THE CASH REGISTER IS WIDE OPEN
“You get what you pay for.”
It’s always a question of when rational policy meets the politics of the moment. Now it’s the deductibility of state and local taxes (SALT) versus the question of, “How are you going pay for it?”
This was the doing of Donald Trump, who decided that he would get more money out of the wealthy Blue States by limiting the amount that citizens could deduct from what they owed the IRS up to $10,000.
Andrew Cuomo and a lot of other likeminded politicians knew that this was going to cost people a lot of money and that the way to the people’s hearts was through their pocket books. Andrew made the deductibility of state and local taxes his number one political priority. He ranted and raged about it and he was right. Along with restoration of all the goodies that Trump took away, Andrew wanted back this money that had been added to our IRS bills. If you were Andrew, would you have let the old president get away with his aggression, especially when it would be a mighty help politically and particularly now when so many attacks are raining down on Cuomo?
So Cuomo hit the hustings and made much out deductibility. Smart political move. In the meantime, Joe Biden was elected president and quite correctly decided to go big. First his multi-trillion-dollar COVID relief plan and now his infrastructure rebuild which, as reflected in the polls, has captured the imagination and the respect of the American people. But there is Andrew Cuomo, who once told me of his great personal friendship with Biden, looking into the political arena and his friend Biden has pulled out the rug from under him. Unfortunately for the New York governor, restoration of the deductibility of state and local taxes was not on the list that included restored transportation and bridge and highway construction.
Biden needs the money for his signature programs and if he were to (and he may have to) give Cuomo his state and local tax deduction back, he would end up cutting a huge swath in his own program. Of course, this does not sit well with Cuomo or many of his political Blue State colleagues in the Congress who are now suggesting “no deal” if Biden doesn’t bend on SALT. Biden may have to end his position on this but, at least in the short run, he has refused to do so.
Biden knows that if he has to accommodate Cuomo and his friends, he will have to raise the amount that he is looking for in his infrastructure plan. At the same time that all of this is unfolding, the Republicans are saying that Biden has already put too much on the table.
There are many other major politicians besides Cuomo who are for the restoration of SALT including Chuck Schumer and Nancy Pelosi. Not bad for starters. One way they can all make peace is to promise a second and separate bill devoted only to deductions of state and local taxes. The deductibility of taxes will certainly lower the amount of money in the national treasury and my bet is that those Red States that have not been suffering under the Trump rule will not be fighting for the Blue State crowd.
It seems like a no brainer to me. Democratic President Biden will have to keep the moderates in his party happy, one way or another. The cash register is wide open. Cuomo will get his infrastructure relief and lots of other goodies but Biden will have to remember that the Blue States brought him to the party and one way or another, he will have to honor his political colleagues and get the reduction of state and local taxes restored. The way to do that is to open the piggy bank once again.
Alan Chartock is professor emeritus at the State University of New York, publisher of the Legislative Gazette and president and CEO of the WAMC Northeast Public Radio Network. Readers can email him at [email protected].
