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The political malpractice of Joe Manchin and Jeanne Shaheen

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This is just stupid:

President Biden has agreed to narrow eligibility for a new round of $1,400 stimulus payments in his $1.9 trillion coronavirus relief bill, a concession to moderate Senate Democrats as party leaders moved Wednesday to lock down support and finalize the sweeping legislation.

Under the new structure, the checks would phase out faster for those at higher income levels compared with the way the direct payments were structured in Biden’s initial proposal and the version of the bill passed by the House on Saturday.

It’s not the biggest deal in the world, but as Eric Levitz says, this is bad politics with no upside or even discernible substantive benefit whatsoever:

For weeks, a handful of moderate Democrats in the Senate have been fighting to prevent $1,400 COVID-relief checks from reaching their own upper-middle-class constituents. It has never been all that clear to the public — or, by all appearances, to the senators themselves — why they wanted to restrict eligibility for these relief payments so badly. It is not as though Joe Manchin or Jeanne Shaheen are opposed to welfare for the affluent in all forms. To the contrary, Shaheen has lambasted Republicans for restricting the state-and-local-income (SALT) deduction, a tax subsidy that primarily benefits well-off homeowners.

Nor could the moderates’ opposition be chalked up to (superstitious) fears of high deficits: Every Democratic senator has already tacitly agreed to support a $1.9 trillion stimulus package, and eligibility restrictions under discussion were always too minor to significantly impact the legislation’s bottom line.

[…]

Here are the two big downsides to this measure:

• It means that 12 million fewer adults and 5 million fewer kids will receive relief checks from the bill. Whereas 91 percent of U.S. households would have received a check under the previous proposal, now only 86 percent will. That’s not a huge difference. But these days, elections are often won in the margins. And Joe Biden’s Electoral College win in 2020 was contingent on the support of affluent, longtime Republicans who decided to cross the aisle. Now, a bunch of these voters will end up receiving less in direct cash assistance from Joe Biden than they did from Donald Trump.

• Since Democrats chose to narrow eligibility by accelerating the phase down in the value of the checks, they effectively engineered a confiscatory marginal tax rate for a small band of workers: A single taxpayer who earned $80,000 in 2020 will effectively pay a 70 percent tax rate on their last $5,000 of income. And since Americans have the option to claim a relief check on the basis of their 2021 incomes, Democrats have now actually given some workers a strong incentive to work fewer hours, so as to avoid a radically higher tax rate. That isn’t a huge concern for progressives. But “discouraging work” is typically the sort of thing moderate Democrats don’t want fiscal policy to do. Meanwhile, those who took on extra hours last year — assuming that they would not pay a 70 percent rate on income above $75,000 — are not happy!

If Manchin et al. insisted on some kind of cosmetic cut to make themselves feel better, the much more logical place would have been the state aid, since 1)virtually no voters would notice and 2)state revenues have generally been above projections. This is just senseless, but Dems like Manchin are obsessed with keeping benefits from “undeserving” people even if it comes at a political cost that outweighs benefits that are trivial even on their own terms.

And while it’s true that people whose brand is attacking the Democratic Party as neoliberal shills will complain about literally anything the Dems pass, some complaints will get more traction than others. “Biden promised you money and you’re not getting it even though Trump did” sounds bad! “Biden is basically the third term of the Bush administration because he, er, converted some state aid to broadband funding” nobody will notice or care. We’re stuck with these people but I really wish they wouldn’t insist on handicapping their own party for no defensible reason.

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