Helping the Rich, Democratic-Style

House Democrats finally passed, 220 to 213, President Biden’s $1.8 trillion¹ “Build Back Better” plan.  You have to be a political geek to know what’s in it, though it doesn’t really matter yet because the Senate hasn’t passed it.  They’re going to make changes in it, and then it will have to go back to the House for another vote.  So, trying to figure out what is in it at this point doesn’t make all that much sense.  The only things we know for sure are that (i) the price tag is totally made up, (ii) the revenue it raises is calculated on bases that won’t actually happen, and (iii) there won’t be any unexpected consequences because if you don’t know what is in the bill, you can’t know what is expected, and if you don’t know what is expected, there can’t be anything unexpected.

Still, one thing we do know about what the Democrats are doing is who is going to benefit.  And that is the upper middle class.  The Biden/Pelosi bill increases the limit on the amount of state and local taxes you can deduct from $10,000 per year to $80,000.  With a standard deduction of about $25,000, this won’t help average people – or even somewhat above average people.  It’s just a tax break for the upper middle class, especially those in states that have high local taxes (i.e., states with Democratic governors and legislatures).

Separately, but tied in with the theory of helping the upper middle class, Fannie Mae and Freddie Mac, i.e., the Biden administration, are increasing the amount of mortgages they’ll guarantee, up to nearly $1 million in “high cost” markets.  Why the federal government needs to guarantee mortgages at this level is beyond me.  Borrowers might have to pay a little more without a federal guarantee, but they’ll still get mortgages.  The Fannie Mae/Freddie Mac move will just let them get them cheaper mortgages.  In others words, more government help and more subsidies for the upper middle class. 

I don’t understand it.  Well, I do understand it.  Everybody wants something for nothing, and the upper middle class are really good at getting it.  Democrats claim that Republicans are the ones giving handouts to the rich.  Well, the Democrats are doing a pretty good job of it themselves.
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¹ I have also seen price tags of $2 trillion.  I don’t think anybody knows for sure.
UPDATE (11/25/21 11:03 am): Corrected the name of "Build Back Better" in the first line.  Thanks to Jennie for the pointer.