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Just an hour ago, Reuters reported Biden announced a massive shift in his fiscal policy, cutting (not raising) corporate taxes even further than had Trump, AND cutting his proposed infrastructure spending bill by hundreds of billions of dollars more following his last week’s proposed spending cuts from $2.25T to $1.7T.
Today’s announcement by Biden is clearly a capitulation to corporate interests, McConnell and Republicans of truly historic dimensions. It’s a ‘double reversal’, not only cutting corporate taxes instead of raising them, but unilaterally, and without obtaining any concessions from Republicans, slashing his infrastructure spending proposals further again, than a week after his prior spending cut of $550B.
Today, June 3, as reported by Reuters, Biden now plans CUTTING corporate taxes to 15%. Trump had cut corporate tax rate from 35% to 21%. Biden ran for office pledging to raise that back to 28%. He then reneged in February and said the corporate tax hike would be to only 25%. He then agreed with European Union finance ministers last week to cut taxes on US multinationals to only 15%. Now he announces, after latest talks with McConnell and Republicans, he’ll CUT US corporate taxes in general to 15%–instead of raising to even 25%.
Not to outdo himself on corporate tax cutting, Biden will CUT his proposed infrastructure bill further as well. Starting out at $2.25T in March, he last week reduced that to $1.7T. Now, however, he offers to CUT that even further to $1T! In this writer’s twitter posts, it was explained how both parties are engaged in a ‘smoke and mirrors’ negotiations on the infrastructure bill. Both are ‘moving the money around’ and proposing to count spending authorizations already approved elsewhere as part of their infrastructure proposals.
For example, in the past two weeks Biden had agreed to break out negotiations on a separate track on $400B in the bill that was actually a subsidy to US auto and tech corporations, to pay for their R&D on electric car investments. It included as well $50B subsidy to US auto corps for semiconductor chip production.
Auto companies had cut production (i.e. gone on strike) claiming a chip shortage and began laying off workers. All this just as Congress was taking up proposals on chip subsidy of $50B. Once it appeared the $50B would pass, however, somehow auto companies–despite their claimed chip shortage–now miraculously boosted production once again. The alleged chip shortage was clearly a lobbying pressure ploy by the companies. They’ll now get the $50B chip subsidy, plus another $173B in the infrastructure bill to subsidize their electric car development and charging stations build out. The rest of the $400B corp subsidy in the Infrastructure bill will benefit tech corps’ R&D and manufacturers.
The $400B subsidy has nothing to do with infrastructure. But will now fast track in passage while the rest of the human investments in the infrastructure bill of $2.25T, then $1.7T, and now $1T will lag.
Biden’s cut of his infrastructure proposals to $1T brings it in line with Republican counter proposals of roughly $928B. However, McConnell & Co. $928B includes moving $350B in spending allocated in the already passed Covid Relief Act (aka American Rescue Plan) in March. It also includes $308B also already allocated to be spent in transportation funding.
So the Republican bill is just agreeing to spend what has already been spent!
It’s almost certain Biden will include the $308B already allocated for transport spending in his reduced $1T infrastructure offer. That’s West Virginia blue dog Democrat Senator, Manchin’s, proposal. So Biden’s only proposing $700B–a long way from his original $2.25T.
Biden’s dual move to CUT corp taxes even more than Trump had and to cut his proposed infrastructure spending by more than $1.5T, represent unilateral moves by him without any real concessions by the Republicans. It all looks like a well orchestrated ‘deal’ from the beginning, overlaid with a public appearance that there are ‘negotiations’ under way
One is reminded of last summer, when Shumer-Pelosi reduced their proposed spending by $1T on their ‘Heroes Act’, which McConnell and Republicans simply refused to counter. Democrats have a history of capitulation, poor negotiating strategy and ability, and a general capitulation to Republicans on fiscal policy.
Further back, one is also reminded of Obama’s policy. In 2009 his fiscal stimulus was a mere $787B (of which $300B were tax cuts for businesses). He then CUT social program spending in August 2011 by twice that amount, $1.5T.
Biden’s lastest moves are deja vu Democrat party perfidy. Biden reveals he–like Trump, Obama, Bush and Clinton before him–is intent on continuing the Neoliberal fiscal policy of cut, cut, cut corporate and investor taxes + promise social program spending, cut that back, and then take even more back in subsequent austerity proposals once the immediate crisis has passed.
In the interim, Neoliberalism means the Fed giving trillions of dollars in free money to banks, investors and corporations. In one year the Fed has pumped $4T of virtually free money into these folks, matching in one year the amount Obama gave them in four years, 2009-13!
By these recent moves Biden and Democrats are on board, in other words, with the decades long policy of continual further corporate tax cutting, temporary fiscal program spending during a crisis, followed by eventual austerity take-backs.
Biden’s just announced CUTS to corporate taxes and proposals for infrastructure spending are clearly Republican-McConnell demands. Biden and Dems once again clearly and prematurely are willing to capitulate to McConnell and corporate interests. Then again, maybe the capitulation was all planned to get to this place months ago!