In a speech announcing the framework for a pared-down spending plan, President Joe Biden made some questionable claims:
- Biden said the plan is “fully paid for,” but some economists believe the White House revenue estimates are a bit rosy and warn that the balanced book relies on expiring spending plans that the White House hopes to extend in the future.
- In pitching a program to replace diesel school buses with electric vehicles, the president said electric vehicles “do not expend any pollution into the air.” But that doesn’t mean they don’t have a carbon footprint.
- In talking about the plan’s child care provisions, Biden said he “couldn’t afford child care” in the early 1970s, when he was earning $42,000 as a new senator and raising two young boys. We can’t say he’s wrong, but for context, that salary is about $270,000 in today’s dollars.
- U.S. workers are among the most productive, not the most productive, but once again, Biden said the country had “the most productive workers” in the world.
Plan Is ‘Fully Paid For’
“It’s fiscally responsible. It’s fully paid for,” Biden said of the framework plan. “And over the next 10 years, it will not add to the deficit at all; it will actually reduce the deficit, according to the economists.”
According to the White House accounting, the new spending in the plan would come to about $1.75 trillion over the next 10 years. But would be offset by nearly $2 trillion of new revenue, mostly from taxes on high-income earners and corporations.
Some economists, however, think the White House is relying on revenue estimates that are overly optimistic. A preliminary analysis of the framework by the Penn Wharton Budget Model estimated the revenue-producers in the plan would raise $1.527 trillion over 10 years, or $468 billion less than the White House estimate. The PWBM estimated lower revenues from tougher IRS enforcement on high-income earners, international tax and minimum corporate book tax provisions, according to its side-by-side revenue comparison by provision.
William McBride, vice president of federal tax and economic policy at the Tax Foundation, told us via email that his organization is in the process of scoring the new framework, “but our preliminary estimates indicate many of the major pay-fors would raise less revenue than initially advertised. As such, it will add to the deficit.”
“We have not seen JCT [Joint Committee on Taxation] scores for most of these, so we are relying on White House (or Treasury estimates),” Howard Gleckman, a senior fellow in the Urban-Brookings Tax Policy Center, told us via email.
Gleckman said he suspects “the tax increases and the prescription drug changes will pay for most of the new initiatives, if not all of them.”
But he said the one White House revenue estimate that is most problematic is the $400 billion it expects to net from “IRS investments to close the tax gap.”
The Congressional Budget Office and Joint Committee on Taxation “generally believe that IRS enforcement nets less,” Gleckman said.
A “similar but slightly different” IRS plan in Biden’s fiscal year 2022 budget was only projected to bring in an additional $265 billion over 10 years, Marc Goldwein, senior vice president and senior policy director at the Committee for a Responsible Federal Budget, told us in a phone interview.
For that reason, he said, the plan “looks to me like it might fall slightly short” of being fully paid for.
But the bigger issue, Goldwein said, is that in order to balance the books, the White House relies on “expiration games” — having various spending policies expire in a few years even though the White House hopes to ultimately extend them later.
For example, the plan proposes to extend the refundable child tax credit for one year, the expansion of the Affordable Care Act subsidies for three to four years, and universal pre-K for all 3- and 4-year-olds and child care subsidies for six years.
If those policies were to be extended, it would cost an additional $2 trillion over 10 years, more than doubling the framework’s cost, Goldwein said.
Electric Vehicles’ Carbon Footprint
In pitching a proposed program to replace diesel school buses with electric vehicles, the president said electric vehicles “do not expend any pollution into the air.” But that doesn’t mean they don’t have a carbon footprint.
“Electric vehicles (EVs) have no tailpipe emissions. Generating the electricity used to charge EVs, however, may create carbon pollution,” the Environmental Protection Agency says on its website. “The amount [of CO2 emissions] varies widely based on how local power is generated, e.g., using coal or natural gas, which emit carbon pollution, versus renewable resources like wind or solar, which do not.”
The EPA has a tool on its website that invites visitors to compare carbon emissions of the two types of vehicles based on their zip code. For example, a 2020 Tesla Model 3 with a long-range battery and all-wheel drive in Washington, D.C. (zip code 20500) produces 100 grams of CO2 per mile — about a quarter of the carbon emissions of an average new gasoline vehicle. (The Tesla Model 3 gets an estimated 315 miles per charge, while the EPA’s model assumes the new gasoline vehicle gets 27 miles per gallon.)
As the EPA says, an electric vehicle is “typically responsible for lower levels of greenhouse gases (GHGs) than an average new gasoline car.” But even electric vehicles are responsible for greenhouse gases that cause global warming.
The plan would cap child care expenses for some working parents at 7% of their income for six years. Biden said it would apply to “nearly all families earning less than $300,000 a year.” (The threshold is 250% of median income in a state, a White House fact sheet says.) He added a personal anecdote about not being able to afford child care himself that some have questioned.
In December 1972, after Biden first won election to the Senate and a month before he would take office, his wife and infant daughter were killed in a car accident. His two young boys were injured and survived. Biden commuted to his job in Washington, D.C., from Wilmington, Delaware, on Amtrak. “I started commuting 250 miles a day because I had my mom and my dad and my brother and my sister to help me take care of my kids, because I couldn’t afford child care, and I was getting a serious salary — $42,000 a year,” Biden recounted.
He has told the anecdote several times, including in a Jan. 14, 2020, debate. Both the Associated Press and the Washington Post Fact Checker noted then that the numbers suggested that Biden probably could have afforded child care. But the Fact Checker wrote that “we can’t be certain, because other financial factors could have been at play.”
We’ll add the same caveat. We can’t say Biden is wrong, and child care is certainly expensive. But it’s worth explaining that $42,000 in 1973 is about $270,000 in today’s dollars.
As for the current cost of child care in Delaware, the liberal-leaning Economic Policy Institute estimates that the average cost for an infant is $11,021 a year in the state, and for a 4-year-old, it’s $8,876.
U.S. Worker Productivity
U.S. workers are among the most productive, not the most productive — at least by the measure preferred by the Bureau of Labor Statistics.
“A general measure of labor productivity” is gross domestic product per hour worked, the Bureau of Labor Statistics said in a 2012 report comparing GDP per capita and GDP per hour from 1960 to 2011. In 2011, the U.S. ranked third among 20 countries at $60.59 per hour worked behind Norway ($81.47) and Ireland ($66.74).
BLS discontinued its International Labor Comparisons, or ILC, program, but it said that The Conference Board produces “ILC indicators similar to those done previously by BLS.”
In a productivity brief issued in 2019, The Conference Board ranked 40 countries by GDP per hour worked in 2018. The United States ranked fifth ($72.9) behind Norway ($97.5), Luxembourg ($93.6), Ireland ($83.9) and Belgium ($73.2). All the amounts are in 2018 U.S. dollars. (See Table 8.)
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