Forget Pelosi's Boondoggle Bill -- Take Taxes to Zero Instead
After spending most of the pandemic crisis on vacation, an ice cream-fortified Speaker of the House Nancy Pelosi finally emerged from her magnificent kitchen to propose a behemoth mess of a spending bill to allegedly save America’s faltering economy. Her 1,815-page proposal forms the “War and Peace” of legislative monstrosities. In fact, the endless big-government wish list contains generous payments for illegal immigrants, tax credits for wealthy residents of high-tax states, massive grants to fiscally irresponsible states, a national prohibition on identification for voters, and even federal loans for lobbyists.
This $3 trillion disaster would massively balloon the federal debt only to consolidate administrative state power and deepen dependency on federal programs. We conservatives should of course reject this proposal, but we must not only be agents of negation. Instead, it is time for the America First movement to proffer workable alternatives that can provide a badly needed boost to American workers and small businesses.
The scale of the present economic inferno almost defies belief, with over 30 million Americans newly unemployed. Even worse, many of these job losses will be lasting. According to the Becker Friedman Institute of the University of Chicago, about 40% of the job losses will be systemic and permanent, not temporary. Among Americans still working, an April AP poll showed that 55% report they have had either hours or pay reduced during the crisis.
Given the scope of this problem, our response must be big, bold, and swift. So, in contrast to Pelosi’s government leviathan blueprint, I propose a simple, elegant, and immediate economic propellant: eliminate all federal taxes for a recovery year.
Putting the Internal Revenue Service on furlough would provide an immediate pay raise for the 120 million Americans still working. Even the still-employed badly need reaffirmation, and allowing our citizens to keep virtually all of their earnings can rebuild and reinvigorate the psyche of a country badly damaged by the coronavirus and the concomitant wide-scale societal shutdowns. As many parts of America reopen, the surest way to add vigor to the restart is cash in the bank accounts and pockets of workers. But rather than some centrally planned, top-down command structure, taking taxes to zero will empower millions of Americans to make their own informed decisions about spending, hiring, and investing.
Such empowerment is commensurate with our movement’s principles regarding the diffusion of power away from the corridors of influence, particularly the Washington swamp. In addition, this proposal would immediately assist small business owners who will struggle, even in the best circumstances, to maintain their franchises once present loan programs run out. A related reform can also help small business: allow presently unemployed Americans to go back to work while still receiving their enhanced four months of jobless benefits. This reform makes sense for two reasons. First, the benefits represent a sunk cost that our government has already pledged. Second, as a country we need to incentivize work – and many small businesses cannot presently “compete” in wages against vastly increased unemployment payments. So, let’s be smart and allow those displaced workers to rejoin the labor market and double dip temporarily.
The obvious objection to this idea is the required borrowing. Let’s be honest about the deficit. There is presently almost no political will to reform entitlements, and without such actions no lasting deficit reduction is mathematically possible. More importantly, the current situation is exactly the circumstance when government should borrow, and aggressively. This virus affliction was an economic meteor strike -- an unpredicted and, thankfully, rare disaster. Borrowing near-term now can stymie the long-term fallout. In addition, with global rates near (or even below) zero percent for all developed-nation governments, America commands the capacity to borrow massive amounts of capital from global investors at very attractive rates. According to the Congressional Budget Office, total 2019 federal receipts were $3.46 trillion, roughly equivalent to the proposed spending in the Pelosi bill. For one year we can access Treasury lending to cover government services, confident that this “tax jubilee”’ will catalyze an economic resurgence and facilitate a return to tax normalization by the second half of 2021.
The left seeks to manipulate the current crisis for ever more control over our lives. Note the way Democratic governors and mayors leap to impose tyrannical and anti-science lockdown restrictions, from closing running paths to limiting how many family members can go boating together. Consistent with this power grab, Madame Speaker seeks a crushingly larger federal footprint and historic spending – all in the name of economic relief. Instead, let’s pursue a bolder policy framework, one that aligns with our principles of personal autonomy and private initiative. Instead of a new law longer than the Holy Bible, how about a one-page piece of legislation? Give the tax man a “shelter-in-place” order. Let the workers keep their money. All of it.