Corporate Tax

Below Joe Biden, corporate pursuits nonetheless steer the ship

Credit should be given where credit is due. Joe Biden’s stimulus package has helped the working population more than almost any other piece of legislation in the past few decades.

That’s a pretty low bar, of course. But through direct payments and expanded unemployment benefits, the American Rescue Plan increased the incomes of most working and middle class Americans. A temporary tax credit has been created for children. She extended generous unemployment benefits until September. And it has rescued state and local governments to prevent a return to austerity.

Biden’s Stimulus Bill was a major departure from Barack Obama’s stingy response to the 2008 crisis and Donald Trump’s tax cut orgy. But the question for working people is not where Biden’s heart lies. It is this: who has the power in his administration?

Answering this question will determine the chances and limits of reform over the next four years. So far, everything indicates that the Washington DC economy is still in control.

For decades, big corporations wanted politicians to take austerity measures when it came to people’s needs. Cut budgets for education. Cut down on health care. Save on unemployment benefits. But last year the COVID crisis and the specter of economic collapse forced the economy to change attitudes. And it is this change in corporate policy preferences that Biden’s stimulus should honor.

From the beginning of the 2020 elections, the economy was on board with the Biden agenda. A poll in Yale of directors of America’s largest corporations found that 77 percent were planning to vote for Joe Biden. CEOs also tied their support for the Democratic Party to their wallets. The data suggests that larger company CEOs who donate to Biden outnumber those who give Trump two-to-one. Overall, major donors made up 61 percent of Biden’s war chest.

As soon as Biden was elected, the business community quickly closed the ranks behind the government and called for a new and massive stimulus package.

Michelle Gass, CEO of Kohl’s, bluntly put her support (and support from other major retailers) on a new stimulus package aimed at ordinary people: “Anything that puts money in our consumers’ pockets is a good thing. ”

In early February, Biden organized a meeting of business leaders to discuss the stimulus package. Jamie Dimon from JPMorgan Chase, Doug McMillon from Walmart, Tom Donohue from the Chamber of Commerce and Marvin Ellison from Lowe’s were among the courted CEOs.

The economy was happy about the newfound closeness to the White House. Josh Bolten, CEO of the Business Roundtable, raved about the administration: “Communication with business is good and the tone is good.” Mike Sommers of the American Petroleum Institute commented, “My CEOs have been pleasantly surprised at the level of commitment the industry has received so far Has.”

Biden didn’t have to wait long for this wooing of big business to pay off. The corporate world was happy to offer its blessings for the stimulus. In late February, 170 business leaders in New York City signed a letter to congressional leaders enthusiastically endorsing the relief plan. David Solomon of Goldman Sachs, Stephen Schwarzman of Blackstone and Larry Fink of BlackRock were among the signatories.

The $ 1.9 trillion bill was finally signed in March. A quarterly survey by the Business Roundtable showed a sharp increase in CEO confidence in the economy. The plans to hire and invest were back.

The CEO of the Business Roundtable described it as “one of the sharpest and fastest recoveries of optimism in the history of our survey”. A Yale poll of eighty CEOs in mid-March showed 71 percent support for the stimulus. That was about as much as the 70 percent of the public who supported it. The survey also found retailers and leisure industry executives excited about the possibility that direct payments to consumers lead to increased profits.

At the end of March, the big companies’ big bet on Biden seemed to be paying off.

The question now is what comes next.

In the spring, Biden and the Democrats announced new goals to increase infrastructure spending and expand the social safety net.

But unlike the draft relief, which was paid for with loans, these new initiatives should initially be paid for with higher taxes. The corporate tax rate would be increased from 21 to 28 percent. And various taxes for the rich would be increased.

The business wouldn’t benefit from it.

The Chamber of Commerce described the proposed corporate tax increases as “dangerously misdirected” from the outset. (Though the plan wouldn’t even reset rates to 35 percent pre-Trump levels.) Raytheon’s CEO warned of a 20 percent cut in the company’s investments if the hike were enforced. After learning of the government’s plans to double the tax rate for the richest, various investors joined in. They described the plan as “madness,” a threat to “the golden goose that America is,” and a “slap in the face of entrepreneurs.” . “

The administration immediately began to give way. Immediately after announcing the plans, Biden officials responded to the companies’ backlash by insisting they were open to withdrawing their ambitions. Brian Deese of Biden’s National Economic Council told Fox News on Sunday, “If people think this is too aggressive, then we’d like to hear what their plans are. We want to have a conversation about that. ”(By“ people ”Deese probably meant company leader.)

Speaking to more than fifty CEOs from Google, AT&T, Dell, Ford, Intel and other companies, Biden’s Secretary of Commerce said of negotiating with the corporate world: “I’ve been encouraged. Nobody likes to talk about pay-fors, but there is room for compromise. “

It now appears that Biden and his team have reached that compromise. The White House drastically scaled back its ambitions to get a package that even some Republicans could endorse. A corporate tax increase is nowhere to be found in this proposal. Since its publication, the Democrats in Congress have also tabled a major new package investing in social programs, but its fate remains very uncertain.

There should be no doubt that the corporate world is on the offensive in the battle to define the Biden government. If business gets its way, no major step that diminishes its power will be tolerated. Hopes of significant corporate tax hikes or major steps to strengthen the labor movement appear subdued.

Not that business always finds its way.

It takes strong social movements to push through important reforms that improve the lives of the working class. That is the lesson of how reforms were won in the New Deal and the civil rights movement. If there is hope that Biden’s government could still be a vehicle to make some big changes that could improve our lives and bring power to us, find it here.

In the meantime, Biden’s government marks a departure from austerity, at least as long as the shift is profitable for the big business. But that’s not because Biden and the Democratic Party are convinced of the need to empower workers and challenge corporate power. All the evidence we have suggests that the partial turnaround in politics is the result of the economy and Democrats fearing another major recession and boosting consumer spending – and a populist revolt.

Don’t take my word for it. Some may remember Biden’s promise to donors in the summer of 2019 that “nothing material would change” if he won. But few remember the full context. Here’s Biden telling his major donors what his government would do:

The truth is … you all know in your gut what to do … [N]Obedience must be punished. A person’s standard of living will not change, nothing will fundamentally change. [But] When we have income inequality as great as it is in the United States today, it brews and ferments political discord and fundamental revolutions. No joke … it allows demagogues to step in and say that the reason we’re where we are is because of the other. You are not the other I need you a lot. I hope if I win this nomination I won’t let you down.

It is our job to insist that business and the rich are “the other”. You created this crisis. You should pay to get us out. And while we’re at it, we in this country’s working class deserve more power at work and in government.

It’s going to be a fight. And we are entering this struggle against a powerful billionaire class who are pressuring the government on all fronts. Progressives eagerly awaiting the next big steps in the White House are likely to be disappointed.

Instead, as in the past, hopes of big change will rise or fall with the ability of the working class to attract them from below.

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