Their principal objections are that (1) to pay for it (kudos to Biden for wanting to pay for it), the bill would partially roll back Republicans’ sacrosanct 2017 corporate tax rate cut (from 35 percent to 21 percent) to 28 percent, (2) it would balloon the deficit and debt, and (3) they don’t like Biden’s definition of “infrastructure.”
Slashing the corporate tax rate cut was premised on the following Republican assurances: (1) It would pay for itself by producing somewhere between 4-6 percent GDP growth, which would send vast new oceans of revenue Washington’s way, which in turn would reduce the debt. Instead, pre-pandemic growth hobbled along at a meager 2 percent and the debt skyrocketed. (2) It would stimulate a huge increase in corporate investment, which would create millions of jobs. Instead, companies used the windfall to buy back their stock and increase share value for their stockholders, more specifically for their C-level executives. No new jobs resulted. (3) It would repatriate corporate earnings from overseas tax havens. It did not do that either. (4) It would make U.S. firms more competitive with their foreign competitors. We’re still waiting for that to happen. There is no evidence at all that, like every Republican tax cut of the past 40 years, all accompanied by similar broken promises, it performed any of these miracles.
If the corporate rate were raised to 28 percent, that would still be below the rates of some of our major trading partners, such as Japan, Germany and France. The effective rate (that corporations actually pay) is only 8 percent. The U.S. collects only about a third in corporate taxes compared to its major trading partners.
As for worries about the deficit and debt, which I share, it is ironic that Republicans had no concerns about red ink when they rushed to enact the 2017 tax cuts that added $2 trillion to the debt without any plan whatsoever to pay for it.
Biden’s plan expands the definition of infrastructure broadly to include “human” infrastructure. Republicans may have an argument that this goes beyond the standard definition. But they cannot, with a straight face, claim that infrastructure does not include essentials like broadband, the expansion of which will disproportionately benefit rural (i.e., Republican) America. Opposing this is irrational. Republicans define infrastructure both more narrowly and more broadly. For them, it means bridges, roads and Trump’s ineffective border wall. Nevertheless, it is still possible that, if Biden were to limit the proposal to the traditional definition of infrastructure and leave his expanded definition for later consideration, he could get some Republican votes.
Although they want to protect corporations by championing low tax rates, at the same time Republicans are vilifying companies for criticizing GOP voter suppression efforts (361 bills in 47 states) and warning them to “stay out of politics, except for campaign contributions.”
The former pro-business party is apparently unaware that corporations do what is best for their bottom line. Companies condemn voter suppression efforts because that is in line with what their customers want. They naturally focus on the people most likely to buy their products and services, i.e., 18-49 year olds, a demographic that voted overwhelmingly for Democrats in 2020. Whatever happened to the century-old Republican mantra: “Let the markets decide”?
The GOP also dismisses polls that show that Americans support Biden’s infrastructure plan by large margins. Republican opposition to infrastructure, like their universal hostility to the Covid relief American Rescue Plan, is a head-scratcher. Aside from its consistency with Trump era callousness, it does not compute as a winning political strategy.
April 16, 2021