hundreds of billions of dollars for these other programs that we want to put into this.

It’s impossible to say where we’ll be in 2025, but like you said, there will be several congressional elections, it’s very likely that they lose the House in one of those, also possible they lose the White House. What’s your sense of how likely this is to be adopted by Republicans? Let’s say it goes into place, people like it over the next four years, Republicans are in power. Do they extend this?

MB: It’s hard to say. I think the risk you have here, if you force it to where it has to be addressed, where it’s not just baked in, one of the risks you run is: OK, yes, Republicans, they don’t want to have on their head that they cut the child tax credit from $3,000 to $1,000. But they might be happy, in the process of reviving it, to get rid of the benefits to the poorest because they’ve been opposed to that, for the most part, except for Mitt Romney. The Republicans have been very much saying this decision to extend the child tax credit to the poorest families, that’s a mistake, it’s going to cause worklessness and all those maladies that go along with that.

I could definitely see them saying: All right, well, look, it’s going to expire, and it’s going to cut down to $1,000, so we have to address it. And so let’s go ahead and get rid of that extension to the poorest. That I think is a very serious risk.

And it seems to be a risk that Democrats are taking somewhat seriously, because although they’re letting the benefit cut from $3,000 to $1,000 in 2026, they are saying that that $1,000 amount will go entirely to the poor. So they are extending the sort of full refundability permanently, but they’re not extending the benefit amount permanently.

But that doesn’t really protect you, because they’re still gonna have to address it at that moment, to fix it.

RG: It feels politically like it might make sense then to push the EITC down to $0, down to the lowest level, so that the poor can also participate in that program, so then you finally get more buy-in. Is there any appetite for that in the policy community? It feels like it should be a no-brainer at this point: if you can do child tax credit, you can do the other one.

MB: Yeah. I mean, I know there’s appetite among progressives in Congress who I’ve talked to, and I think there might be a fight brewing on that. You never know. People tell you things that don’t happen. But my impression is that people might fight about that in the coming weeks and months, but we’ll see. I mean, I don’t know. They’re obviously a minority faction, and most people are just kind of thrilled to get what they can get.

RG: Right. And so what about the childcare subsidies? So Biden talked about nobody will pay more than 7 percent if you make under $150,000/year, and it’s some combination of a federal-state program. What’s your read on that policy? What have you proposed to make childcare higher quality and affordable?

MB: Yeah, so for the Family Fun Pack, which was my slate of family benefits, our approach was very straightforward: it was just to give local school districts grants that they could use to set up childcare and pre-K facilities, run them for free, just like they do K-12.

This one’s a lot more complicated. You have a sliding-scale payment schedule based on your income, where they’re going to kick in subsidies that says if you’re very poor, you don’t pay anything, and then you pay 1 percent, 2 percent, 3 percent, 4 percent — up to 7 percent of your income as your income rises, and then sort of capped at that level. And it’s also not like building public centers. It’s ostensibly all kinds of childcare arrangements, including nannies and whatever private centers, and things like that.

And that’s just a lot more complicated. When you go to enroll in childcare, you’ve got to have that W-2 ready, if you have it at all. If you don’t, if you’re poor, if you’re working off the books, a day laborer, cash-only, there’s lots of people in arrangements where they don’t necessarily have good documentation of their income, that becomes a problem.

And just the general structure of it is kind of confusing. What I think is interesting about this proposal, and this is true of Democrats generally, is there’s consensus on the idea that pre-K, for ages 3 and 4 should be free — free pre-K. And then you go, OK, but ages 2 and 1, and how we’ve got to have this complex — like, what is the difference? Why 3 and 4, but not 1 and 2?

RG: You want to instill good work habits and good motivation in your 1- and 2-year-olds?

MB: Yeah, it’s important.

RG: Important not to put them on the dole too early.

MB: Yeah, they get that up front. And then you can give them the easy road after they’ve learned the lesson.

RG: [Laughs.] Right. And so the Obamacare subsidies are also being made permanent. What’s your reaction to that?

MB: Ah, you know, the Obamacare stuff is interesting. As you know, the exchanges, which is what the subsidies apply to, only insure about 10 or 11 million people, which is less than 3 percent of the population. But there’s this fixation on these exchanges. And it almost seems sort of like a totem, like paying our respects to Obama.

RG: [Laughs.]

MB: Because, it’s like, why of all things are you fixating on this 3 percent of the market? Because that’s the Obamacare part? And of course, what about Medicaid? And there’s lots of other things you could do that were changed in ACA. But I guess it’s fine? Like, I guess it’s fine. It’s not that expensive. It doesn’t insure very many people anyway. So you know, it’s all right. But it’s, there seems to be an outplaced emphasis on that market, given its size.

RG: Do you think there’s any chance that they force a lowering of the Medicare age down to 60? It almost feels deliberate from Biden at this point that he will put out this multi-trillion-dollar project that has progressives pretty excited across the board, but then he’ll leave out some key thing that allows enough people to get angry that it then scans as a moderate thing. Well, if there’s anger at it from some certain factions of the left well, then it must be some moderate, Joe Biden program. Do you think there’s any calculation like that going on, because he campaigned on lowering the Medicare age to 60? He probably has the votes to do it.

MB: Yeah. I don’t know about the vote dynamic, you’re probably more plugged into that [than] me. I mean, it does seem like someone like Joe Manchin plays that game. So I suppose Biden could play it as well.

RG: Mhmm.

MB: The way we’ve kind of done health care since Obama is to say: Look, we’re willing to pour in more subsidies, but we’re not willing to take customers away. And so that’s what that would do.

RG: Right. Right. So paid leave, what’s your read on the paid-leave proposal? And how does it compare to European countries? And how does it compare to the ideal?

MB: Yeah, so the paid-leave stuff that he put out in the document that they released, the fact sheet, is actually extremely short. So it’s almost hard to analyze this. I count three sentences that actually have details in it.

The upshot appears to be that by year 10 of the program, you will be able to get 12 weeks of paid leave. So that’s that’s a long run time. Obviously, 12 weeks is quite low for a two-parent family; if you’re talking about parental leave, that would be 24 weeks; if you go to a country like the Nordic countries, very typical 52 weeks or more. But they started lower and expanded over time, so I guess that’s a thing you could do, you could add a 13th week, a 15th week — there’s more campaigns to come.

The 10-year phase-in of the program seems, again, they’re just sort of playing with the budget window, they did that with Obamacare, it does not seem wise to me. Why wait that long? There’s going to be more administration’s that come in; the power could change in that period.

RG: Right.

MB: The only thing that I would really critique of the stuff that he put out, and they’re going to need to add more details later to make sense of, and then there might be more criticisms, but of the details we have, one thing I’m always sensitive to is: What is the income-replacement rate? How much income are they going to replace while you’re on leave? And they say that it’s going to be, for the lowest-wage workers they’ll replace 80 percent of their wages.

And you think about a minimum-wage worker, can they afford to give up 20 percent of their wages for 12 weeks? Probably not. At that level of a wage scale, we should probably have 100 percent replacement, and maybe lower for higher wage people, but 80 percent is a problem. And not only are people not going to be able to afford it, but the nature of the beast is that they just won’t participate at all and so it becomes a screen that actually excludes not just like, oh, you really have to rough it out, because you’re only getting 80 percent, and that sucks. It’s like, they’re not going to rough it out at all, they’re just going to go back to work after a week or two, which is one of the details they put in the piece, like, such-and-such percent of workers go back to work after two weeks. It’s like, well, a lot of them still will if you’re only going to replace 80 percent of their income.

RG: And for people who don’t remember, on the Obamacare front, Obama really fetishize this trillion-dollar figure, he said it wasn’t going to cost more than a trillion dollars over 10 years, and so in order to make that work, they took a lot of the more generous benefits and made sure they didn’t really start kicking in until half a decade into that 10-year window.

And it was a con because the benefits would be in place for the entire next 10 years, so if you’re trying to seriously budget for the future, you ought to do it more consistently than that, and so what it ended up doing is making it so that Fox News, and everybody else told the whole world what was wrong with the bill, but people didn’t get the benefits of it until deep into that decade. By the time they did finally start getting those benefits, you saw people start to defend it when Republicans wanted to repeal it in 2017.

MB: Yeah, it’s funny, they’re kind of doing both strategies here to play games with the numbers, right? On the one end, they’re sunsetting the provisions in the middle of the window, so that you don’t have to count the last half of the years, and then the others they’re phasing them in for a long time.

That’s just no way to run a country. It’s ridiculous, obviously. But I don’t know, I guess it’s sort of par for the course for Republicans and Democrats.

RG: Yeah, it is. It is.

And so unemployment insurance reform, he tackled that in his speech tonight. What’s your read on how serious this effort is?

MB: The details are just not forthcoming at the moment. So it’s kind of hard to say. I think, perhaps that demonstrates the level of seriousness for a lot of the proposals, they have price tags by them. You know, here’s some money and we’re gonna do this and that; there’s no price tag by the unemployment insurance stuff. So I don’t know. I don’t think that that’s probably very serious.

And even as it is, if you wanted to take unemployment insurance reform seriously, at this moment, given what we just saw, where so many states failed so badly, you would, I think, very reasonably say: Look, we’re going to bring this into the federal government. We’re not going to have 53 different unemployment insurance programs that are so outdated and often run by governors who want to run them into the ground, we’re just not going to do that anymore. We’re gonna bring it in and run it just like Social Security. And yeah, no one’s really willing to take that step. And if you don’t do that, you can create as many rules as you want; if states don’t follow them, and there’s really no way to bring the stick against them, then, you’re gonna keep having these problems, so.

RG: And it feels like a political winner too. You know, Florida, botched, its unemployment process so badly. And so did Georgia, and so did so many other states where you had all of these desperate people logging in constantly, and getting kicked out, and being told that they didn’t have the right paperwork, and just starting from scratch and waiting weeks or months to begin getting their benefits. And it feels like, as Democrats, if you have an opportunity to pin that on those Republican governors, who do deserve a significant amount of the blame, you would take it. But there does seem to be some real hesitancy to federalize unemployment. Is that a function of the budget gimmickry as well? You think the federal deficit just doesn’t want to take on those future outlays?

MB: Yeah, I think partially that’s the case. The way it works right now is there is a federal unemployment tax. But if states implement their own unemployment tax, then the federal tax isn’t charged, or it’s like greatly reduced. And so it ends up making it to where like the money flows into state budgets, and then flows out of state budgets. And even though realistically, they’re just cannibalizing a federal tax, it does affect, you know, which column the number shows up in in a spreadsheet. And that, as you know, becomes very important in these debates.

RG: Mhmm. [Laughs.]

MB: And then, separately, we’ve never federalized anything, I guess. The history of unemployment insurance, as I understand it, from what I’ve read some articles about, the reason they made it a state-federal thing is because they thought that would help them not get it struck down on constitutional grounds. So they were never excited about doing that, but they just thought it would be easier politically. And now we’re sort of stuck with it, so —

RG: Right. What about on the tax-policy side? What’s your take on Biden’s push to pump $80 billion into the IRS so that they can start enforcing tax laws against the wealthy?

And my understanding is that it’s not just that the wealthy have more complicated tax returns, which makes it costlier for the IRS to go after them, but they’re going to have tax attorneys. Whereas if you go after the grandma who used the social security number of a grandchild, they’re probably not going to have a tax attorney. And so it’s not that the returns are much less complicated, it’s that it’s easier prey.

MB: Yeah, that makes sense. I don’t know what the appropriate funding level for the IRS is. I think, until recently, they were funding them at $14 or $16 billion a year, somewhere around there. And it’s gone down to $12 billion, I think. And so bring it up to $20 billion, account for inflation, that seems reasonable to me. Because it’s $80 billion over ten years, so $8 billion plus $12 billion would bring you to $20 billion a year for enforcement. That seems in the ballpark to me. But maybe someone who had more information about the nitty-gritty of the agency would know.

But yeah, I think enforcement’s important, as other parts of this as well, which I’m not sure if they’re in this plan or not, but they’ve been floated. Just things like having banks report certain kinds of information to the IRS that currently they don’t have to report could help with a lot of this stuff. Because a lot of capital income that you receive is not reported to the IRS in the same way that wage information is. And so you have to self-report, or they give you a form at the end of the year — that’s just ripe for evasion, if you can get that info directly to the IRS, and that could help with a lot of this stuff as well.

RG: Right. Because then those rich people know that the IRS has the information.

MB: Exactly. And it becomes a lot easier to enforce, because you said: Hey, I got this form that says you made this amount of money from dividends and you put on your return that you made this other amount. So there’s a problem, you know?

RG: Right. And when it comes to wage earners, they send pretty much everything into the IRS.

MB: Yeah, if you’re just a normal, regular worker who goes and gets a paycheck, 100 percent of that is given to the IRS, depending on the size of employer, certainly every year, and oftentimes every quarter or even every two weeks, so.

RG: And he also talked about raising taxes on the rich back to the level they were before Trump cut them, as well as ending some loopholes for hedge funds, carried interest, as well as increasing capital gains taxes on people making more than $1 million dollars, making them pay ordinary income. Do any of those strike you as structural reforms to the economy?

MB: I don’t know. I don’t think so. I mean, they’re good. I think it’s good. But, it’s just higher tax. I don’t think that it would change too much. I mean, we’re still talking about a top rate of 39.6 percent. And then I guess, with some of the additional Medicare investment tax and stuff like that, it could get up to 43 percent.

We had that before Trump, we had that in the 90s, we had much higher than that in the 60s and 70s. So more revenue, but I don’t know that it’s really gonna change a whole lot, in the same way that like a 70 percent tax [would]. Now you’re talking like, well, that might actually change decisions people make and that could be good, or it could be bad. But this just seems like a little bit of draining of income.

RG: So overall, as a think-tank guy, as Congress is working to write the details of this American Families Plan what would be the few things that you would suggest to them that they and fix before pushing this through, giving that Biden’s probably right that this is a rare moment, a rare opportunity to get something done?

MB: Yeah. So I’ve got a variety of things that I’m working on, specific details. You got sort of reaches that are probably not going to happen, which is: Let’s get the Earned Income Tax Credit also made available to the poorest people. And basically, let’s kind of redo that whole thing that they’ve done with the tax credits to make it basically what they want to do, but better designed and more consistent, and all that kind of stuff. That’s a much bigger haul.

But then there’s also smaller things that I kind of think if we can get it attention and get it in front of the right people, that it’s not that controversial and won’t offend different people. So things like I’m pretty sure that the way the paid leave is going to be structured, though you can’t tell from the document they put out, but based on what we’ve seen of similar stuff, one of the problems that the paid leave bills typically have is that if you don’t have a certain work history, meaning you’ve worked a certain number of years in your life, and you’ve worked a certain amount in recent months, or in the last year or whatever, you end up ineligible for benefits. And the CBO scored a bill a few years ago that was similar to what Democrats proposed today and they found that 30 percent of new parents would not be eligible because they would not meet the work history requirements. So stuff like saying: Hey, why don’t we take that 30 percent and give them the minimum benefit that’s in the bill. There is a minimum benefit, just put them on.

RG: Right.

MB: That’s not going to cost that much. It’s the minimum benefit, you know? And it would include everyone, and it’s probably kind of an oversight more than anything else. So stuff like that, I think maybe we could actually make that happen, as opposed to — which I will also do — complaining about things that they’re not going to change, you know?

RG: Right. Well, thanks so much for joining us tonight, Matt Bruenig.

MB: Thank you.

[Credits music.]

RG: That was Matt Bruenig.

Now let’s hear what Chris Wallace had to say about the speech over at Fox News Wednesday night.

Chris Wallace: You know, I think this is gonna be a popular speech with the American public. He offered a lot of stuff!

RG: That was Chris Wallace, and that’s our show.

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