The United States Chamber of Commerce just sent some shockwaves into Washington D.C. They sent a letter to members of Congress that explained how the progressive-backed reconciliation bill has within it several gimmicks and arbitrary sunsets that will add another $1 trillion to the complete cost of the package.
The letter begins with, “As you await scoring from the non-partisan Congressional Budget Office on the latest iteration of the reconciliation bill, we request that you seek a complete accounting of the budgetary and economic impacts of the current proposal.”
As the letter continues, it contains four significant concerns that will add greatly to the cost of the final law. They include: spending and tax provisions which seem to “sunset” and therefore give the appearance of lower cost, the impact of sunsetting those programs on state governments and the private sector, inflation costs, and workforce participation.
The Chamber of Commerce explained that without the arbitrary sunsets, some as little as within one year, on the new entitlement programs and tax credits introduced in the bill, will see the cost of those programs rise significantly.
They go further by stating that given that the legislation’s proponents clearly intend for the programs to continue past their “sunset,” all the lawmakers should be given a Congressional Budget Office estimate of the true cost of the bill. This should absolutely be given if these programs are intended to be permanent.
The letter clearly delineates a comparison between the estimated proposed funding for three programs, as well as an estimated cost of the programs. This compassion was made by experts at the University of Pennsylvania’s Wharton School of Business.
With the present proposed reconciliation bill, $390 billion would be allocated for universal child care and preschool through 2027. But if this very program were made permanent, the cost is really approximately $700 billion dollars.
The proposed spending for health care coverage under the reconciliation bill is estimated at $126 billion. They have a proposed sunset in 2025, and the experts at Wharton estimated that the cost of making it permanent would be $386 billion.
Incredibly, the present bill’s expanded Child Tax Credit and Earned Income Tax Credit sunsets in 2022, and they are estimated to cost about $170 billion. But according to the experts at Wharton, the total cost of making the program permanent would amount to an astonishing $1.96 trillion.
The Chamber of Commerce focused on the proposed involvement of states and the proposed burden of cost-sharing. In the present bill’s childcare provision, states are required to bear 10% of the costs, beginning in year four. But this is only if they choose to participate in the program. Added to the unknown is that private childcare providers are required to meet a series of federal requirements, which would increase their costs. And presently, after year six, funding abruptly ends, which will leave states forced to bear the full cost of the program if Congress refuses to extend it. The Chamber of Commerce related similar concerns over the universal pre-K program. It requires a 40% cost share before funding sunsets, as well as expansions to the Affordable Care Act.
The Chamber of Commerce also took aim at the spending proposals which would cut taxes in the short term. But they would be increased significantly in the long term. There was an analysis by the Joint Committee on Taxation which was revealed in the letter. It relayed that even though the bill proposes $174 billion in tax cuts over 2022-23, the bill estimates an increase of $945 billion in government revenue over 10 years.
And the bill’s Social Safety Net provisions may reduce taxes by $404 billion through 2026, but over the next five years, taxes increase by $202 billion.
The letter ends with this summation from the Chamber, “As stated repeatedly over the last several months, the Chamber remains strongly opposed to the reconciliation bill for many reasons, including our concerns regarding its impact on the fragile economic recovery and U.S. global competitiveness. Detailed analysis on the issues identified above would at a minimum help ensure that lawmakers are making a more informed decision before moving ahead with a multi-trillion bill.”