42 United States The Economist December 4th 2021
to spend on child-tax and earned-income
credits that are intended to reduce poverty.
Some proponents claim that the proposal
is actually deficit-neutral over the next de-
cade, though this relies on a shifty budget-
ary game. The Trump-era limit on saltex-
pires in 2026, so although a cap of $80,000
costs a lot until then, scorekeepers book it
as a tax increase (relative to full deductibil-
ity) from 2026 to 2031.
President Joe Biden has been emphatic
that bbbis a plan to revitalise the middle
class. So it is an irony, argues Marc Gold-
wein of the Committee for a Responsible
Federal Budget, a think-tank, that one of
the priciest components of it “is a big tax
cut that middle-class people and poor peo-
ple don’t get at all”. Almost all the benefit is
concentrated among the very rich.
Modelling by the Tax Policy Centre, an-
other think-tank, shows that the average
benefit for the middle 20% of earners
would be a measly $20. But those in the top
20% would receive an average tax cut of
$2,100; the top 1% would get a cut of almost
$15,000. The majority of the benefits
would go to Americans earning more than
$500,000 a year. Less than 9% would go to
Americans making less than $200,000.
This is not just “a colossal waste of
money on a regressive, distortionary tax
break”, argues Richard Reeves of the Brook-
ings Institution, another Washington
think-tank, but “a form of fiscal self-harm,
and, therefore, political self-harm”. Jason
Furman, a former economic adviser to Ba-
rack Obama, has called it “obscene”.
The issue is inverting the usual posi-
tions on fair taxation. Mitch McConnell,
the Republican leader in the Senate, is lam-
basting the “bonanza for blue-state mil-
lionaires and billionaires” and the fact that
the bill gives “a net tax cut to 89% of people
making between $500,000 and $1m”. Some
pro-deduction Democrats argue that their
own “maker states” deserve a break that
cadging “moocher states” do not
Whether the change will become law is
uncertain. For both the Democratic leaders
in Congress, Nancy Pelosi of California and
Chuck Schumer from New York (pictured
on previous page), the provision would be
a boon for their home constituencies. But
some Democrats are incensed. Michael
Bennet, a senator from Colorado, has
called the idea “preposterous”. Bernie
Sanders, another strident objector, is
pushing to limit the deduction to those
making less than $400,000 a year. He has
not said whether he would be prepared to
torpedo the whole bill over the measure.
The White House has been sheepish
about the idea, which was not in Mr Biden’s
original proposal. His press secretary re-
cently offered this ringing endorsement:
“The president’s excitement about this is
not about the saltdeduction; it’s about the
other key components of the package.” Tainted waterMessage in a bottle
P
eople living in Benton Harbor, Michi-
gan, don’t drink the tap water. Many
drive to nearby grocery stores to buy bot-
tles. But unlike her neighbours Lisa Wil-
liams does not have a car, so she uses what
comes out of her tap, even though the com-
munity’s water has tested above the feder-
al-action limit for lead since 2018. “I have
to,” Ms Williams laments; the bottled water
that volunteers drop off goes only so far.
After Benton Harbor—a city of nearly
10,000 people, over 80% of them black—
made headlines for its water crisis this
year, Michigan promised to replace all the
town’s lead service lines within 18 months.
That did not stop its residents from filing a
class-action lawsuit in November alleging
deliberate government indifference. The
same day a judge approved a $626m settle-
ment for people affected by a water crisis
across the state in Flint, which caused a
similar media frenzy after residents com-
plained about tainted water in 2014. Get-
ting national attention, it seems, pays off.
Like Flint’s residents, Ms Williams will
soon be able to trust the tap.
Many of the 22m or so people across
America served by lead service lines can
look forward to doing the same. Congress
has earmarked $25bn for water repairs, be-
tween a bipartisan infrastructure bill and a
yet-to-be-passed Build Back Better Act.
Even so, that is about $20bn short of what
experts say is needed to replace all lead ser-
vices lines in the country.
Benton Harbor exemplifies how many
low-income communities have managed
to obtain funding in the past: grassroots
organising. The town has become Ameri-
ca’s new “lead hotspot”, evoking compari-sons with Flint and other cities that re-
ceived big investments after public prot-
ests and national press coverage. In Sep-
tember the Benton Harbor Community
Water Council petitioned the Environmen-
tal Protection Agency (epa) for a free
source of safe drinking water. “We knew
that by having that press conference when
we filed that petition it would get people
excited,” says Edward Pinkney, the coun-
cil’s president.
Things moved quickly. Michigan’s go-
vernor, Gretchen Whitmer, has secured
more than half of the $30m needed to re-
place all Benton’s lead lines. And she has
called on the state legislature to allocate
$11.4m from the American Rescue Plan, the
stimulus package passed in March.
But other cash-strapped towns must vie
for limited funding. Even low levels of lead
in children can result in behavioural pro-
blems, lower iqand anaemia. In pregnant
women, it can induce premature birth and
reduced fetal growth, and in adults more
generally it can decrease kidney function
and cause reproductive problems. The epa
allocates roughly $1bn a year to supporting
water-infrastructure projects, including
lead-pipe replacements, through grants
and loans. Poorer places may struggle to re-
pay even low-interest loans, however. A
lack of robust testing means that several
communities are likely to be unaware of
the level of lead in their water.
Hence the importance of the money
promised by the Biden administration.
The bipartisan infrastructure bill sets aside
$15bn for lead-pipe replacements. The
$1.7trn Build Back Better bill, still stuck in
the Senate, could provide nearly $10bn on
top of that, for pipe replacements and miti-
gation tactics such as filters aimed at
schools. Though not as much as originally
promised, the money will go a long way to-
wards tackling the problem.
Because Benton Harbor does not need
to depend on this money, it is luckier than
many communities left hoping for federal
funds. The town should have clean water
before long. In the meantime, its residents
will remain wary.
Every day, Mr Pinkney drives a u-Haul
truck through town to pass out water bot-
tles with some of his two dozen volunteers.
Long before the state ramped up its efforts,
he distrusted the water supply. “It wasn’t
the right colour,” he grimaces. He has not
drunk from his tap for nearly a decade.
Mr Pinkney blames the city and state
governments for not doing more to fix the
city’s lead problems, citing years of mis-
management and environmental racism.
The pipes should have been replaced three
years ago, he says, as soon as testing
showed the town to be falling foul of feder-
al standards. That’s why they had to peti-
tion, he says: “It got people moving that
never would have moved before.” BENTON HARBOR
Help is on its way for Benton Harbor’s
lead-pipe problem, and America’s