Senators Have nearly 300 Amendments Ready for the Bipartisan Infrastructure Bill

Progress on the bipartisan infrastructure bill has slowed to a crawl, because nearly every senator has amendments they want to add. It's going to take some time for the Senate to work its way through them all.

Some of the amendments want to change what the bill does or reallocate funds from one category to another. Others are poison pills intended to make the bill so unattractive that it is defeated. For example, a current law known as Davis-Bacon requires federal contractors to pay prevailing wages in the area they are working. Sen. Mike Lee (R-UT) introduced a 126-page amendment that would gut Davis-Bacon and allow federal contractors to pay as low a wage as they could get away with. No Democrat would ever vote for that, so the amendment is simply intended to slow progress down.

Some of the other amendments are legitimate and address policy issues the senator cares about. For example, Sen. Roger Wicker (R-MS) introduced an amendment that would give tax credits to issuers of infrastructure bonds, provide more money for the Coast Guard, and ban the government from regulating what carriers charge for broadband Internet access. It won't pass, but is at least a good-faith effort to achieve some goals Wicker—or, at least, the lobbyists who fund him—care about.

On Monday and Tuesday, only seven amendments were processed. If this keeps up, it could take a very long time to get the bill through the Senate. Minority Leader Mitch McConnell (R-KY), who has said he is for the bill, is in no hurry, though. He warned the Democrats to let the normal process play out, however long it might take.

However, the gang of 21 senators that supports the bill has only so much patience. These senators want the bill to pass as they wrote it, with no substantive amendments. They are likely to vote down each amendment as it comes up. So the bill seems to be on track, even though progress is very slow. (V)

Trump Lawyers Try to Block Tax Return Handover

It was expected, and it happened right on schedule, but it is still newsworthy. Yesterday, Donald Trump's lawyers formally asked the judge in the House's tax-return case to block the request of House Ways and Means Committee Chairman Richard Neal (D-MA) for 6 years of Trump's returns. They said the request was politically motivated. There's just one small problem: The actual wording of the law upon which Neal's request is based allows politically motivated requests. It does not provide for any discretion on the part of the Secretary of the Treasury or any judge. The clear intent of the law is that Congress alone should make the call about whose tax returns it gets. This doesn't mean the judge will follow the law, though.

The judge here is Trevor McFadden, a graduate of the University of Virginia Law School who served as assistant U.S. Attorney for D.C. and as counsel to the deputy U.S. attorney general. Before that he was deputy sheriff and a police officer. He was appointed to the federal bench by Donald Trump in June 2017. The Senate confirmed him by a vote of 84-10. He has been a member of the Federalist Society since 2003.

No matter what McFadden rules, the case is virtually certain to go to U.S. Court of Appeals for the District of Columbia and then on to the Supreme Court. It will be months, if not years, before the case is resolved, if ever, despite the absolutely unambiguous wording in the law that the secretary of the treasury "shall furnish" the returns when requested in writing by the chairman of Ways and Means. When a law is so clear and yet it takes years for cases based on it to be resolved, this shows how broken the U.S. judicial system is. (V)

Democrats Scrounge for Cash to Pay for Infrastructure

It is probably a given that the funding of the bipartisan infrastructure bill will be done using smoke and mirrors. Republicans refuse to raise any taxes and even refuse to fund the IRS better so it can go after tax cheats to collect the taxes imposed by current law. Under these conditions, finding a trillion dollars in coins under the cushions of the sofas in the Capitol is going to be a tough lift. But both sides want a bill, so it will probably be largely financed by more debt, while both sides vigorously deny they are putting the costs on the national credit card.

The $3.5-trillion reconciliation bill is another matter. Sen. Joe Manchin (D-WV) really wants it fully paid for, otherwise he won't vote for it. That amount is too much to expect to find in loose change in the sofas, so the Democrats are now scrounging around looking for a trillion dollars here and a trillion there. They are also hunting for savings elsewhere in the federal budget because every billion they can save somewhere else in the budget is a billion less that they have to raise in taxes and still have the bill be budgetarily neutral. Just to get an idea of what $3.5 trillion is, it is more than the entire annual GDP of every country in the world except the U.S., China, Japan, and Germany, and is almost equal to Germany's $3.8-trillion GDP. So, this bill will spend almost a trillion dollars more than the total cost of all goods and services in the U.K. for an entire year. That is definitely not coins-under-the-cushions kind of money. One thing that will make it easier, though, is that the Republicans will have no say in how the funds are raised.

One issue that is still up in the air is whether to use real economics or aspirational economics. Using the former makes it much harder. Besides, to justify their 2017 tax cut, Republicans used aspirational economics, so some Democrats feel there is a precedent. The technical term for aspirational economics is "dynamic scoring." Doesn't that sound professional? What it amounts to is making assumptions about how changes in the legislation will affect people's behavior and thus the government's costs and income. For example, if $[x] is spent on child care, then more women will enter the workforce and thus pay $[y] in payroll taxes and $[z] in income taxes. If you make your model favorable enough, then y + z > x and presto, spending $[x] on child care is suddenly no longer a cost, but a source of revenue! Of course these models are infinitely adjustable, especially if the adjusters have axes to grind and want certain results. The Republicans did this to the max in 2017 and now the Democrats have to decide if they want to play the same game. Regular economics and accounting don't let you do that. All they see is an expenditure of $[x] and no revenue.

Here are some of the other issues the Democrats are looking at:

• Roll back the corporate tax cut: This is an easy one. The Republicans knocked the corporate rate down from 35% to 21%. Democrats could jack it back up again. Precisely how much to raise it is part of the sausage-making process. For example: "OK, Sen. Manchin, how about $50 billion for broadband in West Virginia and a 25% corporate rate? Or would you prefer $100 billion for broadband in West Virginia and a 28% corporate rate? Or maybe 1-Gbps fiber to the home for every home in West Virginia and a 30% rate? What do you say, Senator?" Each point increase in the corporate tax rate raises about $100 billion.
  
  
• Foreign profits: A lot of big companies play games with the GILTI accounting rules to reduce or eliminate their corporate taxes. A typical stunt is to create a subsidiary in Ireland, Bermuda, or the Cayman Islands and sell it all the company's patents for $100. Then the subsidiary charges the mother company an arm and a leg for use of the patents, causing it to have no profit—and thus no tax. The subsidiary then makes a fortune, but that is taxed in Ireland, Bermuda, or the Cayman Islands at extremely low rates. The rules could be changed to tax giant corporations on their worldwide profits, regardless of where they were earned, and then to prevent double taxation, to allow credits for actual taxes paid to foreign governments. If, say, Google, didn't actually pay any tax in Bermuda, then it wouldn't get any credit. End of game.
  
  
• Raise the top individual tax rate: The top marginal rate for individuals has been a political football since it was introduced at 7% in 1913, peaking at 92% from 1952 to 1953, when Dwight Eisenhower gave in to pressure from rich people and cut it to 91% where it stayed until John Kennedy reduced it to 70% and Ronald Reagan dropped it to 50%. Here are the historical rates:
  
  
  
  

  The top rate is now 37%, which is historically very low. Obviously there is plenty of room to raise it again. Some Democrats are talking about 39.6%, but clearly making it 50% and then pointing out this was the rate that Saint Ronald of Reagan preferred would dampen some of the criticism that the sky would fall at a 50% marginal rate. The Democrats could even call it the Reagan Amendment.
  
  

• Capital gains: Joe Biden has suggested raising the capital gains tax to the normal tax rate for taxpayers with $1 million in income, instead of the current top rate of 24%. Another idea is to eliminate the stepped-up basis for estates. Suppose someone bought stock for $200,000 long ago and it is now worth $1 million. If the person sells the stock and then dies the next day, his estate has to pay capital gains tax on $800,000. If however, the person dies holding the stock and the next day the estate's executor sells the stock for $1 million, no capital gains tax is due. Some people think this is kind of weird and want to do something about it.
  
  
• Hit Mega-IRAs: Some hundreds of wealthy Americans have IRAs topping $25 million and 30,000 have IRAs worth over $5 million. IRAs bring with them tax savings to the owners (and reduce income to the government). Democrats want to limit how much money can be in an IRA, thus reducing their owners' tax savings and correspondingly increasing the taxes they pay, all without changing the tax rates.
  
  
• Medicare rebates: This item is one for the accountants, but it could bring in $180 billion. At the end of his presidency, Donald Trump enacted a rule that Joe Biden could scrap. If he does, pharmaceutical companies could again pay pharmacies to put their drugs at the top of their list for Medicare patients. If, say, CVS buys $[a] worth of drugs from Pfizer, but Pfizer pays $[b] to CVS to make sure Medicare patients get their drugs and not some other company's drugs, then the real cost of the drugs is a - b. It is effectively a (big) discount. Trump banned these discounts to save the drug companies money (by not having to compete with each other). By re-allowing the rebates, Medicare would de facto make the companies compete a little bit and save Medicare some money.
  
  
• Drug savings: Also on the drug company front, current law doesn't allow Medicare to negotiate with drug companies over prices. Virtually every other government in the world negotiates drug prices with the pharmaceutical companies. Senate Budget Chairman Bernie Sanders (I-VT) has estimated that allowing Medicare to negotiate drug prices would save the government $600 billion. That is just as good as raising taxes by $600 billion. However, senators from the states with lots of drug companies, like New Jersey, aren't so keen on this plan.
  
  
• Medicare Advantage plans: The government pays some insurance companies money to cover Medicare enrollees with a Medicare Advantage plan. The subsidies vary, but the government could save a lot of money by reducing the benchmark of how much it pays.
  
  
• Beef up IRS enforcement: Biden has suggested increasing IRS' funding by $80 billion, to let it collect more taxes already owed but not collected. A rule of thumb is that for every extra dollar IRS gets in enforcement funding, it brings in $7 in new revenue. So giving it $80 billion would probably bring it over half a trillion dollars in new revenue. However, there is an old rule forbidding Congress from paying for legislation by giving IRS more enforcement money, so the Democrats would have to change the budget rules.
  
  
• Punish scammers: When the FTC catches a crooked firm scamming money from people, it can fine the firm, sometimes big bucks. The Supreme Court said the FTC can't give the money it gets from the scammers back to the scammees. So the government gets to keep it. More revenue for the government! Giving the FTC more power to go after scammers and fine them even more would mean more government revenue. Sen. Maria Cantwell (D-WA), chair of the Senate Commerce, Science, and Transportation Committee, is on the case.
  

In short, there are plenty of options available, but Democrats have to make some choices and there will be intense lobbying by many of the companies and industries with billions at stake. (V)

Who Is Kathleen Hochul?

Maybe we are jumping the gun here, but given what is going on in Albany, NY, we thought some readers might be interested in what happens if Gov. Andrew Cuomo (D-NY) resigns or doesn't resign.

First, resignation. A Reuters poll out yesterday shows that 59% of New Yorkers want Cuomo to resign and 32% said he should serve out his term. That is going to put a lot of pressure on him, and also makes it clear that running for a fourth term is out of the question. But there is more. Albany County has already launched a criminal investigation against him and the New York (Manhattan) and Westchester D.A.s are looking into starting their own. If he is being prosecuted in three counties, it is hard to see how he could continue being governor.

Now suppose he tries to tough it out. He will almost certainly be impeached. Impeachment requires 76 votes in the Assembly. Democrats control 106 seats, so if they want Cuomo out, he will be impeached, even if Republicans want to keep him, which seems very unlikely. The trial is a little different from the U.S. Senate. The state Senate has 63 members, but the majority leader (who is in the line of succession) may not vote, leaving 62 voting members. In addition, the seven judges on the state Court of Appeals are also jurors, making 69 in all. A vote of two-thirds of them (46) is needed for conviction. New York is a pretty progressive state and that shows up in the state legislature. The speaker of the Assembly is a Black man, Carl Heastie, and the majority leader of the state Senate is a Black woman, Andrea Stewart-Cousins. Their 15 minutes of fame is rapidly approaching.

Maybe some Republicans think that if Cuomo is impeached, then the runner up in the 2018 gubernatorial election, Marc Molinaro (R), gets to be governor. Nope. Doesn't work like that. If Cuomo resigns or is booted out, Lt. Gov. Kathleen Hochul (D) takes over. She ran on the ticket with him in 2018 and is nominally his partner, although her interests and his are not exactly aligned right now.

Hochul was born in Buffalo in 1958, the second child of Pat and Jack Courtney. The family struggled when she was young and lived in a trailer for a time. She was politically active at Syracuse University and lobbied the university to divest itself from South Africa. After graduating, she got a law degree from Catholic University. She worked for a law firm for a while, but didn't like it, and got jobs working for Sen. Daniel Moynihan and the state Assembly.

In 2007, then-Gov. Eliot Spitzer (who himself was later forced out in a sex scandal) appointed her as Erie County clerk. In 2011, she was elected to the U.S. House in NY-26, which includes Buffalo and Niagara Falls, in a special election. In 2012 she narrowly lost a full term to the House. In 2014, she was Cuomo's running mate and was elected lieutenant governor, a post to which she was reelected in 2018.

Hochul is reasonably progressive. She supports a $15/hr minimum wage, paid family leave, and free public college. She has also worked on women's issues, including helping to pass tough laws on sexual assault, something the current governor may come to regret. In her 2018 run, she was endorsed by Planned Parenthood, Hillary Clinton, Joe Biden, Rep. Hakeem Jeffries (D-NY), New York AG Letitia James (D), the AFL-CIO, UAW, NOW, Emily's List, and many others.

If Hochul becomes governor, she will almost certainly run for a full term in 2022. This will put her on a collision course with James, who does think it's time for New York to elect a female governor, but thinks that governor should be named "Letitia James." Undoubtedly James, who will get credit from many New Yorkers for taking down Cuomo, would love to bag another serial sexual assaulter, even if it is only for financial crimes. She and Manhattan D.A. Cyrus Vance are already working on that project. No doubt many other Democrats will also jump in and the 2022 Democratic gubernatorial primary will be wild and woolly. (V)

GETTR Is GETTING Actual Terrorists

Be careful what you wish for; you just might get it. Have we mentioned that before? Don't remember. Donald Trump was very unhappy with Twitter and Facebook censoring him, so he wished for an online platform that allowed free speech and didn't censor anything. He got it by starting his own blog, but nobody looked at it, so he killed that. Then one of his closest aides, Jason Miller, started a Twitter clone, GETTR, that absolutely believed in free speech. Wish granted! Great, no?

Well, not entirely. Initially it was flooded with pornography. Then supporters of the Islamic State showed up. They posted videos of beheadings, memes of Trump being beheaded, and many postings threatening violence to the West. For example, one poster wrote: "We will come at you with slaying and explosions you worshippers of the cross. How great is freedom of expression." It has become a safe haven for Islamic terrorists. That is not what Trump had in mind. He was more looking for a platform that was a safe haven for Donald Trump, but had censorship for everyone else.

Politico did a study of GETTR. It found at least 250 accounts that regularly post jihadi material. Miller told Politico that the ISIS was using GETTR because it hated Trump for being so tough on it. He also said that the only ISIS warriors left are keyboard warriors hiding in caves and eating dirt cookies. That is far from the truth and GETTR is allowing them to coordinate much better.

Has Miller taken any action? Yes, he took down some of the jihadi posts, in other words, he forgot all about free speech and started censoring postings. So in that respect, GETTR is like Twitter. The main difference is who does the censoring and who gets censored.

In addition to ISIS postings, there is a lot of white supremacist material up there (e.g., from the Proud Boys), which is not censored. Sean Hannity and Mike Pompeo also post there. But we repeat ourselves.

Sooner or later, GETTR is going to have to get serious about dealing with ISIS, although it will probably let white supremacists continue to post. But it will continue to be a cat-and-mouse game. Emerson Brooking of the Digital Forensic Research Lab said: "The terrorist organizations are always experimenting, because they're fighting a real battle to continue to have access to public spaces to spread their propaganda." If terrorists, white supremacists, and their ilk come to define the platform, it is not likely to become the next Twitter.

Trump does not actually have a GETTR account, though Miller has reserved @realdonaldtrump should his former boss wish to hop on board. Presumably, with GETTR turning into a third-rate Twitter, offering little in the way of attention and praise, and much in the way of embarrassment, Trump won't touch it with a 10-foot-pole. Or a 2-inch pole, if that's all he's got to work with. Without the star attraction the platform was designed around, and with a bunch of unwanted Neanderthals, it's presumably going to go the way of Trump's blog. (V)

Ohio Senate Race Heats Up

The race for the seat from which Sen. Rob Portman (R-OH) is retiring is heating up. Mike Gibbons, a wealthy investment banker, knows that Sen. Ron Johnson (R-WI) bought himself a Senate seat in not-too-distant Wisconsin, and wants to do the same thing. Consequently, he has launched a $10 million ad campaign to promote himself in the GOP primary. Gibbons knows something about running for the Senate, but only a little something: He did it in 2018 and failed to win the primary. This time around, he will spend more. This week alone he is pouring $3 million into ads. The current ad touts his positions on secure borders, the right to bear arms, the sanctity of life, the power of faith, and fair elections. It ends with: "I'm Mike Gibbons and I approve this message because winning isn't everything. It's the only thing." Gotta give credit where credit is due. The line is from UCLA football coach Red Sanders, who used it back in the 1930s. Sanders also said that "Beating 'SC is not a matter of life or death, it's more important than that," but we doubt Gibbons uses that in one of his commercials.

But money or no money, Gibbons is no shoo-in. There are half a dozen other folks in the GOP primary. Another one of them, Jane Timken, is married to Ward Timken, former chairman, CEO, and president of TimkenSteel, which split off from the Timken Roller Bearing Company in 2014. She's not going to be short of money, either. She just got a boost in the way of an endorsement from Gov. Kristi Noem (R-SD). Upon endorsing her, Noem said: "Jane is a trailblazer who fights to keep Ohio red and she has never backed down from a fight. I am confident that Jane Timken will be a leader with grit, perseverance, and integrity, exactly what is needed to fight for Ohio values in Washington, DC."

Other candidates in the race include wealthy auto dealer Bernie Moreno, J.D. Vance (who has the backing of billionaire Peter Thiel), and former state treasurer Josh Mandel. Donald Trump hasn't weighed in yet, so every morning each candidate looks into the bathroom mirror and says: "Mirror, mirror on the wall, who is the Trumpiest of them all?" If it doesn't answer "YOU," the candidate works harder at it. It is going to be an extremely expensive and bloody contest. The only serious Democrat running so far is Rep. Tim Ryan (D-OH). (V)

Governor of Tennessee Supports Paying for Vaccinations

Of cows, that is. Over the past 2 years, Tennessee has sent half a million dollars to farmers to vaccinate their cows. After all, "vacca" means "cow" in Latin so it is important to have them vaccinated. Or so says Gov. Bill Lee (R-TN), who just so happens to own a cattle ranch.

As to vaccinating people, he is less enthusiastic. Unlike other governors who have set up lotteries for vaccinated people and done other things to get people vaccinated, Lee is more a fan of doing nothing and letting people decide for themselves. This has resulted in a 39% vaccination rate in Tennessee, far below the national average of 49%. Lee himself has been vaccinated, but has kept it quiet so as to avoid setting an example for others. He was also silent when the state's health director was fired for encouraging people to get vaccinated. (V)

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