Monday, February 8, 2021

A Kinder Means Testing

Don't Means Test Stimulus Checks
Now that congressional Democrats have moved past the Republican's latest political showboating (this time in the form of a twelve hour vote-a-rama) the non-fascist party can move forward with a COVID relief bill. They'll likely do so through reconciliation, a process that allows certain bills to pass with only 51 votes in the Senate instead of 60. Since it's apparently not possible to get ten Republicans on board with a relief package if they don't control the White House.

The catch with reconciliation is that it can only be used once per fiscal year, and only for laws related to taxes and spending. Who and what determines whether a bill is related to taxes and spending? The Byrd Rule, named after West Virginia Senator Robert Byrd, provides a six pronged test of the bills. And the Senate Parliamentarian, Elizabeth MacDonough (the first woman to hold the position), will deem which parts of the bill adheres to the Byrd Rule.

Okay, now that I've scared off most of the readers with parliamentary wonk links, the three of us can get to what I really want to talk about: what's being reported about the Democrats' misguided plans to provide relief checks to fewer Americans than was provided under the Trump Administration & the prior split Congress.

Word is out that the Democrats' may try to lower the income cap for who will receive stimulus checks: from $75k per individual and $150k per household, down to $50k and $100k per household. 

Why would they do such a thing, especially now that they have control of both Congress and the White House?

It's a bit of a mystery. Maybe Joe Manchin simply wants the cap lowered; and with the slimmest of possible Democratic majorities, any Senator can potentially veto any aspect of a bill they don't want. 

But rather than discuss the merits of lowering the income cap so we can reduce benefits to teachers and healthcare workers making $50,001 a year (or why $1,400 is not the $2,000 Democrats ran on and promised one month ago), I want to outline why means testing is a poor tool to achieve these aims in the first place, and what ought to be done instead.

Means testing, looking at one's means (usually income) to determine eligibility for benefits, often relies on reports of past income: in this case, income tax returns. But since hardly anyone has filed their 2020 taxes yet, means testing for COVID relief relies on 2019 income tax returns to determine eligibility.

The year 2019 was either two decades or thirteen months ago, depending on your circumstances. Some things have happened since then.

If conservative Democrats truly want to ensure that our country does not live through the horror of firefighters making $51,000 receiving a check for $1,400, there is a better way to ensure that working class Americans don't get some of their tax dollars back. Moderates can give stimulus checks to the same group who received the prior two, and then claw back the dollars by tackling the terribly misguided Trump tax cuts.

In the halcyon days of 2017, our Republican forefathers used the same reconciliation process that modern Democrats now plan to use. But instead of using it to help people survive one of the worst health and economic crises in history, Republicans used reconciliation to grow the national debt to unheard of levels so they could cut the corporate tax rate and give the vast majority of the tax benefit to top earners who didn't need the money in the first place.

So here we are again, with the prospect of giving money to people who "don't need it". Whether you're a corporation or a librarian risking her life so kids at home can read books, it does not matter: we are earnest about our desire not to give money to folks who don't need it.

Still, is there a better way to keep this librarian from getting this $1,400 than using 2019 income? There is! Rather than oppressing the middle class via outdated income data, we can ensure these fifty-thousandaires suffer by looking at their current year income and clawing back the $1,400 they did not deserve when they do their taxes in April 2022. 

How could this be accomplished? If congressional Democrats use this reconciliation opportunity to repeal the tax cuts in the 2017 TCJA, they'll not only address the deficits that Republicans created over the past four years, but by adding in language stating the stimulus would need to be repaid by the fat-cats earning between $50k a year $75k, they can ensure only those who truly suffered from this recession get the stimulus.

Looking at news reports, it appears Republicans are once again sincerely worried about the out of control national debt.  Naturally, they will be in favor of reducing the fiscal impact by raising taxes on top earners and corporations in order to make this stimulus budget neutral. And this can be the way to get bipartisan support for the stimulus bill: pair it with tax reform and, returning tax rates to where they were in 2016, say, for those individuals earning above $157k.

Even if Republicans choose not to support this common sense legislation that would lessen the stimulus' impact on the national debt, the Democrats actually don't need a single vote from the GOP. Just as tax cuts can be passed via reconciliation, so can tax increases.

The rub is that congressional Democrats can only do this once a year. 

While the Trump administration's failure to deal with this pandemic means that Democrats may have to use their once-a-year shot on pandemic relief, they should realize that it's also their one opportunity to address the ill-conceived and fiscally disastrous Tax Cuts and Jobs Act as well.

And if moderate Democrats get to take away a $1400 check from an unemployed teacher in the process, who says there aren't silver linings?

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***Photo is from Senate Democrats on Flickr Creative Commons.


  1. I keep wondering why the Dems aren't grabbing this opportunity with both hands and both feet and headbutting the shoots-and-leaves out of the last four years' disasters.

    1. I love being a Democrat but it is infuriating how they do so little with each opportunity. Having to use reconciliation on something like pandemic relief is going to limit what can be done in 2021. But it's the right thing to do because it will help people. So of course they'll do it.

      Just so hard when your political opponent will exploit the fact that you'll do the right thing.

  2. It's a bit similar to concerns about the vaccination process, at least in my view. We've got big stories about the two in Florida who tricked their way into their first vaccination. No doubt, there's some fraud around the country.

    But, ultimately, what matters is getting help out to as many people as fast as possible. In order to do that, we might have to accept some loss to increase the velocity of aid. Just like when the previous administration found that some folks received direct checks that likely shouldn't have, the important part was getting the money into the citizens who needed it—the other 99.9+% of people.

    Means testing can similarly slow down the speed that we get aid out to people, and then we're left to wonder if efficiency of aid is more important than the speed at which it arrives. Will our patient still be alive once it comes?

    1. Chris, first, I'm very sorry not to have replied until now. I fell asleep at the wheel here with the blog.

      As you said, we need to be worried a bit less about who's most deserving and worry more about just making sure as many people who need help, get help.

      As you said, will the people still even be here once the help arrives?