Reason Roundup

Magical Thinking Abounds in New Budget Deal Discourse

Plus: The growing trust gap, pandemic-low unemployment numbers, and more...


Democrats pat each other on the backs over tentatively agreeing to spend trillions. From this week's victory laps over a new budget outline, one might think something consequential had already been determined. But so far, a bunch of Democrats on the Senate Budget Committee have simply agreed that it would be cool to spend $3.5 trillion on a wish list of Democrats' preferred policies.

President Joe Biden reportedly received a standing ovation for it.

"This is the most consequential piece of legislation passed since the Great Depression," said Sen. Bernie Sanders (I–Vt.). "It addresses almost all of the issues that progressives and working class people feel are important." (Sanders also noted that "it doesn't provide all the funding that I would like to do right now.")

Yet the budget outline still has to make it through the full Senate and through the House before anything happens. And it still needs a lot of details filled in. So far, Budget Committee members have only agreed to allot massive amounts of money to vague policy areas, including an expansion of the temporary child tax credit, expansion of Medicare benefits, subsidized preschool, a national paid leave program, immigration reform measures, climate measures, broadband access promotion, anti–gig economy provisions, more funding for the Department of Justice's antitrust division, and more

Approve trillions in spending now, hash out the details later—it's brilliant! If, that is, your goal is more getting your name on the good side of progressives, leftists, and the media that love them than responsibly governing.

For now, the $3.5 trillion is just a price tag attached to a spending framework. (And, as Peter Suderman noted at Reason yesterday, these trillions come "in addition to the $2 trillion or so already spent at the beginning of the year on the recovery plan, and beyond the roughly $4 trillion spent last year on pandemic relief.")

Descriptions of the budget framework "leave observers and policymakers somewhat in the dark over just what exactly this agreement means, and what it portends for policy development over the course of the year. What we do know is that these consultations and agreements are preparatory to the consideration of a budget reconciliation bill that can overcome Republican opposition in an evenly divided Senate," writes Gordon Gray of the American Action Forum. He explains more about the budget resolution and reconciliation process here.

"The upshot of the reported 'budget deal' is that there appears to be agreement to consider a budget resolution that assumes additional spending and revenue losses totaling $3.5 trillion over the next decade, in part drawn from two major tax and spending proposals put forward by the Biden Administration," adds Gordon. "The budget resolution will necessarily shed additional light on the parameters of congressional Democrats' forthcoming tax and spending legislation, but it will not provide clear detail. To the extent Senators vote to advance the budget resolution, at this stage they will very likely be voting for legislation without knowing what policies they are enabling."

Democrats insist that whatever that spending is about, it will be fully paid for. But that's…dubious. The big idea is that the spending will generate more economic activity, which can then be taxed to pay for the already-spent or budgeted programs.

"Smart investments will have a positive effect on economic growth, but they should not be exaggerated," suggests Maya MacGuineas, president of the Committee for a Responsible Federal Budget, in a statement. "Politicians should not be making up their own estimates, choosing their own scorekeeper, incorporating fantasy growth assumptions, or relying on future promises to pay for their spending today."

"If I claimed that I had fully paid for my cocktail bar tab…you would probably assume that I had forked over actual money equivalent to the entire tab. Cocktails in. Money out," writes Suderman. "But for Senate Democrats, it probably means something more like producing an estimate showing that, over the next decade or so, drinking cocktails at this particular bar could generate enough money-making ideas to offset the cost of the drinks…maybe minus food items. The cocktails pay for themselves!"

Basically, there's a lot of magical thinking going on right now with the budget agreement, both in terms of how things will be paid for and how easy it will be to pass.

"Applause and pleasantries don't necessarily translate into votes," notes Politico. And there's reason to doubt rosier prognostications:

Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.Va.) haven't committed to supporting the deal, which needs every Democratic vote. Manchin has said that inflation and fossil fuel provisions are giving him pause.

Rep. Pramila Jayapal (D-Wash.), who leads the Congressional Progressive Caucus, touted key wins Wednesday, including paid leave, universal child care and Medicare expansion provisions. But she stopped short of promising CPC support until they have more clarity on the details, which are still coming together.

Behind the scenes, moderate Democrats are concerned about the price tag and potential tax hikes to pay for the package, which could provide fodder for classic GOP attacks.

"If the plan's central components become law, it would be the capstone achievement Democrats had promised when they won a pair of Senate elections in January to gain narrow control of Congress — and come with a reach that could exceed its cost," writes Jim Tankersley at The New York Times. But "its passage in Congress remains far from assured, with a series of hurdles in the coming months, including filling in key details on taxes and spending and holding together a fragile Democratic coalition."

Some folks optimistically point out that even if everything should go through as is, the $3.5 trillion in proposed spending is lower than other new spending ideas by Democrats. "The budget package is about 1/10th the cost, for example, of Medicare for All. The Green New Deal as originally envisioned was theoretically much larger too," noted Bloomberg reporter Steven Dennis.

But it's unclear why that should make anyone concerned about this spending feel better. At best, "it could be worse." And who's to say that Democrats, high on doling out promises of trillions of dollars in new programs, won't move on to add those things next?


Polling finds significant trust gap. A Gallup poll conducted June 1 through July 5 finds "Americans' trust in all big institutions has cratered" and a there's "massive gap in who we do trust," notes Mike Allen at Axios:

By the numbers: New Gallup polling finds a 45-point split in trust of police — 76% of Republicans vs. 31% of Democrats. Confidence in the church or organized religion — twice as many Rs as Ds, 51% to 26%.

So who do Democrats trust instead?

With President Biden in the White House, 62% of Ds said they trust the presidency vs. 13% of Rs. That's a 49-point delta — the biggest in the survey.

No surprise here: Blue America trusts the media by double digits more than red America does.

But this is interesting: Twice as many Democrats trust public schools as do Republicans, 43% to 20%.


Pandemic-low unemployment numbers in the latest jobs report. From The Wall Street Journal:

Applications for unemployment benefits fell to a new pandemic low, showing a healing labor market, and the number of people receiving jobless aid has also trended lower as many states end enhanced pandemic programs.

Jobless claims declined to 360,000 in the week ended July 10 from a seasonally adjusted 386,000 a week earlier. Last week's applications count marked the lowest level for claims since March 2020, the month the Covid-19 pandemic hit the U.S. economy.

The four-week moving average, which can smooth out volatility in the weekly figures, fell to 382,500, also a pandemic low


• Los Angeles County is bringing back its mask mandate:

• Is a fundamental First Amendment decision from the Supreme Court at risk?

• In El Salvador, a woman named Sara was sentenced to 30 years in prison after losing her baby and being accused of violating the country's strict anti-abortion laws. "Last month, she was freed thanks to a growing movement to defend the women facing decades in prison on similar charges," reports Buzzfeed. "Now she hopes to clear other women's names."