Biden Abandons Goal of $1 Trillion in New Taxes, Now Has Eyes on $3 Trillion in New Taxes: Report
As we’ve discovered in the past few weeks, President Joe Biden sees himself as the new Franklin Delano Roosevelt. Granted, he’s much older, much fuzzier and has no explicit mandate for New Deal-style programs, but he’s not going to let that stop him.
His next big spending bill is set to be an infrastructure plan, something the administration has been hoping will be more palatable to Republicans. That might be a problem any way you slice it, according to The Washington Post.
Originally, according to The Post, Biden’s White House National Economic Council was looking at a $3 trillion plan with $1 trillion tax hikes. Unlike the stimulus, this wouldn’t be funded entirely by debt.
That still wasn’t enough for the left and its larger goals, however — which is why The Post reported Monday that the infrastructure plan is now more likely to look like $4 trillion in spending with $3 trillion in tax hikes.
Biden wants to go big, as we’ve seen. We’ll see how big he wants to go on Wednesday, when the plan is unveiled. The problem with bigness, however, is that some members of the economic team are worried widening the deficit would cause interest rates to go up, with federal debt payments spiking.
Whatever the case, it would be the first major tax hike since Bill Clinton’s 1993 plan. Bloomberg sketched out an outline in a March 15 report — although this dealt with a tax hike package that was much smaller in scope than what The Washington Post is reporting now.
Biden’s plan, according to Bloomberg, would raise the corporate tax rate from 21 percent to 28 percent, raise the income tax on those who earn over $400,000, expand the reach of the estate tax, raise capital gains taxes and reduce tax preferences for limited liability companies and partnerships — so-called “pass-through” businesses, which are taxed at individual rates instead of corporate rates.
The tax hikes also seem to serve another purpose; the messaging from sources in almost every media report is that the plan aims to reduce income inequality.
“His whole outlook has always been that Americans believe tax policy needs to be fair, and he has viewed all of his policy options through that lens,” Sarah Bianchi, former Biden economic aide and head of U.S. public policy at Evercore ISI, told Bloomberg.
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“That is why the focus is on addressing the unequal treatment between work and wealth.”
White House economist Heather Boushey told Bloomberg Biden still wouldn’t raise taxes on people making over $400,000, but that “folks at the top who’ve been able to benefit from this economy and haven’t been this hard hit, there’s a lot of room there to think about what kinds of revenue we can raise.”
This will likely run into several problems. The first is that The Post reported centrist Democrats in the Senate have been backing an infrastructure bill that could be passed with bipartisan support. That’s why the bill reportedly focuses primarily on physical infrastructure instead of “care-work infrastructure” — child care, family and medical leave and the like — a priority of left-wing Democrats that gets Republican eyes a-rollin’.
“There’s some broad skepticism we can do the other piece in a bipartisan way and there’s a strong desire for the next bill to be bipartisan,” one aide to a centrist Democrat senator told The Post.
The issue comes when the investment tops $4 trillion and the tax hikes to pay for it are $3 trillion. No matter how much Republicans prefer physical infrastructure investments to care-work investments, those numbers likely make it a non-starter with the GOP.
The two other options to pass the bill in the Senate, then, are doing away with the filibuster and reinterpreting the process of budget reconciliation in an unprecedented way.
The consensus is still that there are a few Democrat holdouts on nuking the filibuster, making that a problematic route. Normally, budget reconciliation would also be off the table. The law that allows for budget reconciliation — a process where a bill can be passed along a straight party-line vote without the filibuster — allows only one bill a year on issues of taxation, spending, and the debt limit, respectively.
As you may recall, Biden’s COVID relief bill was already passed via reconciliation, which would usually take the process off the table for the remainder of the year. Senate Majority Leader Chuck Schumer wants to change that.
According to a Monday report from CNN, aides to the New York Democrat have been in discussions with the Senate parliamentarian over whether they can use a provision in the Congressional Budget Act to offer the plan as a “concurrent” resolution and give them a second chance at a straight party-line vote.
Such a move would be unprecedented — but then, the Biden administration’s attitude seems to be that they need to break as many eggs as possible to Get Things Done.
Again, we’ll have to see what the damage is when the plan is unveiled Wednesday, but there’s little doubt a plan that claims it’s going to spur growth will actually slow it, and destroy plenty of jobs in the process.
The Biden administration keeps on repeating the same talking points: Taxes limited on the upper class; no burden for anyone making under $400,000; income equality, you know the deal. But as journalist Ashe Schow noted at The Daily Wire, “hiking the corporate tax rate by nearly a third, expanding the estate tax, and raising taxes on LLCs, will increase the tax-burden for non-wealthy Americans.”
It would also make the United States spectacularly uncompetitive.
Joseph W. Sullivan, a White House economic adviser during President Donald Trump’s term, pointed out at National Review that if Biden’s tax proposal became reality, and state and local taxes remained the same in the United States, we would be tied with France for the highest corporate tax rate among leading industrial nations — 34 percent, according to the Organisation for Economic Co-operation and Development.
It would also make the United States uncompetitive with another country with significant economic clout: China, which has a corporate tax rate of 15 percent for industries encouraged by the government. Especially in tech, an area encouraged by the Chinese Communist Party with particular fervor, that would mean American companies would have double the tax burden of Chinese firms.
And all of this after a year-long lockdown that’s devastated the American economy. Biden thinks he can tax-and-spend his way out of this, creating a new New Deal.
It’s an ersatz New Deal, being assembled by a president both too impressed by the power of the office and too confident of his own (let’s face it, diminished) ability to craft a coherent economic response to the pandemic. And he plans to make the country grossly uncompetitive and overtaxed to get it done, partially under the ridiculous explanation of reducing income inequality and partially because some in his administration are waking up to the fact debt matters.
Even FDR discovered there were limits to what he could do. If this is the bloat, social engineering and rule-bending we can expect as from the Biden-as-FDR administration, one hopes he discovers those limits quickly — before he can do any more damage to the American economy and the national debt.
This article appeared originally on The Western Journal.
