On Monday, March 29, 2021, 7th Congressional District Rep. Tom Tiffany hosted a listening session at the Hudson House hotel. He selected a handful of questions to answer from those submitted in writing. One was why did he vote no to the American Rescue Plan, which meant voting against sending $1,400 to middle class and impoverished Americans.
He answered with three main assertions.
This viewpoint provides sourced information as context for those assertions and readers can reach their own conclusions.
Assertion No. 1: Only 9% of the American Rescue Plan was for COVID-19 relief.
Here are the findings of three entities who reviewed this claim: Committee for a Responsible Federal Budget, Snopes, and Newsweek.
The Committee for a Responsible Federal Budget is a nonpartisan entity with a history of being critical of the bill. They found that about 85% of the bill is directly related to the COVID-19 pandemic health and economic recovery. Specifically, they found that a little more than 15% of the package “is spent on long-standing policy priorities that are not directly related to the current crisis.”
For rural Wisconsin, for example, that includes relief to expand rural broadband.
On Feb. 18, 2021, Newsweek ran a fact-check piece on the 9% claim and found the claim to be false. According to Newsweek, the 9% claim only looks to the $160 billion for vaccine efforts.
Snopes also found the claim to be false. On March 12, 2021, Snopes published its analysis which stated that the 9% claim does not include stimulus checks, unemployment benefits, funding to keep schools safely open, or other measures that provide relief for those impacted by COVID-19.
Assertion No. 2: Wisconsin is bailing out cities and states like Illinois.
Tiffany asserted that Wisconsin, and by default, Wisconsin taxpayers were bailing out states like Illinois, New York and California, given that $350 billion of the American Rescue Plan is going to cities and states throughout the country.
(On a side note, cities and states pay for local and state law enforcement and denying them relief during this crisis denies relief for local and state law enforcement.)
What states pay in federal taxes is a matter of public record. The American Rescue Plan gives $350 billion in federal tax dollars back to the states. Let’s look at what the states pay to the federal government in a given year. According to the IRS, in 2018:
California paid $456 billion
New York paid $281 billion
Illinois paid $161 billion
Wisconsin paid $51 billion.
Based on these numbers, California is bailing out California is bailing out New York, and Illinois is bailing out Illinois as the American Rescue Plan is sending money back home to the states. The states cited by Tiffany more than account for their share of the cut.
Assertion No. 3: $1,400 now means having to pay $6,000 per person back later and later is soon.
Fact checker group AFP examined this claim in a piece published on March 11, 2021, and found the claim to be misleading. They determined that the claim is that each American will owe $5,750 and that it is based on dividing the total cost of the American Rescue Plan, $1.9 trillion, by estimates of the U.S. population -- instead of dividing the U.S. population by the cost of $1,400 checks to middle class and impoverished Americans, which is $400 million, not $1.9 trillion.
Separate and apart from this issue, however, is the context of public debt and how it rises and falls throughout American history. Contrary to Tiffany’s claim, public debt doesn’t get paid through per-American tax-dollar payouts but rather as a function of and through the growth of the American economy. The Congressional Budget Office reports that at the end 0f 2019, publicly held debt was at $16.8 trillion or 79% of the United States gross domestic product. The GDP is the total value of goods produced and services provided in a country in one year.
The American Rescue Plan will add an additional $1.9 trillion, putting us at 88% of our GDP. The Atlantic ran a piece titled “The Long Story of U.S. Debt from 1790 to 2011, in 1 Little Chart” on Nov. 13, 2012. (It’s worth the read.) Looking at public debt in the context of American history, the United States has used and leveraged debt since the American Revolution. In fact, in 1790, the United States was at about 30% debt-to-GDP ratio.
During World War II, public debt rose to over 100% of the GDP. At the conclusion of the war, public debt was $241.86 billion, or 113% of our GDP. By 1950, public debt rose to $257 billion, or 86% of our GDP. Even though the dollar amount on our debt increased, the growth of the economy reduced the value or cost of that debt.
By 1962, the U.S. returned to a debt-to-GDP ratio that it saw prior to WWII. The post-WWII investments in the American public resulted in not only massive expansion of the middle class but of the American economy. As the economy expanded, the debt steadily declined to a low of 24% of the GDP in 1974.
By investing in people in times of crisis, the economy grows and our debts decline accordingly.