Biden’s Phony Fiscal Policy: Cuts Corp Taxes & Infrastructure Spending
June 3, 2021 by jackrasmus
I don’t often restate my twitter posts here on the blog, but today’s development by Biden is so historic a betrayal and reversal to satisfy corporate friends and Republicans it deserves a repost. It’s a ‘double reversal’ and so typical a Democrat party betrayal.
Today Biden announced he was 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 and said it would be only 25%. He then agreed with European Union finance ministers to cut taxes on US multinationals to only 15%. Now he announces he’ll CUT US corporate taxes to 15%–instead of raising to even 25%. This comes after talks with Republicans.
Not to outdo himself, Biden next CUTS his proposed infrastructure bill further as well. Starting out at $2.25T, he last week reduced that to $1.7T. Now, however, he offers to CUT that to $1T!
In the past two weeks it was apparent that Biden and Republicans were engaging in a ‘smoke and mirrors’ negotiations on the so called American Jobs Act, aka Infrastructure bill: 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 capitulate. Then again, maybe the capitulation was all planned out months ago!
Dr. Jack Rasmus
Copyright, June 3, 2021
Today Biden announced he was 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 and said it would be only 25%. He then agreed with European Union finance ministers to cut taxes on US multinationals to only 15%. Now he announces he’ll CUT US corporate taxes to 15%–instead of raising to even 25%. This comes after talks with Republicans.
Not to outdo himself, Biden next CUTS his proposed infrastructure bill further as well. Starting out at $2.25T, he last week reduced that to $1.7T. Now, however, he offers to CUT that to $1T!
In the past two weeks it was apparent that Biden and Republicans were engaging in a ‘smoke and mirrors’ negotiations on the so called American Jobs Act, aka Infrastructure bill: 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 capitulate. Then again, maybe the capitulation was all planned out months ago!
Dr. Jack Rasmus
Copyright, June 3, 2021
As sickening as the news is, my thanks to Dr. Rasmus for his clear refutation of the Big Lie of the Big Spend. The mental slum in which mainstream economists inhabit means a worldwide gulag of economic degradation for the lower 90%; the only way that the architecture of prosperity will ever be built is with the systemic demolition of mainstream lies by independent thinkers such as Dr. Rasmus.
I looked at a list of program proposals in the Am. Jobs Plan (at Committee for a Responsible Federal Budget), it’s a long list. There’s very little left on this list after all the capitulation you have figured in, it no longer should be called by the original name. Plus the reduction in corporate tax rate, to “harmonize” with the European rate. Was/Is that necessary? Wasn’t there about 60% approval for the Am Jobs Plan? Now, his approval rate will plunge. Wimp-out, that will be the impression. Same with removing the filibuster, wimp-out, anti-democratic betrayal to big money. Obama after a while refused to use the word “stimulus”, it had acquired a derogative meaning. A wimp-out response.
Big Money.
Powering Big Everything.
The Lernaean Hydra was a character of Greek mythology, a nearly undefeatable beast with several heads, each working to sustain that beast against defeat & death.
We are now up against a new Hydra, a product of that Big Everything.
Each head represented by economic sectors, all controlled by the same Elite – Big Oil, Big Energy, Big Banking, Big Tech, Big Ag, Big Chem, Big Med, Big Pharma, Big Investment, Big Manufacturing, Big Media, Big Politics, Big Government, etc.
While there’s often tough talk about injuring or severing one of those heads (i.e. the need to break-up Big Tech, for example), the many other heads would remain, continuing to sustain that beastly Hydra, even eventually regenerating that injured/severed head (i.e. that Big Money/Big Investment would just assume ownership & control of those new smaller corporations formed post-breakup).
Wimp out. Good term. Defines well the corporate wing of the Democrat Party (in control of it since 1989). Wimp out now clearly defines the party in general. Sanders, Warren at. al looking increasingly like Quixotes tilting at windmills; as Coyotes corporate wing continues to play its part of the neoliberal shell game in effect since 1993 when Clinton was selected as its neoliberal candidate and the two party system became a single neoliberal Corporate Party of America with two wings.
The Big Three asset management firms (Vanguard, BlackRock, State Street) hold just shy of 40% of all outstanding shares in U.S. markets.
The Top Five hold almost 70%.
Plus each exist as among the largest shareholders/investors of each other.
They hold the largest number of shares of the largest “competing” corporations, in most every single industry.
Giving them effective voting control over those corps.
There is no longer any true market competition in the U.S.
What’s more, corps held by these firms exist as the largest political campaign contributors, to Politicians of both the “left” & “right”.
Plus they exist as the largest spenders on lobbying, either individually or collectively via industry trade associations.
Plus they exist as the largest recipients of government-given corporate welfare subsidies.
These asset management firms hold the power to make or break the careers of ANY politician that stand in the way of their power and profits.
In the early 1700’s, British Writers John Trenchard & Thomas Gordon wrote a series of essays titled Cato’s Letters, regarding the massive influence, power & corruption that the largest corporations had over the British government.
Cato’s Letters are often regarded as among the most influential writings of the U.S. Founders.
The Declaration of Independence was not merely a declaration against the British government, but against the mega-corporations that were exercising control over that government.
Similarly, the Boston Tea Party was not a rebellion solely against the British government, but against the mega-corporations that were interferring with trade & commerce by the Colonies, via those mega-corps control over that government.
Hence the phrase “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness” in the Declaration of Independence.
Rights are not based on wealth or status.
The U.S. has now come full-circle, back from whence the Founders sought to escape.
Note how every presidential candidate promises to bring real representation back to the People, and to fight the Elite.
But end up doing the exact opposite when in office.
Total, absolute corruption.
We are witnessing extremely disturbing history in the making.
The U.S. has literally devolved into a feudal society.
People can only exist at the behest of the neo-feudal Lords.
For 40 years, since the beginning of neoliberal policies in the early 1980s, a wing of the capitalist class has proposed a 15% ‘flat tax’. Steve Forbes (owner of the magazine) even ran for the Republican party nomination for president on that single issue. It was rejected by that party, and that class, for decades. Certain sectors like oil and energy, tech, pharma, REITs, and banks did not think it (15% flat tax) was necessary. Many were able to reduce their effective tax rates well below the 15% anyway. But now 15% is becoming more a ‘magic number’: 15% for global tax (GILTI). 15% minimum domestic corp tax. Watch for next neoliberal tax initiative of 15% all corporate, in exchange for closing tax loopholes. Except some loopholes will be closed and new ones will be created. Biden is willing to cut to 15% in exchange for infrastructure spending bipartisan deal, phased in over 10 years. Otherwise, the current 21% corp tax vs. 15% global (GILTI) tax is a strong incentive for US multinational corporations to accelerate moving operations offshore in order to take advantage of the lower 15% tax rate. Biden has clearly signaled to McConnell he is willing to go for a 15% corp flat tax down the road, in exchange for infrastructure now. Meanwhile, I’ve yet to hear Biden & Dems clarify their ‘trial balloon’ signal proposal to McConnell of 15% tax last week does not mean lowering the 28% to only 21%, notwithstanding WAPO and other capitalist media interpreting his statement last week thus. Neoliberal Democrats (Biden, Obama, Clinton) have a long history of willingness to trade lower corp tax and other taxes on capital for maintaining spending on fiscal stimulus and/or social programs. (Both sides, of course, are in mutual agreement to increase defense spending). Those tradeoffs are the essence of neoliberal fiscal policy: cut taxes on capital in exchange for maintaining social spending + keep defense spending growing steadily. And forget the impact on budget deficits and national debt. Let the Fed worry about that.