The other day i was asking myself how we got where we are. Then I recalled i had already written the answer right after I started my column. It’s repeated here. The date of information is early March 2021.
A Billion Here, A Billion There, and Soon You’re Talking about Real Money
Chapter One.
This is the first of a series of articles dissecting the COVID19 Relief Bill, giving my take on who is benefiting and what the impact is on the American taxpayer. All four articles are combined in this post.
The House of Representatives has forwarded a $1.9 trillion COVID relief package to the Senate, which made some modifications and sent it back. What is included? Nobody knows.
This is the first of a series of articles going through the bill item by item and identifying provisions with a tenuous – if that – connection to COVID relief, as well as provisions that a is not correct. The definition of a small business is determined first by what it does. To find that is or where to find it.
You find clear guidance (that’s a joke) here, in the Electronic Code of Federal Regulations. If you’re a soybean farmer (Code 111110) you can have up to $1M in annual revenue, unless you’re an oilseed farmer other than a soybean farmer (Code 111120) in which case you can have up to $1M in annual revenue. Since the revenue caps are identical, there’s a combined maximum average number of employees (Code 311124) for both at 1,000. If you divide the revenue by federal minimum wage ($7.25) and you spend no money except for employees you can hire 66 employees. What do the other 934 do? Not the Agriculture Secretary’s problem.
So, a million bucks a year and 1,000 employees sounds big. Hold onto your seat and get ready for a bumpy ride. If your business is Postharvest Crop Activities (except Cotton Ginning) (Code 115114), then you can have $30M in revenue. If your business is cotton ginning, Code 11511) then you’re limited to $12M a year. What’s the difference? Damned if I know, except in my experience cotton ginning takes place in the South, and the remaining Postharvest Crap takes place anywhere it wants. Bet you didn’t think $30M was a small business. But wait, there’s more.
New Housing Builders for Sale (Code 236117) can have $39.5M in sales, but New Housing Builders Not for Sale (Code 236115) is different, and you can have $39.5M in annual revenue. Look into my eyes, question nothing, follow the spiral. This goes on mind-numbingly for pages and pages of tables. Home Centers (Code 444110) can have more than $40M. Various manufacturers can have a varied number of employees, all precisely determined by government experts who may never have known the smell of machine oil in the morning.
Section §121.411 (3) has the inviting title Criminal Penalties.
Ag gets money for supplying food to restaurants (if there are any left) and for supply chain resiliency spending, of course. It gets to use the money for Crop Year 2020 losses due to high winds or derechos. It turns out Michael Crichton was wrong. Aliens don’t cause global warming. Pandemics apparently do.
We aren’t quite done with the important stuff. It turns out that the federal government, which employs a total of 9.1M people in various categories, has identified a particularly hard-hit segment of those: the 2.1M who are federal civilian direct employees and thus eligible to join unions. These sorely-oppressed and overworked (and immune from firing) employees are awarded a pandemic-fighting fifteen weeks of paid leave to quarantine, recover from illness and care for sick family members or children who are learning from home. Another automatically presumes frontline federal employees contracted COVID-19 at work, meaning those employees will be eligible for certain workers compensation benefits through the Labor Department. The provision doesn’t cover any federal employee who has been teleworking.
Unlike common citizens denied paychecks for a year, these heroes have been drawing full salary and benefits all along, at an average $109,000 each in pay. The fifteen weeks of extra paid leave is the equivalent of a $31,400+ bonus. Total cost, $66B to people who support Democrats almost exclusively. All necessary COVID relief. If you don’t believe me, ask Nancy Pelosi. This stuff is almost as important to her as ice cream.
We still haven’t gotten to the most important and compelling expenditures, such as gifts not available to every citizen unless the citizen is black or a Hispanic immigrant. There are distributions of funds to states which have been hard-hit by COVID19. States are prohibited from using any of the money to pay down debt or meet unfunded pension obligations. A fundamental concept in accounting is that money is fungible. That means that it is ultimately impossible to determine how the money was used. If you give me a dollar and prohibit me from using it to pay down debt, I promise I won’t. I’ll use it to pay for paperclips for the State Department of Irrelevancy, then spend the money I would have spent for paperclips and use that dollar to pay down debt. As you can see, that’s a completely different dollar and I have complied with your restrictions.
Chapter Two.
This is the second of a series of articles dissecting the COVID19 Relief Bill, giving my take on who is benefiting and what the impact is on the American taxpayer. When last we left our intrepid and courageous legislators, they had just awarded $66 billion to federal employees eligible for government employee union membership to handle the vicissitudes of having to deal with closed schools, unpredictable schedules and closures, care for family members, and similar traumas not inflicted on the other seven million federal employees, and certainly never experienced by the other 329 million Americans.
Now we see $73 billion given to the Departments of Labor, Health and Human Services and Education for critical tasks in directly combatting the effects of the pandemic. This includes money for contact tracing, which requires being able to find the patient in the first place. That cannot be done for the three thousand to six thousand people admitted to the US through an open Southwest border, where, according to a Homeland Security source, 15-25% are COVID-positive. In addition to other strange discoveries about the virus, it appears that crossing the Southwest border transforms the disease into one that cannot be spread.
CDC gets a carve-out of $300M to administer vaccines to racial and ethnic minorities and rural populations, with no explanation. This is a case where following the science can help, because our bodies make Vitamin D from sunlight, which is absorbed by darker skin pigments known as melanin before it can penetrate the body and stimulate Vitamin D production. Why isn’t that a headline? And how does living farther than average from one’s neighbors make one more vulnerable to a virus?
There’s $3.25 billion to support the National Stockpile, which seems strange. The popular narrative has it that the National Stockpile was in perfect shape the day Trump took office, and that he did nothing with it, resulting in it being empty when he left office. I never studied quantum physics or quantum voodoo, so I’m ill-equipped to follow the logic.
A microscopic $22.4 billion is used to create a Public Health Slush Emergency Fund for more contact tracing and reimbursement of lost income due to the pandemic, (I belong to the school of thought that the lost income was largely a result of governments’ reaction to the pandemic rather than the pandemic itself), and more benefits to people with dark skin or who live far from neighbors. There’s more than $19B to manufacture and buy vaccines, which means the current administration is hiding its light under a bushel. There was alleged to be nothing available when the new administration took office, and less than two months later it has designed, built, tested, staffed and burned in highly-specialized manufacturing capability for incredibly fragile end-products. That would have taken me most of a year with an unlimited budget and staff, but I’m not a politician.
There’s another $3B to reimburse health care providers and hospitals for health care costs and lost revenue. I recall that the revenue was lost when hospitals were told not to treat anyone and all elective surgery (except abortions, which as a matter of choice are by definition elective), and thousands of nurses, physicians and others were laid off until we “bent the curve.” By the time orders were given resulting in the ludicrous situation of unemployed health care professionals from small hospitals not being allowed to help the overwhelmed staffs of large hospitals, we knew that almost no youngsters died, or even became particularly ill, due to the virus. Government is now taking credit for fixing a problem it caused by itself through failing to follow science. We have the privilege of paying for it.
Another $4.25B goes to preventive and other services in mental health. No known mental health professional has ever provided any evidence that prevention efforts have any effect. Then again, the money is being divided by omniscient politicians lecturing us to “follow the science” while the scientists disagree vehemently with the politicians.
The Administration for Community Living receives $100M to address abuse, neglect, and exploitation of the elderly, including adult protective service and long-term care ombudsman activities. If only we’d known before that elder abuse is caused by a virus, perhaps we could have done something about it. Is there another interpretation of this passage?
We start approaching the significant money when we come to the Department of Education. There is $82B for education, which has been effectively withheld from almost all American children not in private schools since March 2020. This is in addition to the money provided last year to education under the CARES Act, $16.5B total, plus $14B made available for post-secondary education. To recover from the heavy burden of receiving those funds, teachers unions have insisted that their members cannot yet safely return to school. The global number of teachers being infected by students is only slightly higher than the number of pterodactyl sightings in Iceland, but that is only anecdotal information, and a randomized test still needs to be conducted. Pending that, a further $54.8B in burden will be forced on public schools, and the Bureau of Indian Education, with the highest per-student spending and the worst record in the US, will have its budget effectively doubled. And, there’s another $22.7B for higher education funding.
I have not added the education numbers because I do not wish to go on suicide watch.
Chapter Three.
This is the second of a series of articles dissecting the COVID19 Relief Bill, giving my take on who is benefiting and what the impact is on the American taxpayer. When last we left our intrepid and courageous legislators, they had just awarded $66 billion to federal employees eligible for government employee union membership to handle the vicissitudes of having to deal with closed schools, unpredictable schedules and closures, care for family members, and similar traumas not inflicted on the other seven million federal employees, and certainly never experienced by the other 329 million Americans.
Now we see $73 billion given to the Departments of Labor, Health and Human Services and Education for critical tasks in directly combatting the effects of the pandemic. This includes money for contact tracing, which requires being able to find the patient in the first place. That cannot be done for the three thousand to six thousand people admitted to the US through an open Southwest border, where, according to a Homeland Security source, 15-25% are COVID-positive. In addition to other strange discoveries about the virus, it appears that crossing the Southwest border transforms the disease into one that cannot be spread.
CDC gets a carve-out of $300M to administer vaccines to racial and ethnic minorities and rural populations, with no explanation. This is a case where following the science can help, because our bodies make Vitamin D from sunlight, which is absorbed by darker skin pigments known as melanin before it can penetrate the body and stimulate Vitamin D production. Why isn’t that a headline? And how does living farther than average from one’s neighbors make one more vulnerable to a virus?
There’s $3.25 billion to support the National Stockpile, which seems strange. The popular narrative has it that the National Stockpile was in perfect shape the day Trump took office, and that he did nothing with it, resulting in it being empty when he left office. I never studied quantum physics or quantum voodoo, so I’m ill-equipped to follow the logic.
A microscopic $22.4 billion is used to create a Public Health Slush Emergency Fund for more contact tracing and reimbursement of lost income due to the pandemic, (I belong to the school of thought that the lost income was largely a result of governments’ reaction to the pandemic rather than the pandemic itself), and more benefits to people with dark skin or who live far from neighbors. There’s more than $19B to manufacture and buy vaccines, which means the current administration is hiding its light under a bushel. There was alleged to be nothing available when the new administration took office, and less than two months later it has designed, built, tested, staffed and burned in highly-specialized manufacturing capability for incredibly fragile end-products. That would have taken me most of a year with an unlimited budget and staff, but I’m not a politician.
There’s another $3B to reimburse health care providers and hospitals for health care costs and lost revenue. I recall that the revenue was lost when hospitals were told not to treat anyone and all elective surgery (except abortions, which as a matter of choice are by definition elective), and thousands of nurses, physicians and others were laid off until we “bent the curve.” By the time orders were given resulting in the ludicrous situation of unemployed health care professionals from small hospitals not being allowed to help the overwhelmed staffs of large hospitals, we knew that almost no youngsters died, or even became particularly ill, due to the virus. Government is now taking credit for fixing a problem it caused by itself through failing to follow science. We have the privilege of paying for it.
Another $4.25B goes to preventive and other services in mental health. No known mental health professional has ever provided any evidence that prevention efforts have any effect. Then again, the money is being divided by omniscient politicians lecturing us to “follow the science” while the scientists disagree vehemently with the politicians.
The Administration for Community Living receives $100M to address abuse, neglect, and exploitation of the elderly, including adult protective service and long-term care ombudsman activities. If only we’d known before that elder abuse is caused by a virus, perhaps we could have done something about it. Is there another interpretation of this passage?
We start approaching the significant money when we come to the Department of Education. There is $82B for education, which has been effectively withheld from almost all American children not in private schools since March 2020. This is in addition to the money provided last year to education under the CARES Act, $16.5B total, plus $14B made available for post-secondary education. To recover from the heavy burden of receiving those funds, teachers unions have insisted that their members cannot yet safely return to school. The global number of teachers being infected by students is only slightly higher than the number of pterodactyl sightings in Iceland, but that is only anecdotal information, and a randomized test still needs to be conducted. Pending that, a further $54.8B in burden will be forced on public schools, and the Bureau of Indian Education, with the highest per-student spending and the worst record in the US, will have its budget effectively doubled. And, there’s another $22.7B for higher education funding.
I have not totaled the education numbers because I do not wish to go on suicide watch.
Chapter Four.
The first three parts of this series dealt with the strange relationship between COVID19 and such issues as distance to the nearest neighbor, straight-line winds, contracts by cities to run transportation systems and other topics whose relationship to COVID19 is not clear. They also addressed the dizzying array of Federal programs dealing with common issues, which are sliced and diced into separate issues based on vague criteria appearing to establish distinctions without differences. This part of the series will deal primarily with the interaction between COVID19 and Federal taxes.
Subchapter IV of Chapter 1 of Subtitle A of Title II begins the slow slide into the realm of taxation. It illuminates the origin of what most of us thought was a stimulus payment of $600 per person. It turns out not to be a stimulus payment but an advance payment of a refundable tax credit, and will not be taxed. Recipients are required to provide documentation of employment or self-employment, but does not explicitly require the individual to prove that the documentation pertains them him or her. I think I’ll submit documentation for LeBron James, which should entitle me to a lot of unemployment money. States are required to verify identity of recipients of one type of payment, which, according to our national leadership, is de facto racism.
There are requirements for employers to report to the state when a worker returns to employment, or when the employer has offered employment but the worker has refused the offer. What happens with that information is not merely non-specific, it is undiscoverable. The second stimulus payment of $600 is again described as a refundable tax credit advance, and is not taxable, nor subject to garnishment. I think.
The employee’s deferred contribution to payroll taxes (Social Security tax withholding) must be withheld by employers beginning January 1, 2021, and ending on April 31, 2021 – stet, you can’t make this shit up – except that the repayment period is extended through December 31 2021. There is no provision for a claw-back from people who did not return to work. Educators are allowed to deduct the cost of any PPE purchased since March 12, 2020, from their income for tax purposes; no other professions are mentioned. Paycheck Protection Program loans that are forgiven do not appear to be taxable, nor do future PPP forgiven loans appear to be taxable. Use of those PPP funds to make payments that otherwise would be legitimate business deductions is not allowed; as money is fungible and no single dollar can be audited from receipt through expenditure, I have no idea how this will be accomplished. Students need not include grants or emergency assistance in taxable income, but companies receiving forgivable PPP loans who use the money to make student payments to employees whose education the employer is supporting are to do something. That is not a typographical error. The language is simply too dense for me to understand.
Employees are authorized to take loans from their pension funds, IRAs, 401(K) plans as before but are allowed to repay them over a three-year period and pay taxes on the early withdrawal amounts under some undecipherable conditions and for unintelligible reasons. I’ve been filing my own taxes, including business taxes, for fifty years, but were I subject to the provisions of this COVID Relief Act, I’d have to hire a CPA. Farmers are likewise free to treat carryback losses essentially however they wish. There are two-year and five-year carryback terms, and farmers are allowed to treat carryback amounts using either or neither period, and to revoke prior selections and exemptions, in a manner simply too complex for me to comprehend.
Small firms who used PPP money to pay vendors or other normally tax-deductible expenditures are permitted both to have the loan forgiven and to claim the expenditures as deductible expenses. This appears to me to be a blatant violation of fundamental principles of taxation and deductible expenses. This goes beyond having the cake and eating it, too. It adds sending slices of cake home with all the guests.
The PPP appears to be an opportunity for mischief. Once the bill is enacted PPP loan applications must include demographic information about the borrower. This typically is used as a basis for determining whether there has been any bias in award of a benefit based on unequal treatment of a specially-designated group. It may be perfectly innocent; in a woke world, I will believe it when it comes to pass.
Multiple sections provide for a simple classification of student loans and grants. They are irrelevant to U.S. income tax. Nothing that Congress couldn’t turn into three hundred words scattered among three or four paragraphs.
Finally, we get to see where the money is going. An authorization of $806.5B is created, but not all of it is appropriated. Only set-asides are appropriated. For example, $15B is set aside for minority depository institutions and community development financial institutions, which are defined differently but in practice are similar in that more than 90% of their loans are granted to minority-owned businesses. Another $35B is set aside for first-time borrowers, especially those in low-income and disadvantaged areas, plus $25B for second-time borrowers in financially hard-hit areas. The $60B is expected to be set aside for small businesses with ten or fewer employee. All of which can be reallocated as the Director of the Small Business Agency wishes after twenty-five days. The entire detailing of where the $60B goes, subdividing it into segments as small as $250,000, is moot after less than a month.
The bill then goes into a dizzying array of various types of loans and grants, all styled as for small business – which can be for $5M to someone with a net worth of $4.9M to purchase real property and improve it. The government’s definition of small differs significantly from that of most voters. The loan types include:
· Minority Business Development Centers program under the Minority Business Development Agency (MBDA)
· Targeted EIDL Advance program (Emergency Injury Disaster Loan, covers a multitude of possibilities). These loans and advances are sub-divided into multiple types and subtypes, with an astounding variety of terms, requirements and payback options.
· Microloan Program. In most parts of the world, these are capped at less than $200 and intended to help an entrepreneur open a new business, usually in a rural area. To the SBA, they are up to $50K, and SBA regulations make it clear that rural enterprises are an afterthought.
· 7(a) loans, up to $5M. These are the most common type of SBA loans.
I can only conclude that the bill itself was written with attorneys and bureaucrats in mind, not small businesses. This is a predictable result of surrounding oneself with people who agree with everything you say. Eventually, the environment becomes an echo chamber, and loses contact with reality. I don’t mind when people live in echo chambers and lose contact with reality; I do mind when they feel entitled to spend trillions of taxpayers’ dollars at a time.
Naw, Bill, I didn't feel bad enough about the state of the nation. You had to go and publish this!
In July, 2021 and again in August, 2021, Poopy Pants Biden warned us that the non-vaccinated would be dying by the truckload if they didn't line up to get the Department of Defense bio-weapon injected in their arms. Well, it is now 2024 and the only people who survived the so-called Delta Variant of the flu are those who got multiple boosters. I guess the old fellow is a genius.