I have opined in the past that the amount of debt this
country is taking on is troublesome. This is especially true if rates start to rise.
I have also very briefly mentioned the upcoming COVID relief bill that House leadership
is trying to move through Congress. No matter what news content you consume,
you will encounter lots of opinions on what should or should not be done with
this piece of legislation. Over the weekend, the U.S. House posted the first
draft version of the bill. You can locate it here.
It currently stands at 591 pages of legalese. Since the
government is planning on spending $1.9 trillion
of our tax dollars, I figured I better do a little investigation on my own.
And so, I entered the rabbit hole. This was a fact-based
mission and I am not going to offer any political commentary, but rather attempt
to succinctly lay out the facts so that we all know what is proposed to be done
with our money. So, here we go.
One major caveat: it is impossible for me to distill down
all 591 pages into 1500 words, so I will try to capture the highlights. I did
attempt to read as much as I could but finally fell asleep in my reading chair
with an unfinished glass of red wine.
The first nine pages effectively lay out the outline for all
of the committees that have requested funding in the bill. These include
Agriculture, Education & Labor, Energy and Commerce, Financial Services,
Oversight and Reform, Small Business, Transportation and Infrastructure,
Veterans' Affairs, and Ways and Means. Each of these entities submitted
numerous funding requests and recommendations.
According to the Wall Street Journal editorial board,
it is estimated that only around $825 billion of the bill is directly related
to COVID-19 relief and that roughly $1 trillion consists of "expansions of
progressive programs, pork, and unrelated policy changes." Well, their warning
certainly got my attention and so, as I started digging through the bill, I
kept my eyes open to see them.
One of the first things that caught my eye was the
$1,010,000,000 allocated towards assistance and support for socially
disadvantaged farmers, ranchers, forest landowners and operators, and groups.
The reason it drew my attention is because I couldn't figure out what "socially
disadvantaged" meant in this context. Luckily, they defined the term for us:
The term ''socially disadvantaged
farmer, rancher, or forest landowner'' means a farmer, rancher, or owner or
operator of nonindustrial private forest land who is a member of a socially
disadvantaged group.
I have no problem with helping socially disadvantaged
people. I just can't understand their explanation of socially disadvantaged, since
it uses the term in the definition. It's like defining something that is wet as
something that is wet.
This is the kind of circular definition that is pervasive
throughout this bill. I could go on and on, but here are some of the major
points in no particular order, and please forgive me if any of my calculations
are off by one or two billion here or there:
First, the bill does provide $473 billion in payments to
individuals and families.
- $75 billion for vaccines
- $26 billion for restaurants
- $15 billion for airlines
- Roughly $7 billion for additional Paycheck Protection funding
A really big item (and up for a lot of debate) is the
elementary and secondary school emergency relief fund. This is complicated, so
bear with me.
The Committee on Education and Labor requests a total spend of
$128,554,800,000, which will be deployed between now and September 30, 2023 as
follows:
$4 billion for governors to spend at their own discretion
- $54.3 billion for K-12 schools
- $22.7 billion for higher education
o $1.7 billion for minority-serving institutions
o $1 billion for for-profit schools - $4 billion for governors to spend at their own
discretion
o $2.7 billion for private schools
There are also other items including expanded broadband,
improved ventilation, and infrastructure. There are also a number of specific
schools and organizations that will benefit, including Bureau of Indian
Education ($850mm), Gallaudet University ($19mm), Howard University ($35mm),
National Technical Institute for the Deaf ($19mm), Institute of Education
Sciences ($100mm), National Endowment for the Arts ($135mm), National Endowment
for the Humanities ($135mm), and the Institute of Museum and Library Services
($200mm), among others.
Of course, by now you are aware that the $15 federal minimum
wage is included in this bill. This provision has garnered a lot of debate and
may not make the final bill. We shall see.
The Committee on Energy and Commerce will get $75 billion.
This includes funding for the center for disease control and prevention, COVID-19
testing, vaccine confidence activities, testing ($46B!), public health
workforce, Indian health ($6B), mental health and substance use disorders, the
exchange grant program, Medicaid (almost 40 pages of different grants and
programs), children's health insurance, and distance learning.
The Committee on Financial Services would be granted $10B,
which will remain available until September of 2025. Among others, there are
housing provisions, rental assistance, mortgage forgiveness, emergency housing
ventures. It also includes a lengthy section surrounding the Small Business
Credit Initiative of 2010. It's a really long section, and if I'm honest, I
can't pretend I have absorbed all of the details.
The airlines are getting a lot of money. Let's call it
around $15B (although I've read the section twice and I'm still not totally
clear).
The Committee of Oversight and Reform gets a big hunk of the
bill, to the tune of $219.8B. The majority of this goes toward the coronavirus
state fiscal recovery fund. It goes on for 20-30 pages. There are many state,
county, and local agencies specifically mentioned to be receiving money.
The Committee on Small Business. This section includes
support for different types of small businesses, with a particular focus on
restaurants. After reading it, I do believe this section does push a lot of
money towards small businesses through a variety of different existing and new
agencies.
The Committee on Transportation and Infrastructure would get
$50B to remain available through September of 2025. This includes $3B for
funeral assistance, $1.5B for the Great Lakes St. Lawrence seaway development,
Grants of $820mm for railroad development, $8B for airport relief, support for
aviation manufacturing jobs, assistance to railroad workers, and more.
The Committee on Veteran's Affairs will be allocated $272mm.
The majority of these funds goes toward a vast array of veteran's health
services of all types.
The Committee on Ways and Means is a big one. The first part
of their allocation concerns the extension of the CARES act and related unemployment
provisions. A major change is moving the period from 50 weeks out to 74 weeks.
It's hard to imagine that anyone can put an exact number on the future cost of that
extension, but it will be big. It also includes a bunch of provisions for
health care workers and nursing homes. I found myself in need of a law degree
to fully understand all of the points being covered.
Here are a couple of the items to note and that have been
documented in numerous publications (Forbes, Wall St. Journal, New
York Times, Chicago Tribune and others) across the United States.
-$1.5mm will be given to the Seaway International
Bridge which would connect New York and Canada.
-$50mm to non-profits like Planned Parenthood or
other entities, including services for adolescents.
-$852mm for AmeriCorps, AmeriCorps Vista, and the
National Senior Service Corps.
Reading through this thing was exhausting, frustrating and
difficult. These huge omnibus bills seem to be becoming increasingly popular.
To me, it would make more sense to simply pass smaller, more focused bills. I
guess that's why I will likely never be a politician. One thing I can say for certain, if you are having a
hard time falling asleep, click on the link provided above and you will find
your eyelids get heavy very quickly.
At the end of the day, all of this spending has to come to
roost. The money supply is massively increasing and so is the debt. This leans
towards inflationary pressures, but Chairman Powell seems intent on holding
rates low. This may be an epic battle. Only time will tell.
Final, final thought: Our representatives spend millions of
dollars with the same thought that we might buy a cheeseburger. But why not? It's only our
money they are spending.
