A Peek Inside 'Build Back Better' - Part 4 of 5
Beware! Pick-Pockets are Operating in this Area.
We are back with another episode of “What’s in the Build Back Better Act — Part 4.” We continue our dive into that cesspool of 2,468 pages. As of today, the bill is still under review in the Senate.
Senate Majority Leader Charles Schumer is vowing to give Americans a great big lump of coal for Christmas:
“Democrats have made very good progress on some of our largest priorities for the month …Soon we will be able to turn to another crucial item on our December to-do list: passing Build Back Better in time for Christmas. We remain on schedule to bring this bill to the floor of the Senate before December 25.”
On the other hand, Senator Mike Lee seems to think the bill is 6-foot deep:
“I think it’s dead. I don’t think the president today is going to declare it permanently dead. I suspect he will try — to paraphrase ‘The Princess Bride’ — probably try to characterize it as just mostly dead.”
But, those behind legislation of this magnitude are patient. My guess? It’ll be back and perhaps it’ll come back in worse form. Remember when the 2008 TARP bailout bill was declared dead and then came back about a month later with a vengeance? I do.
Will the historically high price inflation give politicians any pause for thought before they pass the dang thing? I doubt it. But we can dream, right?
The entire House bill, also known as H.R. 5376, can be read in full here.
See here for Part 1, Part 2, and Part 3 of the Monetary Current assessment of this Build Back Better Act.
Because the bill is 2,468 pages long, I didn’t read the thing word for word. I did what I’d call a “thorough skim” and pointed out the interesting things I found. I likely missed some important stuff. So if you get a hint of something interesting that I missed that you’d like me to dive deeper into it, please leave a comment or send me a message. Now let’s get into the final section of the bill — Title XIII. It’s a beast.
TITLE XIII—COMMITTEE ON WAYS AND MEANS
This Title is the most exhaustive out of all sections in the bill. It consists of 10 subtitles totaling 1,224 pages in length (that’s essentially half of the entire Build Back Better bill). We’ll only get through the first half of this Title in this review.
Subtitle A—Universal Paid Family and Medical Leave
Here we see a proposal to expand the scope of The Social Security Act from a purported retirement program to a welfare program. The proposal is based on amending The Social Security Act to add paid family and medical leave benefits for things like caregiving (e.g., caring for a child, an ill person, etc.).
But it wouldn’t be 2021 without wokeness sprinkled into the legislation. To “promote equity,” the Secretary of the Treasury will be required to,
“prevent disparities on the basis of race, color, ethnicity, religion, sex, sexual orientation, gender identity, disability, age, national origin, family composition, or living arrangements …”
You see, discrimination is A-Okay when the government does it. So, slap an approved label of your choice on yourself, and chances are you’ll get some loot.
Subtitle B—Retirement
This section requires employers to enroll their employees in automatic contribution retirement plans (e.g., IRA, 401K). And if employers don’t comply, they get taxed as a penalty.
“There is hereby imposed a tax on the failure of an employer to maintain or facilitate an automatic contribution plan or arrangement. … The amount of the tax imposed … shall be $10 for each day in the noncompliance period with respect to such failure.”
Whether intentional or not, this is clearly an attack on small businesses. It is required for all businesses with five or more employees. Can you imagine starting a business and then having to navigate the complex legal environment associated with setting up retirement accounts for employees? You might as well shut the doors before they even open. Otherwise, we will likely see businesses purposely limit their growth to just 4 employees.
And the government will adjust the tax penalty for inflation just to twist the knife a bit as the years go on.
“… beginning after 2023, the $10 amount … shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment …”
Subtitle C—Child Care Access and Equity
This section establishes State Child Care Information Networks. These “networks” would require States to maintain a publicly available database that compiles information on child care providers, including:
location, description of any fees, hours of operation
info on applications for child care services
the total number of children, by age group, for whom the provider is providing child care services, and how many openings are available by age group
whether the provider has a waiting list, and if so, the average length of time parents are on the waiting list
the languages spoken by staff
Maintaining this information seems reasonable, right? Well, this just adds more unnecessary burden to a business trying to provide affordable child care. More burden causes higher operating costs. Higher operating costs result in a higher cost of child care. And the reporting requirements are a burden:
“the State requires each provider listed in the State Child Care Information Network … to update [numbers 3 and 4 above] … on a weekly basis, and to update all other information … quarterly …”
They apparently recognize the reporting requirements to be a pain in the rear, because they provide financial incentives to comply:
“… provide financial incentives and support to child care providers for whom participating … would be costly or time consuming.”
The amount of these financial incentives aren’t spelled out, but there is a vague statement that seems to allow the Secretary of the Treasury to arbitrarily distribute funds “according to relative need.”
Now if the reporting is inaccurate by more than 10% in error, the State gets penalized.
“PENALTY FOR EXCESSIVE ERRORS IN STATE CHILD CARE INFORMATION NETWORK.— … if … a check … reveals that the number of child care providers erroneously included or erroneously not included … is at least 10 percent … and the State has not submitted … a report demonstrating that action has been taken to reduce that error rate to less than 10 percent.
But the penalty is only a 5% reduction of the funding to the State. Now, this is just me thinking, but what incentive does a child care provider really have to worry about maintaining accurate and timely reporting? It’s the State that gets penalized, not the provider. And if it’s only a 5% penalty, then does the State really care either?
To me, this State-managed “network” idea just sounds like it’s going to be a giant boondoggle, full of inaccuracies, that no one ends up even using anyway.
Subtitle D—Trade Adjustment Assistance
As with most of the stuff in the Build Back Better Act, this section is a bill within a bill. In fact, it specifically states that Subtitle D should be referred to as the “Trade Adjustment Assistance Modernization Act of 2021’’.
It extends and expands the currently expired Trade Adjustment Assistance (TAA) program. TAA essentially provided subsidies to domestic workers, firms, and farmers to ease the reality of international trade competition. It propped up inefficiency and promoted dependency. President John F. Kennedy encouraged this mentality as evident in his Special Message to the Congress on Foreign Trade Policy in 1962. In a classic example of political doublespeak, Kennedy starts off praising international competition in the marketplace:
“The discipline of the world market place is an excellent measure of efficiency and a force to stability. To try to shield American industry from the discipline of foreign competition would isolate our domestic price level from world prices, encourage domestic inflation, reduce our exports still further and invite less desirable Governmental solutions.”
But then — as if he forgot what he just said moments earlier — goes on to recommend the government come in and prop-up failure:
“I am also recommending as an essential part of the new trade program that companies, farmers and workers who suffer damage from increased foreign import competition be assisted in their efforts to adjust to that competition. When considerations of national policy make it desirable to avoid higher tariffs, those injured by that competition should not be required to bear the full brunt of the impact. Rather, the burden of economic adjustment should be borne in part by the Federal Government.”
The fact that this trade “support” has been going on for over half a century and is now being proposed for further expansion, should be evidence enough that this promotes inefficiency and dependence.
Subtitle E [No Title]
There’s no title assigned to this Subtitle. I presume this is an inadvertent mistake, but this section is generally related to health care and care of the elderly.
ELDER JUSTICE
There is proposed legislation with the purported intent to prevent and investigate elder abuse, neglect, and exploitation. Quick, someone get Andrew Cuomo on the phone and warn him!
$400 million is appropriated to provide wage subsidies, student loan payments, guaranteed child care, transportation, job interview clothing, and legal assistance to address arrest/conviction records to health care workers or those training to be health care workers.
How does that prevent elder abuse, you ask? Hell if I know!
But, don’t worry, there’s another $500 million appropriated to establish medical-legal partnerships and legal hotlines to target potential vulnerable elderly. Watch the lawyers swarm toward the money like flies on a turd.
NURSE STAFFING REQUIREMENTS
There is $50 million for Congress to study the appropriateness of establishing minimum nurse-to-resident ratios for nursing facilities. Why on Earth does any business need the government to perform a study to determine its employment needs? Central planning 101: it always fails. As President Reagan once said,
“The more the plans fail, the more the planners plan.”
MEDICARE DENTAL, HEARING, AND VISION COVERAGE
An expansion of Medicare is proposed to include dental, hearing, and vision coverage. I’ll just point out that Medicare’s unfunded liability is estimated to be $103.4 trillion.
Subtitle F—Infrastructure Financing and Community Development
They just signed into law the Infrastructure Investment and Jobs Act last month, but apparently, that wasn’t enough to satiate the ever-hungry pigs at the government trough. There are proposals for even more “infrastructure financing” in this Build Back Better monstrosity.
INFRASTRUCTURE FINANCING
There’s provision in here for issuing “infrastructure bonds” to help finance this stuff. But, buyer beware:
“… a qualified infrastructure bond shall not be treated as federally guaranteed …”
NEW MARKETS TAX CREDIT
Wow, a tax credit! Is this the one positive sign in the entire bill? In general, any chance to starve the three-headed beast of tax revenue is a positive in my book. After all, the more you feed it, the more powerful it grows, the more revenue it needs to satiate its thirst for control over you. And your money is your money after all. Pure and simple.
But, the New Markets Tax Credit (NMTC) program— proposed to be permanently extended — is so convoluted and complex that you really have to be politically connected “in the know” to take advantage of it. In other words, this isn’t helping out the little guy as Build Back Better proponents spout. Instead of general tax relief for all Americans, these types of complex, targeted tax credit programs are “fishy" to say the least.
The NMTC was established in 2000 and provides federal tax credits to attract private investment into low-income communities. It allows investors to receive 39% Federal income tax credit based on the overall investment value into the project. CliftonLarsonAllen (CLA) — a wealth advisory and tax consulting firm — published a presentation on how to leverage the NMTC to increase capital for investment. CLA provides the following example to illustrate how the process can work:
“A developer wants to build a $10 million dollar mixed use building in a New Markets designated area and receives $10 million dollars in New Markets financing. The generated tax credit would equal 39 percent (or $3,900,000) over a seven year compliance period. The developer can then negotiate the sale of these credits and receive approximately $3,000,000 from the New Markets Tax Credit investor to help finance the facility. At the end of the seven year compliance period, the $3,000,000 in investor equity typically reverts to the developer.”
See an extracted flowchart below illustrating the not-so-simple process.
REHABILITATION TAX CREDIT
Here we have another tax credit. This Rehabilitation Tax Credit is available to those that invest in the refurbishment of qualified “historic” structures. It currently exists at 20%, but the bill proposes a change up to 30% for the next 5 years, and a step back down to 20% 2 years thereafter. Why would they do this?
Most likely, the associated political lobby got in Congress’ ear because they are planning near-term renovations. So, why not get more bang for your buck now? After the renovations are complete, the legislation can be reset for the Joe Schmos that weren’t in on the game.
These convoluted tax credits, like the NMTC, create an environment that attracts fraud. For example, a Virginia man, George Hranowskyj, made out with $8 million after he scammed the Rehabilitation Tax Credit program over the course of 6 years. His mistake was that he got caught. The indictment alleges that Hranowskyj inflated the amounts spent on renovation projects to increase the amount of the rehabilitation tax credit kickback. He then sold the credits for millions to corporate investors in need of reducing their own tax liability.
Another Virginia man, Billy Jefferson, pled guilty to scamming $12 million from the program in the same manner.
CREDIT FOR QUALIFIED WILDFIRE MITIGATION EXPENDITURES
A 30% tax credit against wildfire mitigation expenditures is proposed. It appears that the West Coast lobby got their hands in the tax-credit pot, too. After decades of government forest mismanagement and billions of dollars disappearing in metaphorical flames, perhaps shifting the focus to fire mitigation from fire suppression is a positive development.
HOUSING
Similar convoluted tax credit programs for housing developers and investors in low-income areas are either getting an increase or are being created:
Low Income Housing Tax Credit (increase)
Neighborhood Homes Credit (new program)
INVESTMENTS IN TRIBAL INFRASTRUCTURE
Native tribes would be treated the same as States for the purposes of tax-exempt debt issuance. In other words, when the tribal governments issue bonds, the interest accrued won’t get federally taxed as income. I’m not surprised the Federal Government treats Tribal governments differently than States in the first place.
The bill also extends the New Markets Tax Credit and other credits into the Tribal areas and U.S. Territories (e.g., Puerto Rico).
Already semi-sovereign Tribal lands are becoming less sovereign and more dependent on the Federal Government with each piece of welfare “bestowed” on the Tribal people. The corruption of local Tribal governments will only worsen as conditional money funnels its way through their hands from the Feds.
And that’s a wrap for today’s review of the first half of TITLE XIII—COMMITTEE ON WAYS AND MEANS. Tune in next time for Part 5 — the final chapter of the Monetary Current review of Build Back Better.
I’ll leave you with a work of art by George Alexopoulos.
If you’re intrigued by the above comic like I am, check out the rest of George Alexopoulos’ work at Patreon.com/StudioNJ and Etsy.com/shop/StudioNJ. He puts out an incredible amount of comic content that is always plugged into the absurdity of the world. He takes a no-holds-barred approach to depict current events with his twisted sense of humor. You won’t be disappointed. Follow him on Twitter @GPrime85.
A preview of what’s remaining in the Part 5 of 5 review of Title XIII is as follows: