Two key Senate Republicans declared Nancy Pelosi’s tax break for blue-state millionaires dead on arrival — if she has the nerve to actually propose it. The chair of the Finance Committee, which would have to approve the elimination of the state and local tax (SALT) deduction cap, won’t bother to review it at all. A spokesperson for Chuck Grassley wondered why this would be the time to bring up a tax break for millionaires in high-tax states like California and New York:
The office of Senate Finance Committee Chairman Chuck Grassley, R-Iowa, blasted House Speaker Nancy Pelosi after she proposed rolling back a cap on state and local tax (SALT) deductions as part of the next coronavirus response bill.
The SALT cap, which was put in place by President Trump’s 2017 tax reform law, limits deductions of state and local tax from federal taxes at $10,000. The cap has been particularly unpopular in high-tax blue states. Grassley’s office argued that eliminating this now would not help the working class, as it would mostly benefit wealthier Americans.
“This is a nonstarter. Millionaires don’t need a new tax break as the federal government spends trillions of dollars to fight a pandemic,” a spokesperson for Grassley said.
Not only will Mitch McConnell oppose a repeal of the SALT cap, he wondered aloud on today’s Hugh Hewitt show why we’re talking about Phase 4 in the first place. Congress just passed a $2.2 trillion dollar relief bill, which has yet to even launch its most direct stimulus of $1200 for nearly every taxpayer and $500 per child. Shouldn’t we wait to see how the CARES Act works first?
McConnell has suspicions that Pelosi will turn Phase 4 into a practical application of Rahm Emanuel’s famous exhortation about crises:
HH: There is obviously going to be a need for another bill. I look at the restaurant industry where 3% of restaurants have closed completely forever, maybe double digits. I look at the broadcast industry, some segments of it without revenue. Will there be a phase 4? And how will that develop, Leader McConnell?
MM: Well, I think we’ll have to wait and see. Remember, this bill was only signed into law last Friday. So it’s only been law for about four days. And the Speaker is already talking about another bill that, you know, I think you have to genuinely be aware of the Speaker in a situation like this. I’m reminded of what Rahm Emanuel said during the financial crisis – never let a crisis go to waste. What that meant was seize in the crisis to try to achieve unrelated policy items that you have not been able to get under other circumstances. So I would think any kind of bill coming out of the House I would look at like Reagan suggested we look at the Russians – trust, but verify.
HH: Now the Speaker has announced that she’s working on phase , and I thought to myself that’s not going to fly. Phase 1 and 2 came out of the House, phase 3 came out of the Senate. Any phase 4 would have be a joint effort. Is there any plan to undertake a joint effort, Leader McConnell?
MM: Well, I think first, we need to see what the effect of the current bill is. The Treasury, of course, is wrestling with all this complicated effort to speed checks to individuals and small businesses to get us through this period until the health care pandemic begins to subside. So I think we need to wait a few days here, a few weeks, and see how things are working out. She hasn’t suggested the House would even come back into session until the 20th of April, and I’ve said the same thing. So let’s see how things are going, and respond accordingly. But let’s not, I’m not going to allow this to be an opportunity for the Democrats to achieve unrelated policy items that they would not otherwise be able to pass.
Veronique de Rugy has the same suspicions, and not just about Pelosi either:
The ink isn’t dry yet on “phase three” of the coronavirus relief package that speaker of the House Nancy Pelosi and President Trump are already talking another stimulus package. They aren’t wasting any time.
Phase three was remarkable in that it was the largest economic relief package in U.S. history. The process that led to it was also remarkable as an example of the bad incentives that exist because our politicians are using other people’s money. Many politicians’ aspirations to grow the size of government dramatically were on display too during this process. Just check the House Democrats’ proposal. Thankfully, much of it didn’t make it into the final bill.
But phase three is done; now comes phase four. So far, all we know is that the White House has a list of $600 billion in requests from federal agencies, and the Democrats are coming up with their own list.
De Rugy notes two contradictory quotes from Pelosi from an MSNBC interview this morning as a warning sign of what’s to come. First she claims that her Phase 4 proposal would be entirely “specific to the coronavirus” rather than a “wish list.” However, Pelosi also promised to take up the very wish-list items that were stripped out of Phase 3, adding the SALT deduction cap to the process on top of those. So which is it?
McConnell is taking the smart approach. We just conducted the largest economic intervention in American peacetime history. Perhaps we should wait a few weeks to see what works and what doesn’t, and then focus more clearly on the specific and acute gaps rather than using the crisis to ride our ideological hobby horses.