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March 31, 2021

The Multi-Trillion-Dollar Fiscally Responsible Agenda

The Biden team trims its sails on its American Jobs Plan

 

Biden wants another bill to sign, but has the White House lowered their
ambitions for it? (Evan Vucci/AP Photo)

The Chief

One theme of the early Biden administration is that the dragon of
deficit hawkery has been slayed. No longer will Democrats combat on an
unlevel playing field, constantly trimming their sails while Republicans
have no problem with running up deficits. This is how we've led
ourselves into an incredibly low tax burden and the lowest public
investment in decades, based mostly on the priorities of the two parties
and the willingness to execute them.

Now, the theory goes, the Democratic Party has learned and the
leadership is implementing real and substantive policy and shrugging off
the likes of Larry Summers and those who would hold back progress. It
wasn't lost on me that this was based entirely on one bill in an
emergency. The American Rescue Plan is a significant achievement but
it's temporary, with most of its measures expiring within a year or
two. There would be opportunities to extend them, but we'd have to see
something more lasting to really judge if the neoliberal mindset had
finally been shoved aside.

The promise of a large-scale infrastructure bill could settle the
question. And the early chatter, about a bill with a broad conception of
infrastructure, incorporating surface transportation like roads and
bridges but also broadband, electrical grids, energy-efficient housing,
and the care infrastructure that allows families to live and work, was
incredibly energizing. The Biden administration was talking about $3
trillion in investment, and the party's most right-leaning member, Joe
Manchin, was talking about $4 trillion.

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**** We now have the blueprint
,
it's called the American Jobs Plan (AJP). And as welcome as it is to
have any positive movement toward public investment, I have to be the
stinker here and note that the Summers-led carping about inflation and
higher interest rates and crowding out investment did have an impact in
the final proposal, and that's before Congress gets their hands on it.

This isn't a supposition. "Some members of the economic team
second-guessed themselves," the Washington Post writes
,
"concerned that the plan could jeopardize the nation's long-term
financial stability. The officials worried that the large gap between
spending and revenue would widen the deficit by such a large degree that
it could risk triggering a spike in interest rates, which could in turn
cause federal debt payments to skyrocket." That shifted things from a
$3 trillion bill with $1 trillion in revenue offsets to maybe a $4
trillion bill with up to $3 trillion in offsets.

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Some of this is coming from Congress, and particularly moderates who
might not mind the investment but want it paid for as much as possible.
And the tax code has been so damaged over the past few decades that
there's no real shortage of revenue options that would not be
distorting or disable growth but would begin to check the historic
levels of inequality in the country. As Congressional Progressive Caucus
chair Pramila Jayapal (D-WA) put it at a press call yesterday,
infrastructure doesn't need to be paid for, but if we want to make the
tax code more fair in tandem, that's fine.

So far, the tax fairness is solely on the corporate side. What being
announced today is a rise in the corporate tax rate from 21 to 28
percent and a global minimum tax for U.S. multinationals. (There's
some diplomacy here outside of the bill, being led by Janet Yellen, to
get the world to agree on a global minimum.) Add to that the perennial
"end tax breaks for companies that ship jobs overseas (which we've
been hearing since the Kerry campaign in 2004), the withdrawal of fossil
fuel subsidies in the tax code, a minimum tax on the income corporations
show to investors (limiting the tax giveaways that have wildly
profitable companies pay no tax), and stronger IRS enforcement, and you
have a bill that invests around $2.25 trillion over 8 years

and yields that much revenue over 15, with deficit reduction thereafter.

We're going to have much more on the investment elements in the coming
weeks, and what's being announced today involves just half of them. It
hits the major challenges the administration wants to address:
revitalizing manufacturing, rebuilding America, mitigating the climate
crisis, and restoring the dignity of care work. But while it's not
being announced today, we now know that the child allowance that was
part of the American Rescue Plan will probably not be made permanent in
this package, and maybe only extended to 2025. A proposed $500 billion
to green mass transit also went by the boards.

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The care economy elements coming in the second round, presumably offset
with individual tax changes, could be jettisoned, I fear. That's made
more acute by the incorporation of a couple of those elements in this
package ($400 billion to modernize child care facilities and invest in
care work for the elderly). Then if the second half goes up in smoke the
administration can say that at least they got something they wanted for
care infrastructure. But that trade-off would mean no paid and family
medical leave, no expansion of childcare, and no extension of the two
key social welfare elements of the ARP, the additional Affordable Care
Act subsidies and the advance monthly child tax credit. (And no lowering
of the Medicare eligibility age
,
which has emerged as a possibility of late.) Centrists have already
called this aspect of the package a "liberal wish list."

Those care investments, meanwhile, are job-enabling jobs, which could
have more of a multiplier effect. There's a big debate on the left
about whether to emphasize restoring manufacturing and onshoring supply
chains or prioritizing the care economy as the jobs of the future for an
aging population. I'm worried about the idea that we have to choose.
We need to better move people around the country, justifying doubling
the federal investment in mass transit and modernizing roads and bridges
and ports whose inefficiency costs us in pollution. As a public safety
matter we need to remove all lead pipes from water systems, an amazing
investment in this bill. We need everyone to have access to high-speed
broadband to keep up in a 21st century economy. We need an electric grid
better equipped for renewables, and capped orphan oil and gas wells, and
an electrified federal vehicle fleet
, and energy
efficient buildings to preserve the planet. We need manufacturing jobs
and secure supply chains because without it we risk resiliency and
national security. And we need every family to get the care it needs,
and for the workers supplying it to have some basic dignity.

We can't afford to choose. And I'm concerned we're being told that
we must.

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What Day of Biden's Presidency Is It?

Day 71.

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Today I Learned

* The talk about "diversity of experience
"
in Biden's first set of judicial nominees is overheated. Lots of
corporate lawyers still in the mix. (HuffPost)

* Journalists were let in to see a facility in Texas

holding four thousand migrants in a space for 250. (Associated Press)

* Interesting discussion of the lack of preparedness

for increases in migrants, especially given the court order allowing
unaccompanied children to enter. (Migration Policy Institute)

* Speaking of things out of Biden's control, how about a severe
political and public health crisis

in Brazil. (Wall Street Journal)

* Six million debtors with privately held student loans are not sharing
in the payment pause everyone else is getting. The Education Department
extended relief only to the 1 million

who have defaulted. (Politico)

* We're going to be dealing with the Suez Canal backlog

for a while. (Wall Street Journal)

* Marcia Fudge not cutting FHA premiums

in her first major policy at HUD. (Politico)

* Major nipped another Secret Service agent
,
alert the media. (HuffPost)

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