Section 4.2: Department of the Treasury
“The Biden Administration Treasury Department has failed badly in achieving every one of the agency’s core objectives. The financial affairs of the nation have seldom been in worse condition, with the national debt expanding by more than $4 trillion in Biden’s first two years in office. No President in modern times—perhaps ever—has been more fiscally reckless than has the Biden Administration.”
This is a partially a disingenuous observation, partially a flat-out lie. Biden was stuck cleaning up the pandemic mess and in a recession when he took office. Furthermore, the National Debt did NOT expand by $4 trillion in Biden’s first two years, it was about $1.5 trillion. Trump’s four years, due to tax cuts and COVID, expanded the National Debt by more than $8 trillion, mostly due to tax cuts for the wealthy and his trade wars. [Source]
See Also:
- Donald Trump Built a National Debt So Big (Even Before the Pandemic) That It’ll Weigh Down the Economy For Years
- Trump added twice as much to the national debt as Biden: Analysis
- Trump ran up national debt twice as much as Biden: new analysis
- Tax Cuts Are Primarily Responsible for the Increasing Debt Ratio
The president who added the most to the National Debt by percentage? FDR (Franklin Delano Roosevelt.) This was due to the Great Depression and the New Deal. After that, Wilson, Reagan, Bush Sr., and Obama, although it’s worthy of note that while Obama and Trump both added about $8 trillion to the National Debt, Trump only took four years to do it, not eight. [Source]
Full contextual analysis of Section 4.2: Department of the Treasury here.
“The Treasury should work with Congress to simplify the tax code by enacting a simple two-rate individual tax system of 15 percent and 30 percent that eliminates most deductions, credits and exclusions. The 30 percent bracket should begin at or near the Social Security wage base to ensure the combined income and payroll tax structure acts as a nearly flat tax on wage income beyond the standard deduction. The corporate income tax rate should be reduced to 18 percent.”
Specifically, Project 2025’s tax reform plan would:
- Enact a two-income tax bracket system that would raise taxes by $3,000 for the median family of four—which makes about $110,000 a year—and raise taxes by $950 for the typical single-person household, which makes about $40,000 a year. (see Appendix for state-specific data)
- Provide an average $1.5–2.4 million tax cut for the 45,000 U.S. households making more than $10 million annually from the combination of the “two-bracket” system and cuts to taxes on the wealthy’s investment income.
- Cut the corporate tax rate to 18 percent, which amounts to a $24 billion tax cut for the Fortune 100.
- Replace all individual and corporate income taxes with a consumption tax in the long term. This could take the form of a value-added tax well above 45 percent, which would produce an enormous one-time burst of inflation and raise prices.
The shift toward a flat consumption tax while eliminating income taxes would lead to an average $5,900 tax increase for the middle 20 percent of households and an average $2 million tax cut for the top 0.1 percent. [Source]
Full contextual analysis of Section 4.2: Department of the Treasury here.
“In addition, intermediate tax reform should repeal all tax increases that were passed as part of the Inflation Reduction Act, including the book minimum tax, the stock buyback excise tax, the coal excise tax, the reinstated Superfund tax, and excise taxes on drug manufacturers to compel them to comply with Medicare price controls.”
Oh good, let’s go back to uncontrolled prescription prices. /sarcasm
Full contextual analysis of Section 4.2: Department of the Treasury here.
“All non-business tax deductions and exemptions that were temporarily suspended by the 2017 tax bill should be permanently repealed, including the bicycle commuting expense exclusion, non-military moving expense deductions, and the miscellaneous itemized deductions. The individual state and local tax deduction, which was temporarily capped at $10,000, should be fully repealed. Deductions related to educational expenses should be repealed. Special business tax preferences, such as a special deduction for energy-efficient commercial building properties, should be eliminated.”
No more deductions for any of those things. If you were keeping track, that’s no more tax writeoffs for moving expenses related to work (unless you’re in the military), no more deductions for tax preparation fees, work-related expenses not reimbursed by an employer, or cost of your home office setup. No more being able to deduct any state or local taxes from your federal tax return. No more deducting student loan interest and certain tuition expenses. No more deductions based on sustainable construction practices, which will discourage businesses from doing them.
This means that WAY more of your income is subject to taxation under this plan. This is a regressive tax, meaning that it impacts the wealthy far less than it would everyone else.
Full contextual analysis of Section 4.2: Department of the Treasury here.
“The public finance literature is clear that a consumption tax would minimize government’s distortion of private economic decisions and thus be the least economically harmful way to raise federal tax revenues.”
Consumption taxes are levied on what you spend, rather than what you earn. The theory is that it encourages people to spend less and save more. But this is also a regressive tax – if you live paycheck to paycheck and can’t save anything, you’re just being taxed even more on what you’re being forced to spend. There’s a huge equity problem here.
Full contextual analysis of Section 4.2: Department of the Treasury here.
“Congress should repeal Title I, Title II, and Title VIII of the Dodd–Frank Act. Title I of Dodd–Frank created the Financial Stability Oversight Council, a kind of super-regulator tasked with identifying so-called systemically important financial institutions and singling them out for especially stringent regulation. The problem, of course, is that this process effectively identifies those firms regulators believe are “too big to fail.””
The authors are arguing for repealing Titles I, II, and VIII of Dodd-Frank. So, what do those titles do, and what are the practical consequences to an American consumer, of repealing them?
Title I created the Financial Stability Oversight Council, as described above. Repealing it increases the likelihood of big banks taking on more risks without facing regulatory oversight, potentially leading to increased instability in the financial system. This means a greater risk of taxpayer-funded bailouts, which affects consumers’ access to credit, loans, and savings, and causes job losses, reduced home values, and losses in retirement savings.
Title II provided the orderly liquidation framework. Without it, the government might revert to bailouts using taxpayer money to rescue failing institutions, instead of letting them fail in a controlled way. Conversely, if the banks are allowed uncontrolled failures, this could see consumers finding their bank accounts frozen or losing access to funds if their bank collapses. If this becomes common, customer trust in the financial system will erode, potentially leading people to withdraw their money from banks, which in turn could lead to financial panics.
Title VIII provided regulators the authority to supervise and regulate the systems that handle the processing of trillions of dollars in transactions daily, ensuring the smooth transfer of money and securities between banks. Repealing this would lead to reduced oversight, increasing the risk of disruptions in payment, clearing, and settlement processes. It could lead to delays or failures in transactions, affecting everything from stock trades to everyday debit card purchases.
The bottom line is, as always, that deregulation is good for corporations; bad for people.
Full contextual analysis of Section 4.2: Department of the Treasury here.
“Treasury plays a role in funding the conservatorships of Fannie Mae and Freddie Mac. It should work to end the conservatorships and move toward privatization of these massive housing finance agencies. This would restore a sustainable housing finance market with a robust private mortgage market that does not rely on explicit or implicit taxpayer guarantees.”
This would not, by any means, “restore a sustainable housing finance market.”
Fannie Mae and Freddie Mac buy mortgages from lenders, pool them, then sell them as mortgage-backed securities (MBSs) to investors. This process injects liquidity into the mortgage market, enabling banks to offer loans at lower rates.
Without government backing, the risk associated with Fannie Mae and Freddie Mac’s securities would increase. Investors would demand higher returns to compensate for that risk, leading to higher interest rates for homebuyers. This will make homeownership even less affordable for average Americans.
Fannie Mae and Freddie Mac also ensure the availability of the 30-year fixed-rate mortgage – a staple of the American housing market – by purchasing these loans from lenders. Their guarantee of these mortgages gives lenders confidence to offer them widely. Privatizing these might reduce access to or eliminate the availability of 30-year mortgages, which are seen as risker for investors due to their long term. This means that homebuyers might have to rely on shorter-term or adjustable-rate mortgages.
As GSEs, Fannie Mae and Freddie Mac have mandates to promote affordable housing and serve a broader segment of the population. They help maintain access to mortgage credit for low- and middle-income borrowers. Privatization would shift the focus of these institutions to maximize profits rather than public policy goals. This means less access to affordable housing for low- to middle-income buyers.
In short, privatizing Fannie Mae and Freddie Mac would likely lead to higher mortgage rates, reduced availability of the 30-year fixed-rate mortgage, less access to credit for low- and middle-income borrowers, and potentially greater market volatility. While it could reduce government risk exposure – which is no doubt what the authors want – it would shift the focus from the greater good to maximum profitability, which will reduce access to housing for millions of Americans.
Full contextual analysis of Section 4.2: Department of the Treasury here.
“Congress should repeal the Corporate Transparency Act, and FinCEN should withdraw its poorly written and overbroad beneficial ownership reporting rule.”
This one is transparently (if you’ll excuse the pun) evil. The Corporate Transparency Act (CTA), passed in 2021, requires U.S. companies to disclose their beneficial ownership information – that is, the individuals who own or control them – to the Financial Crimes Enforcement Network (FinCEN). The goal of the law is to combat money laundering, tax evasion, and illicit financial activities by increasing transparency regarding company ownership structures. The CTA mainly targets shell companies used to hide illicit financial dealings.
The CTA is also seen as an essential tool for disrupting networks involved in human trafficking, narcotics, and terrorism financing.
So if we reduce oversight of this, what’s going to happen? Increased financial and other crimes, and decreased law enforcement visibility into it and capability of prosecuting it – with no visibility, it’s a LOT harder to prove the law was broken.
Full contextual analysis of Section 4.2: Department of the Treasury here.
“Under the Biden Administration, the Treasury Department has appointed a Counselor for Racial Equity, established an Advisory Committee on Racial Equity, and created an office for Diversity, Equity, Inclusion, and Accessibility. All these should be eliminated.”
In context, he’s arguing that equity is racist, and recommends firing any government employee of the Department of the Treasury who participated in any of these initiatives. This mischaracterizes what equity is, as usual. See the FAQ.
Full contextual analysis of Section 4.2: Department of the Treasury here.
“The next Administration should eliminate the Climate Hub Office and withdraw from climate change agreements that are inimical to the prosperity of the United States.”
More climate change denial / science denial. He goes on to argue that since other countries who joined the Paris agreement haven’t fully met their promises, that we should completely abandon ours because it makes no difference anyway. Absolutely abysmal opinion.
Full contextual analysis of Section 4.2: Department of the Treasury here.