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The Daily 202: Biden tries to turn Trump’s tax law against Republicans who love it

By Olivier Knox
National Political Correspondent and Anchor of The Daily 202
with Mariana Alfaro
May 7, 2021 at 4:28 p.m. GMT+1
https://www.washingtonpost.com/politics/2021/05/07/daily-202-biden-tries-turn-trumps-tax-law-against-republicans-who-love-it/

It falls short of the old riddle about the outcome of an irresistible force striking an immovable object, but President Biden has turned the 2017 GOP tax law into a weapon against Republicans balking at his trillions in new government spending.

Biden and his proposals are broadly popular. The GOP’s “Tax Cuts and Jobs Act” (TCJA) isn’t (as of 2019). That’s the “force.” Republicans say they’re dead set against the president’s tax hikes. Time will tell whether any can be moved.

There’s a political symmetry to the president’s attacks on what was President Donald Trump’s signature legislative achievement: Republicans spent a decade raising money and courting voters with attacks on President Barack Obama’s Affordable Care Act. (As is true of so many things, my colleague Paul Kane noted this before I did).

On the road in Lake Charles, La., yesterday, Biden told Americans they must pick between his vision — tax hikes on the richest Americans and corporations — or what “the other team” put together and passed four years ago.

“It created a $2 trillion deficit, with the vast majority of that going to the top one-tenth of one percent of the wage earners,” the president said as he promoted his $2.3 trillion infrastructure package, which faces an uphill fight in Congress.

Biden, who is also selling his $1.8 trillion “American Families Plan,” made the case in even more detail in his first speech to a joint session of Congress on April 28.

“The big tax cut of 2017 — remember, it was supposed to pay for itself, that was how it was sold — and generate vast economic growth,” Biden said. “Instead, it added $2 trillion to the deficit. It was a huge windfall for corporate America and those at the very top.”

And, he continued: “Instead of using the tax saving to raise wages and invest in research and development, it poured billions of dollars into the pockets of CEOs.”

There’s another parallel: Where Democrats fought fiercely to protect the law better known as Obamacare, Republicans have signaled they will do what it takes to protect the 2017 tax cuts.

As Paul Kane reported a week ago:

“There’s not an appetite to undo the 2017 tax act among our members,” Sen. John Thune (R-S.D.), the GOP whip, told reporters at lunchtime Wednesday, about nine hours before Biden’s address.”

Campaigning against the Republican tax law lets Biden contrast a real-world example of GOP policymaking to his fairly traditional Democratic pitch that has gained steam in the era of ex-presidential rivals Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) The rich and corporations will pay for vast government programs that, he says, will help level an economic playing field sharply tilted in favor of the wealthiest Americans.

As for the tax law’s benefits, the nonpartisan Congressional Research Service concluded in a May 2019 report that the law had a negligible impact on economic growth or wages while adding to the deficit, contradicting supporters who said it would pay for itself.

White House aides declined to comment on how Biden feels personally about targeting Trump’s chief legislative achievement. And the president himself has insisted his calls for tax hikes on the wealthy are rooted in fairness, not what Republicans in another era would have derided as class warfare.

“I’m not looking to punish anyone,” he insisted in Louisiana. “I come from the corporate state of the world, Delaware. More corporations are incorporated in the state of Delaware than every other state in the union combined.

“But guess what? You know, I’m sick and tired of corporate America not paying their fair share,” the president said.

It’s a view many Americans share. Nearly two-thirds of Americans — 59 percent — say it bothers them “a lot” that corporations and the wealthy “don’t pay their fair share” of taxes, according to a Pew Research Center survey conducted last month.

That’s nearly double the 33 percent who say the most irksome aspect of America’s federal tax system is “the amount you pay in taxes.”

Another notable feature of Biden’s sales pitch is how, to hear him tell it, his proposed tax hike is painless — it won’t touch working-class Americans, the middle-class won’t feel it. And the rich? Well, they’ll keep zipping around in luxury, maybe a few million dollars lighter but their lifestyles largely unaffected.

“This is not punishing anybody,” the president said yesterday. “All those folks are still going to have two homes or three homes and their jets and it won’t matter. Not going to change their standard of living one little bit."

That’s not quite right. Republicans have noted that raising corporate tax rates may make American firms less competitive with foreign rivals.

And the nonpartisan Tax Policy Center says corporate tax hikes reduce U.S. workers’ productivity, and therefore their wages and other compensation.

For now, the immovable object seems, well, immovable.

“One hundred percent of our focus is on stopping this new administration,” which wants to “turn America into a socialist country,” Senate Minority Leader Mitch McConnell (R-Ky.) told reporters in his home state this week.

What’s happening now

The economy picked up 266,000 jobs in April, fewer than expected. “The unemployment rate remained relatively unchanged at around 6 percent, although economists caution the number is misleadingly low, given how many people have dropped out of the labor force in the last year, and are thus not counted as unemployed,” Eli Rosenberg reports. “Some businesses have been complaining to the White House and lawmakers that they are having a hard time recruiting workers, particularly for low-wage, hourly jobs. Political tension over questions about the labor force spilled into public on Thursday, when Senate Minority Leader Mitch McConnell (R-Ky.) blamed the stimulus package passed by the White House and Congress in March for acting as an incentive for people to not return to work. Biden administration officials have countered that the $1.9 trillion stimulus package provided vital assistance to millions of Americans and has only helped the economy grow.”

Biden is speaking at 11:30a.m. on the jobs report from the White House East Room. He is “expected to argue that Congress needs to build upon his $1.9 trillion coronavirus relief package, signed in March, by embracing other spending proposals focused on jobs, infrastructure and safety-net programs,” John Wagner details.
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https://www.washingtonpost.com/politics/2021/05/07/daily-202-biden-tries-turn-trumps-tax-law-against-republicans-who-love-it/