On Sunday in separate appearances on ABC, House Speaker Nancy Pelosi and Ohio Senator Rob Portman offered up opposing viewpoints on the timeline of passing a bipartisan infrastructure package.
Pelosi reinforced her stance to hold up the $1 trillion agreement as Democrats work to finalize a separate $3.5 trillion spending package, in hopes that they both get passed together.
“We are rooting for the infrastructure bill to pass, but we all know that more needs to be done,” she said.
During his own interview on ABC, Portman, a Republican and one of the leading negotiators on the bipartisan package, called Pelosi’s stance”entirely counter” to President Joe Biden’s commitment to bipartisan efforts in the House and Senate, adding that $1 trillion infrastructure bill “has nothing to do with the reckless tax-and-spend extravaganza (Pelosi’s) talking about.”
The $1 trillion infrastructure package contains a total of $579 billion in new spending dedicated to increasing broadband connections nationwide as well as updating bridges and roads.
Earlier in the week, however, Republican Senators voted against that same infrastructure bill they’d previously come to an agreement on with the White House, citing concerns over an extra $40 billion in IRS funding.
According to reports from the Wall Street Journal, Senator Lindsay Graham went further by encouraging Republican members to leave DC in efforts to prevent Senate Democrats from having the 51 senators required to operate, which is called a quorum.
If the Democrats are successful, the agreement would total $4.1 trillion in new spending, making it one of the largest spending bills ever advanced by Congress.
Senate Majority Leader Chuck Schumer said the Democrats’ $3.5 trillion package would pay for social program expansions including Medicare coverage for dental and vision care.
Eisinger explained how some of America’s wealthiest people have minimized their incomes and paid zero federal income tax in recent years, argued that philanthropy isn’t a substitute for government, and called for changes to the tax system.
Here are Eisinger’s 15 best quotes, lightly edited and condensed for clarity:
1. “The ultra-wealthy are not in our tax system. They’re off in an entirely different universe, one where income is essentially voluntary. The shorthand for what they’re doing is ‘buy, borrow, die.’ You buy, or you build, or you inherit your money. You borrow against it. You don’t pay taxes on the gains. And then when you die, there are various ways that you can avoid estate tax.”
2. “The means that they have at their disposal – their purchasing power, their political power, their influence, their charitable givings – all emanate from their wealth and, more directly, their wealth growth. We thought that wealth growth is more properly thought of as income for these people. Everybody has said, ‘Checkmate, ProPublica, you idiots, we don’t tax unrealized gains in this country,’ to which we say, ‘Yes, that is the point of our article.'”
3. “If you had asked tax experts and wealth experts last week, ‘Does Jeff Bezos pay zero in federal income tax? Does Elon Musk pay zero? Does Mike Bloomberg?’ – most people would say no. That’s a pretty shocking thing.”
4. “There is a wealth tax in this country for average Americans. It’s property tax. Most people’s houses are their font of wealth, and they’re taxed every year.”
5. “Warren Buffett is really astonishing. He’s the king. He has avoided more tax than anyone in America by our measurements.” – the famed investor minimizes his income by keeping his fortune in Berkshire Hathaway stock and not paying a dividend, ProPublica reported. He defended himself to the publication.
6. “Elon Musk is outside of the regular tax system. He gets paid when he wants to get paid. He takes income at the time and place of his choosing. If you can imagine arranging your affairs so that you can control when income comes in, that gives you an enormous amount of leeway over your taxable income.”
7. “Carl was great. He was incredibly charming and was totally perplexed by the concept of needing to pay taxes. ‘If you don’t have income, you don’t pay taxes.’ He was very amusing.” – discussing how billionaire investor Carl Icahn declared $500 million of income between 2016 and 2017, but reduced his taxable income to zero by borrowing against his assets to boost his investment returns, then deducting the interest costs of the loans.
8. “What the wealthiest person in the country contributes to American society through a tax system that we all need to contribute to – that’s a little bit more newsworthy than a crotch shot.” – dismissing a comparison between ProPublica publishing details of Amazon CEO Jeff Bezos’ tax returns and tabloids releasing supposedly intimate photos of him.
9. “We don’t have any evidence that Warren Buffett borrows. Not all these guys have exactly the same model or do all of this in lockstep with each other. But what we do know is that Buffett takes hardly anything for income, so when he talks about raising tax rates for the rich, it’s essentially irrelevant to him. It’s really irrelevant for all these guys.”
10. “Bloomberg said it’s a violation of his privacy, which was an interesting statement for a person who runs one of the most important media companies in America.” – on Michael Bloomberg’s response to ProPublica publishing details of his tax returns.
11. “We have thousands of people. We’re going to be doing stories all year on various aspects of it. And we’ll name many, many more people, but only in what we consider to be responsible ways that are in the public interest.”
12. “Warren Buffett said to us, ‘I’m going to give 99%-plus of my fortune to charity … that’s going to be better for society than paying down the United States debt.’ I would like to allocate my tax dollars the way I want, spend them on this and not that. But we collectively have a society, and we have a democracy. And the democracy gets together and makes priorities. And then we influence the democracy through the vote.”
13. “There are certain collective functions of government that charities could never do. We do need government to do some things, and government can’t do it if it’s starved, if the roads and bridges are crumbling, if we think that Social Security and Medicare are going to go bankrupt.”
14. “There are whole swaths of the tax system that just simply do not function anymore. We don’t have enforcement. We don’t have auditing from the IRS. The budget has been gutted. The wealthiest among us could be paying tens of billions of dollars more every year in income taxes – not even talking about a wealth tax -if we had a different kind of income tax system or taxation system in general.”
15. “There are two extraordinary things about death in our tax code that are great gifts to the ultra-wealthy.” – highlighting the “step-up in basis” which raises the cost base of appreciated assets when they’re inherited, and structures such as trusts that let recipients avoid paying inheritance tax.
Scientists have warned the UK government that it should abandon its plans to lift all coronavirus restrictions in June, amid rising cases of the variant first found in India.
The government is set to lift restrictions on June 21. But scientists who advise the government are concerned about rising case numbers, and the potential for cases to further rise when people start mixing more.
Professor Ravi Gupta, a member of the New and Emerging Respiratory Virus Threats Advisory Group, told BBC Radio 4’s “Today” program on Monday that although new cases are “relatively low,” there had been an “exponential growth in the number of new cases” triggered by the variant identified in India.
He said the government should postpone unlocking the country by “a few weeks.”
“All waves start with low numbers of cases that grumble in the background and then become explosive … What we are seeing here is the signs of an early wave,” Gupta said.
The UK recorded more than 3,000 new coronavirus infections on Sunday, according to government data. This is the fifth consecutive day with at least 3,000 new cases. Before that, the UK had not recorded 3,000 new daily cases since April 12.
Professor Adam Finn, a member of the Joint Committee on Vaccination and Immunisation, also warned about the lifting of restrictions, telling ITV’s “Good Morning Britain” on Monday that “it’s unfortunate that everyone’s got this particular date in their head.”
“What we need to do is understand how things are going and adjust accordingly. What we’ve done wrong in the past is left it too late and delayed making decisions, ultimately pushed them back and then ended up with large waves of infection,” he said.
When you trim away all the complications and high-minded theories, the single mission statement of an economy under capitalism is to grow. We say an economy is healthy when it’s adding jobs, productivity, and profits, and we say an economy is sick when it’s contracting, losing jobs, and failing to hit profitability markers.
But shouldn’t we expect more than aimless growth from an economy? Shouldn’t our economy reward growth in sectors that would benefit everyone – environmental science, say – and discourage growth in sectors that harm the public good, such as the privatization of our water supply?
How government influences the economy
Government is supposed to be a counterweight on the economy’s untapped growth. Regulations, tax credits, and other incentives are supposed to encourage beneficial growth and discourage the harm produced by unfettered capitalism. But over the last four decades, the government has largely abdicated itself from the regulatory role, giving companies free license to blindly pursue growth for growth’s sake.
“For some years now, I’ve been working with policymakers globally, trying to convince them that we need to redesign policy away from fixing markets and towards creating and shaping markets,” Mazzucato said.
That would take the form, she explained, of governments creating “a list of big problems that we have” as a society, from “the future of mobility” to “solving key issues around the digital divide,” to “getting the plastic out of the ocean.” Lawmakers would then design a strategy to involve “as many different sectors as possible to collaborate and to innovate together to solve that problem.”
Government’s role, in this case, would be as a purchaser, as a backer of “grants and loans to galvanize as much bottom-up innovation and investment as possible to actually solve problems,” and as a director of “what I’ve been calling mission-oriented policy.”
It would direct and incentivize the best of corporate America to solve some of humanity’s biggest problems, putting the profit motive to work for the greater good.
The DARPA example
Mazzucato says in the United States we already have one perfect example of a government entity that encourages innovation in pursuit of a single goal: The Defense Advanced Research Projects Agency, or DARPA. Founded in the 1950s alongside NASA as during America’s race to the moon, she says, the government established in DARPA “a new design of public-private partnership.”
“There was lots of investment by companies like Honeywell, Motorola, and General Electric,” Mazzucato said, and in the quest to build spacefaring technologies, American companies built inventions that would eventually create the touchscreens, voice-activated artificial intelligence, camera phones, GPS, and driverless car tech. Basically, without the moonshot, we might still not have the necessary technologies to build smartphones today.
But those technologies were not the end goal for the “purpose-focused” organization. “For example, DARPA basically invented and funded what we today call the internet,” Mazzucato explained. “But no one in DARPA said, ‘Oh, we need the internet.’ They had a problem to solve, which was getting the satellites to communicate, and the internet was the solution to that.”
DARPA is singularly focused on defense issues, so Mazzucato is calling for an array of new ARPAs to address societal problems, which “are much harder than purely technological ones. They often require regulatory change, behavioral change, and political change,” she said.
When governments set these huge, seemingly impossible goals for industry, they empower our sharpest minds to broaden their thinking and elevate their game to work in concert with others. Part of the reason this framework has been far more successful than traditional corporate structures in terms of unleashing innovation, Mazzucato explains, is that the thinkers are “explicitly told to be risk-taking, to welcome the uncertainty.”
The path to the Moon was littered with waste, dead ends, and spectacular failures. That was all part of the plan. Putting government in charge of the direction establishes “the idea of having real impact so that your successes matter,” Mazzucato said, but it’s also clear about “the admission that along the way you’re allowed to fail,” in a “process of trial and error and error and error.”
Economic growth for growth’s sake is simply not enough of a mission statement for a society to thrive. Mazzucato believes that government has a necessary goal to direct that growth toward a common good, so that we all – corporations, humans, and the planet as a whole – can benefit from the journey.
SpaceX on Friday met with the UK minister for digital infrastructure, Matt Warman, a person with knowledge of the discussions told CNBC on Monday. The UK’s culture secretary confirmed on Friday that Starlink was being considered for getting internet to hard-to-reach communities in the UK.
On top of Project Gigabit discussions, SpaceX has also signed a deal with British telecoms company Arqiva to build ground stations and infrastructure to connect satellites to fibre networks and servers, a space industry insider told The Telegraph on Monday.
An Arqiva spokesperson declined to comment to Insider. SpaceX didn’t immediately respond to Insider’s request for comment.
If Starlink and the UK reach a deal over Project Gigabit, Elon Musk’s space company could benefit from government funding to accelerate its coverage in the country. In the US, Starlink won nearly $900 million from the US Federal Communications Commission (FCC) in December to deploy internet connection in underserved American communities.
The UK’s culture secretary Oliver Dowden told Sky News on Friday that Starlink was one of the best ways to deliver internet in hard-to-reach communities, though other alternatives were being considered, such as balloons or autonomous aircraft, he said.
But Starlink satellites or those from OneWeb – a UK satellite company that was rescued by the government from bankruptcy in November 2020 – are preferred options because their technology are already in use, Sky reported.
In this week’s episode of “Pitchfork Economics,” co-host Nick Hanauer points out that the United States doesn’t really have an industrial policy. Other nations intentionally establish suites of economic, regulatory, and fiscal policies which direct their industrial sectors into specific fields, focus manufacturing into new technologies, and discourage harmful corporate behavior such as environmentally unsound investments. Over the last 40 years, America’s leaders have largely left the industrial sector alone to govern itself.
That hands-off approach is responsible for some disastrous economic results for the United States. Case in point: Solar cells were created in the United States, and many of the world’s leading solar power experts live here, but Hanauer says that “at some point it became staggeringly obvious” to Chinese leaders that cheap and abundant solar cells “would be enormously useful to the economy and the world, and that having a national competence and advantage in making them would be a good thing.” They directed Chinese manufacturers toward “the goal of building scale and dominance in photovoltaic cells.”
Here in the United States, our leaders either didn’t grasp the growing importance of solar power in a world that was struggling to respond to climate change, or they simply believed that the free market would fill that void. The results speak for themselves: As Larry Beinhart notes for Al Jazeera, “seven of the world’s top 11 solar panel manufacturers are now in mainland China.”
The complexities of the free market
It should be clear by now that simply allowing the free market to blindly flail around in search of short-term profitability is no way to build an economic future. And America’s cultural insistence on record quarterly corporate profits is a big reason why our infrastructure has become a global laughingstock.
Hanauer and co-host Jessyn Farrell talk with Saule Omarova, the Beth and Marc Goldberg professor of law at Cornell Law School, who has formulated an intriguing new idea to guide American industrial policy even while honoring our national preference for fierce independence.
When it comes to building infrastructure in America, Omarova explains, “it’s really difficult to figure out which tasks specifically should be left to the private market and which tasks should be left to the government.” This leaves what she calls a “dead zone” where some of our most embarrassing failures as a nation have landed – our failure to get broadband and good medical care to rural areas, our inability to build the same kind of inter-city train network that Europe and much of Asia enjoys.
The NIA, Omarova says, would be “an institution that can step into that dead zone, and that is designed to be a hybrid” between the free market and the federal government. “It’s not hamstrung by the short-term profit obsession,” the way that shareholder-driven companies are, she explained. “It has longer time horizons and it has vast resources, and it has its eyes on the public benefit and the public interests first and foremost.”
“But at the same time, unlike the existing government institutions,” the NIA would be “not so constrained by the immediate vagaries of budgetary politics, so it can start working alongside other private market actors and other public government agencies in order to get those projects financed, planned, designed, and implemented.”
Blending government and free market perks
Just as the NIA would straddle the void between public ownership and private enterprise, Omarova says the structure of the NIA itself would need to be a unique blend of government and free market: While a federal board would oversee the system, “the actual operations will be conducted by its subsidiaries, the federal government-owned specialty charter corporations.”
So consider the solar cell example, in which China invested in an expensive and imperfect technology and eventually became the world leader in a burgeoning clean energy sector. The NIA could have directed American companies toward solar power through an aggressively targeted suite of tax incentives to encourage the building of manufacturing plants and the investment of research and development dollars.
The US government already performs this kind of incentivization through tax cuts – albeit in a much slower, more limited way. “But at the same time,” Omarova said, “why not have the NIA acting through one of its subsidiaries to become a co-investor, a controlling co-investor, or an equity holder in a company that actually does that?”
By giving the American people a seat at the boardroom table in exchange for taxpayer investments, the NIA might be able to direct manufacturing plants to Michigan, or West Virginia, or other economically depressed locations “where that plant will actually have far-reaching, very important collateral benefits to the economy and to the society as a whole.”
A renewed chance for rapid growth
By placing solar panel manufacturing plants in parts of the country that have been left behind over the last few decades, we’d see rapid job growth, renewed economic vigor, and the much-needed bolstering of infrastructure like clean water and good internet connection speeds.
Omarova’s idea doesn’t put government in the driver’s seats of corporations so much as it uses government as the pipes through which free enterprise flows, directing that economic energy to where it can do the most good.
The NIA is a complex idea, one that’s literally never been attempted in American history. The idea of investing in future-forward industries creates many opportunities for failure. But when we take a step back and see what 40 years of totally free markets has done to our global reputation as an economic leader, it becomes obvious that a big, bold idea is necessary if we’re going to save the United States from our own worst economic impulses.
Elon Musk warned against excessive regulations, called on executives to focus on their products and customers, and bemoaned candy companies’ lack of innovation at the WSJ CEO Council Summit this week.
The Tesla and SpaceX CEO also highlighted memes as a worrying source of misinformation, argued machines will eventually surpass humans in every aspect, and touted tunnels as an effective way to reduce urban traffic during the virtual discussion.
Here are Musk’s 12 best quotes from the interview, lightly edited and condensed for clarity:
1. “A lot of the time, the best thing that government can do is just get out of the way.”
2. “Rules and regulations are immortal and if we keep making more every year and do not do something about removing them, then eventually we’ll be able to do nothing.”
3. “It’s government’s responsibility to establish the rules of the game and ensure that those rules are properly enforced. Where I think government does not do a great job is when they want to not just be a referee on the field, they want to be a player on the field.”
4. “The reason that government is often the worst at responding to the customers – being the people – is that they are a monopoly that can’t go bankrupt or usually cannot go bankrupt.”
5. “Big Candy has consolidated into like three companies and they also own all the dog food and the baby food. When’s the last time there was some good candy? What’s the forcing function for a new candy bar? I haven’t seen one in ages.”
6. “Spend less time in meeting rooms, less time on PowerPoint presentations, less time on a spreadsheet, and more time on the factory floor, more time with the customers. Step back and say, ‘Is your product as awesome as it could be?’ Probably not. What could you do to make it great?”
7. “Just be an absolute perfectionist about the product that you make, the service that’s provided. Seek negative feedback from all quarters, from customers, from people who aren’t customers. Ask them, ‘Hey, how can we make this better?'”
8. “There might too many MBAs running companies. There’s the MBA-ization of America, which I think is maybe not that great.”
9. “The troops are gonna fight a lot harder if they see the general on the front lines than if they think the general’s in some cushy situation. Nobody bleeds if the prince is in the palace. Get out there on the goddamn front lines and show them that you care and you’re not just in some plush office somewhere.”
10. “We need to go 3D in cities in order to alleviate traffic congestion, and probably the best way to do that is with tunnels.”