Rep. Alexandria Ocasio-Cortez took aim at Sen. Kyrsten Sinema of Arizona, a fellow Democrat, after Sinema came out against her party’s $3.5 trillion infrastructure bill.
Sinema told the Arizona Republic in a statement that she thinks the bill is too costly, and “will work in good faith to develop this legislation with my colleagues and the administration to strengthen Arizona’s economy and help Arizona’s everyday families get ahead.”
Ocasio-Cortez took to Twitter to call out the Arizona Democrat, writing: “Good luck tanking your own party’s investment on childcare, climate action, and infrastructure while presuming you’ll survive a 3 vote House margin – especially after choosing to exclude members of color from negotiations and calling that a ‘bipartisan accomplishment.'”
Ocasio-Cortez previously criticized the lack of diversity in the bipartisan group, arguing that it leaves marginalized communities behind.
Sinema is a key moderate for the Democrats, and a main negotiator in the bipartisan infrastructure deal. A group of Republican senators said earlier today that they had reached a bipartisan deal with the White House. That deal cut $30 billion from the new spending proposed, lowering funding for public transit and slashing an infrastructure bank meant to foster private and public partnership. Sinema’s opposition will force Senate Democrats to make cuts from the $3.5 trillion agreement they struck earlier this month. It will need all 50 Democrats in the Senate to stick together so it clears the arduous reconciliation process.
AOC is not the only progressive sounding off on the prospects of a slimmed down Democrat-only spending package. Rep. Mondaire Jones of New York also tweeted: “Without a reconciliation package that meets this moment, I’m a no on this bipartisan deal.”
At the time, the New York congresswoman said that $3.5 trillion agreement was an “enormous victory,” although she would have preferred a larger package.
“This bill is absolutely a progressive victory,” Ocasio-Cortez said, according to reporter Kevin Frey of NY1. “If it wasn’t for progressives in the House, we probably would be stuck with that tiny, pathetic bipartisan bill alone.”
The toll of the climate crisis on daily life has become increasingly clear. Just ask President Joe Biden.
“Interesting to me – I didn’t raise it – but how many of the survivors and how many of the families talked about the impact of global warming,” Biden told reporters after meeting with the families of victims in the Surfside, Florida condo collapse.
The tragedy in Southern Florida that killed at least 18 people and left as many as 145 missing wasn’t the only sudden catastrophe with climate at its root this summer. Just days earlier, temperatures reached record-breaking highs in the Pacific Northwest amid a deadly “heat dome” that local medical officials eventually declared a “mass casualty event.” Then, New York City’s streets and subways flooded during a tropical storm that recalled Hurricane Sandy’s devastation not too long ago.
The climate crisis – long a far-off warning or even political talking point – is suddenly a deadly reality. And it’s starting to have what one expert called local effects, meaning it’s really changing the way people live, hitting the food they eat, places they live, and especially their health. Climate change is an economic issue, now more than ever.
“People are talking about it as if it’s now something we should be considering when talking about the risks that we face as a society – risks to infrastructure, risks to human life,” Amir Jina, an assistant professor at the University of Chicago Harris School of Public Policy, told Insider.
Going outside will look different. UCLA environmental law professor Sean Hecht said the climate crisis changes “the parameters that have defined our built environment.”
The climate crisis is already in your backyard, or your local store
In the Pacific Northwest, some grocery stores stopped selling perishables, and restaurants and other businesses temporarily shuttered due to the heat. Globally, a UN report finds that the world’s food supply will be gravely impacted by the climate crisis without intervention, and that extreme weather could disrupt food supply chains.
“We are going to be seeing roads that aren’t placed in places that make sense,” Hecht said. Communities might not be equipped for less beach or snow, and farmers may need to adjust the crops they’re planting. For instance, California’s booming $6 billion almond industry was hit hard by a historic drought this year, The Wall Street Journal reported, with many farmers forced to simply raze trees they can no longer water.
“When the world changes around [climate change], these basic legal and then really human expectations start to not match the physical environment. And that creates a lot of conflict,” Hecht said.
That was apparent for the New Yorkers wading through several feet of water to finish their commutes. Rep. Alexandria Ocasio-Cortez tweeted a video of the flooding and said it makes the case for her Green New Deal, which hasn’t yet become law: ‘The Green New Deal, which is a blueprint to create millions of good jobs rebuilding infrastructure to stem climate change & protect vulnerable communities, is unrealistic. ‘Instead we will do the adult thing, which is take orders from fossil fuel execs &make (sic) you swim to work.'”
The economic impacts have already started, and they’ll be unequal
While these extreme weather events illustrate the larger-scale impact of the climate crisis, the smaller-scale impact will hit your wallet soon.
On a macro scale, climate change cost the US economy $500 billion over the previous half-decade, according to a Fed official, and potentially over $1.775 trillion since 1980, according to the NOAA. Research by Tatyana Deryugina in the American Economic Journal found that the economic costs of hurricanes may be greater than previously thought – since the distribution of measures like unemployment insurance goes up.
On the individual level, Jina said the costs add up, too. “There’s a set of risks involved in anywhere we choose to live or any economic activity we choose to engage in that we need to start thinking about a little bit more,” he said.
And, of course, the costs aren’t felt equally. As Hecht said, whenever there’s disruption, people with more resources can better afford to address the disruption.
Hecht says research “very consistently” shows that disruptions are harder on communities with fewer resources, which creates inequity by class, something that “also is correlated in large part with race.” Research from Jina and other members of the Climate Lab finds that the poorest counties will take the largest income hit from the crisis.
As Healthline reports, the climate crisis disproportionately impacts people of color, such as comorbidities linked to racism exacerbated by rising temperatures, to being redlined into areas more likely to be impacted.
Infrastructure spending is (maybe) on the horizon
Meanwhile, climate measures – or lack thereof – have come to the forefront in President Biden’s infrastructure proposals.
The bipartisan deal that the president struck with a group of senators omits some of his original climate proposals, and pares down spending on others. Democrats have already sent a list of climate demands for inclusion in a reconciliation bill, including equity for low-income communities and communities of color impacted by pollution, along with a carbon-free grid.
The federal government can be instrumental when it comes to addressing how we produce and consume energy, the experts said. Actually creating that infrastructure is one important step.
“We gotta make lemonades out of lemons here,” Biden has said. “We have a chance to do something that not only deals with the problem today, but allows us to be in a position to move forward – and create real good jobs, by the way, generate economic growth.”
Even though Biden has proposed spending up to $4 trillion on rebuilding infrastructure, not all of that is focused on climate initiatives. Meanwhile, although Ocasio-Cortez did not initially put a price tag on the Green New Deal, she later clarified its cost would be much higher. “It’s not a fun number to say, I’m not excited to say we need to spend $10 trillion on climate, but … it’s just the fact of the scenario,” she said in 2019.
“Let’s make sure that when we build a house or rezone an area, that it’s not just going to be repeatedly flooded every single year – where the potential insurance costs or the reconstruction costs are going to completely dwarf the construction costs,” Jina said. “That just makes simple economic sense.”
A big part of addressing the situation is in more “mundane” aspects, like updating building codes, Jina said.
The White House maintains that the funding will “Improve healthy, sustainable transportation options for millions of Americans by modernizing and expanding transit and rail networks across the country while reducing greenhouse gas emissions.”
“Amtrak is ready to support this vision for greater public transit,” an Amtrak spokesperson told Insider.
But the compromise comes with billions of dollars being left behind at the station. Only $66 billion will go to combined passenger and freight rail projects instead of the $80 billion initially allocated for Amtrak.
The national rail provider quickly jumped on board the infrastructure train in March and unveiled its “Amtrak Connects US” plan. New rail lines were imagined and major cities without existing rail services like Phoenix and Nashville, Tennessee were promised connectivity to the national rail network. An investment in high-speed rail was notably absent.
Parts of the plan may still be implemented as the infrastructure plan still represents “the largest federal investment in passenger rail since the creation of Amtrak,” according to the White House, but the key victory for Amtrak would be a new weapon in its arsenal against freight trains.
Amtrak trains outside of the Northeast Corridor primarily run on tracks owned by freight companies that are, by law, required to give preference to Amtrak trains. But that’s not often the reality on America’s tracks and lengthy delays are often incurred by long-distance passenger trains as a result.
Rep. Peter DeFazio’s House Transportation Committee is spearheading the effort to give Amtrak the right to have federal courts settle disputes with freight companies.
“Right now they’ve got it the way they want it,” DeFazio said of rail freight companies in an interview, as reported by the Wall Street Journal. “So we’re going to change the law and give Amtrak better access.”
Amtrak’s enthusiasm surrounding the planned $80 billion investment also didn’t go to waste. States and localities across the US, excited by the idea of new rail service, have been eager to work with Amtrak on new state-sponsored routes.
In Colorado, officials are working towards a new rail line along Interstate 25 in what’s known as the Front Range corridor between Fort Collins and Pueblo, according to the Denver Post. Amtrak is also petitioning Congress to make it easier for states to get new services by not forcing them to foot a lion’s share of the bill, which is what the law requires at present.
Amtrak spokesperson Marc Molinari attributes the excitement to Amtrak finally going on the offensive instead of having to constantly defend itself and its spending.
Roger Harris, Amtrak’s chief marketing and revenue officer, told Insider on June 15 that the $80 billion plan was “extremely ambitious” but “even part of it would be revolutionary.”
President Joe Biden has thrown his support behind a $1 trillion bipartisan infrastructure deal focused on roads and bridges – and part of the spending would be potentially offset by unused relief funds and targeting unemployment insurance fraud.
Repurposed federal UI will account for $25 billion of the deal’s pay-fors, a person familiar with details of the plan told Insider. The bulk of the funding from UI will come in the form of “unemployment insurance program integrity,” which will provide $80 billion in revenue.
“It’s the fraud. It’s the fraud from UI,” Sen. Jeanne Shaheen (D-N.H.) told Insider when asked about the inclusion of unemployment insurance in the funding. She added: “Apparently, there are several reports that talk about significant fraud in the UI.”
Sen. Joe Manchin, a key moderate, said the deal wouldn’t detract from enhanced UI. “There’s an awful lot of fraud in UI that can be repurposed,” Manchin told Insider.
Previously, Sen. Shelley Moore Capito – a major GOP player and negotiator – had floated repurposing unemployment funds from the states ending federal early benefits early to pay for an infrastructure package. That seems to have garnered traction among lawmakers.
Andrew Stettner, a senior fellow and unemployment expert at the left-leaning Century Foundation, cautioned that legislative details still needed to be ironed out. He also said there’s a risk people could lose jobless aid they’re entitled to if anti-fraud prevention policies are poorly implemented.
“There’s been certainly a surge in organized crime activity in the UI system that has led to a lot of fraud,” Stettner told Insider. “The thing that we have to be concerned about: Are the mechanisms that are being put in place to try and prevent that fraud? Does it lead to unfairness in the system? Are people being wrongly implicated in fraud? We’ve had a lot of cases with that.”
At least 26 states are prematurely cutting off federal unemployment benefits this summer.
Many of the states opting out are ending all federal benefits, including programs with expanded eligibility. That means thousands of workers will lose – or already have lost – all benefits completely. So far, a dozen states have ended their benefits, cutting off somewhere between 400,000 and 500,000 people.
Now, lawmakers are proposing that those severed benefits be used to fund new infrastructure spending, rather than tax hikes on America’s wealthiest and its large corporations.
Overall, about 4 million Americans will see their benefits end ahead of schedule. Federal programs are set to end nationwide in September, but several governors have opted to cut off their benefits in an effort to get workers back into the workforce – although the current labor shortage may also be driven by lack of childcare, or a mismatch between open roles and unemployed workers’ qualifications. As Insider’s Ayelet Sheffey reported, job searches were actually down in states ending those benefits early.
“This is not because the government – because the world – is suffering from people not returning to their jobs,” Keshya Dempsey told Insider of the decision to end benefits prematurely, which will cut her off as well. The 35-year-old Dempsey lives in Florida, where the $300 in extra weekly benefits will end on Saturday.”This is political. It has always been political.”
As bipartisan infrastructure talks plod on, funneling money to beef up IRS enforcement looks like it’ll be sticking around.
Sen. Angus King, an independent of Maine who caucuses with the Democrats, told Insider on Tuesday that deciding what pay-fors make it into the final package is difficult – but suggested that funding for IRS enforcement will remain.
“I understand going after tax cheats is part of it,” King said. “There’s a lot of money we’re leaving on the table right now.”
The bipartisan Senate group of 10 – evenly divided between Republicans and Democrats – is working on a $1 trillion package. Sen. Rob Portman of Ohio, a prominent lawmaker in the group, told reporters Tuesday that money to bulk up the IRS’s ability to enforce tax laws would be included in the nascent framework.
The IRS officially estimates the “tax gap” coming in at $441 billion a year. But Charles Rettig, the agency’s commissioner, told Congress in April that the number could actually be over $1 trillion.
The bipartisan approach to IRS enforcement might not go that high.
“We have a CBO estimate that, if you put about $40 billion into bringing back the IRS workforce … that could result in $110 billion – which nets out to $63 billion,” Portman said on Tuesday. “It’s a relatively modest increase in IRS spending compared to what the Democrats proposed under Biden’s plan.”
The number of agents devoted to working on sophisticated tax evasion enforcement has fallen by 35% over the last decade, according to Treasury and the IRS budget has fallen by 20%, while audits fell by 42% from 2010 to 2017. According to a White House fact sheet, the audit rate for those making over $1 million a year declined by 80% from 2011 to 2018.
Biden wants to ramp up enforcement on the wealthiest Americans. A recent study from IRS researchers and academics found the top 1% of Americans fail to report about a quarter of their income. Income underreporting is nearly twice as high for the top 0.1%, which could account for billions unreported.
The role of IRS enforcement is coming into greater relief following a bombshell ProPublica report, which revealed just how little in proportional taxes some American billionaires pay. The tax mechanisms that those billionaires utilize are actually completely legal, but they’ve kickstarted talks of tax reform among Democrats.
Following the ProPublica report, five former treasury secretaries published an op-ed in The New York Times saying that, “in the ways outlined by President Biden’s recent proposal,” more enforcement could be pursued.
The five former treasury secretaries – who served under both Democratic and Republican presidents – write: “But on this issue, all should agree, including members of Congress of both parties: Giving the I.R.S. the tools it needs to improve compliance will raise significant revenue and create a fairer, more efficient system of tax administration.”
President Joe Biden has offered to cut down the cost of his infrastructure plan – the American Jobs Plan – from $2.25 trillion to $1.7 trillion, presenting a counteroffer to Republicans on Friday.
The offer did not address the $1.7 trillion American Families Plan, which is largely focused on care-economy measures, so the initial $4.1 trillion combination of packages would now come to about $3.2 trillion.
White House press secretary Jen Psaki said that officials including Transportation Secretary Pete Buttigieg and Commerce Secretary Gina Raimondo offered up the reduced package.
“In our view, this is the art of seeking common ground,” Psaki said.
Psaki said that proposed funding for broadband was reduced to match that of Republicans, and proposed funding for roads, bridges, and major projects was also reduced to be more in line with senators’ proposals. Investments in research and development, supply chains, manufacturing, and small businesses will be shifted into different legislative pushes.
But the White House said it would continue to push for funding for critical transportation infrastructure, especially railways.
Psaki also said the White House planned to reiterate the president’s unwillingness to raise taxes on Americans making under $400,000, such as through a gas tax and user fees.
“He believes that the extraordinarily wealthy, that companies – many of whom have not paid taxes in recent years – can afford a modest increase to pay for middle-class jobs,” Psaki said.
Republicans had previously offered a $568 billion counteroffer to the White House, well below the $2.25 trillion originally proposed and still substantially lower than the new counteroffer. It would preserve Trump-era tax cuts, which are directly countered in Biden’s proposed funding.
After the GOP group met with Biden last week to discuss its $568 billion counterproposal, Biden gave them a Tuesday deadline to bring him a new plan to negotiate, but that never happened.
Instead, the group met with Buttigieg and Raimondo, and a new plan wasn’t introduced, with the senator from West Virginia who led the Republican plan, Shelley Moore Capito, telling reporters after the meeting that there was “progress, but we still got a ways to go.”
“I think they’re digesting what we proposed, and I think the plan is for them to react to that,” Capito added.
Capito’s office said in a statement to Insider that Friday’s White House offer was “well above the range of what can pass Congress with bipartisan support” and that Republicans and the White House still differed on what’s considered infrastructure, how much should be spent on it, and where that money should come from.
“Based on today’s meeting, the groups seem further apart after two meetings with White House staff than they were after one meeting with President Biden,” Capito’s office said. “Senate Republicans will further review the details in today’s counteroffer and continue to engage in conversations with the administration.”
Separately this week, Capito also floated using unused unemployment benefits to fund infrastructure after April’s weak jobs report, which caused a growing number of GOP-led states to end Biden’s weekly $300 unemployment benefits early.
The White House’s counteroffer comes as Democrats are increasingly calling on Biden to ditch negotiations with Republicans and act big on infrastructure legislation.
Psaki said the negotiations were an art of a “different kind of a deal – a deal for the working people.”
You’ve probably heard that it’s hot vax summer. Vaccination rates have climbed, mask mandates are lifting, and Americans are slowly starting to venture into the first semblance of the After Times. In anticipation of the US fully reopening, cooped-up Americans are buying new going-out clothes and getting ready for the intimacy they put on pause. Even brands are getting thirsty.
But another thing will be heating up this summer: tax policy. President Joe Biden has already shepherded a law through Congress that will change the tax code (for a few years) to send monthly checks to American families, and he’s hard at work on another that would raise taxes on corporations and families earning more than $400,000 a year.
Biden wants to raise taxes on the wealthy and corporations to offset massive infrastructure spending
Some of the country’s highest earners will see tax increases if Biden gets his way. He’s proposed increasing the income tax rate to 39.6% for Americans earning over $400,000, and raising the capital gains rate to the same level.
That increase – targeted only at Americans earning $1 million or more – would hit wealthy investors who get the bulk of their income from assets like stocks. The capital gains rate is generally lower than the rate that income is taxed at. As Insider’s Liz Knueven reported, the change would affect just about 0.4% of American taxpayers.
“This is about making the average multimillionaire pay just a fair share,” Biden said in a fiery speech defending the increases. “It’s not going to affect their standard of living a little bit.”
Significantly, Biden also wants to close up some tax-code loopholes and to ramp up tax enforcement on the wealthiest American, who have been found to hide billions in income from the IRS. The IRS estimates that there’s a tax gap of $441 billion a year. But Charles Rettig, the agency’s commissioner, has told Congress that the number could actually be over $1 trillion.
The gap between taxes owed and taxes paid could grow only if left untouched, according to the Department of Treasury. Treasury estimates that Biden’s proposed $80 billion investment in the IRS could bring in an additional $700 billion over 10 years. That would still leave hundreds of billions in taxes going uncollected each year, as Insider’s Ayelet Sheffey reported.
Meanwhile, an expanded tax credit will start putting checks into families’ pockets
Regardless of what happens with the infrastructure negotiations, many Americans will start feeling the effects of new Biden tax policies this summer.
Beginning July 15, families will start receiving monthly checks of up $300 from the IRS. Every 15th of the month for the next year – unless it falls on a holiday – checks will come. Those checks come from the expansion of the child tax credit, which was revamped under Biden’s $1.9 trillion American Rescue Plan.
One of Biden’s proposals in the American Families Plan is extending those checks through 2025 (many Democrats want to make them permanent). The checks are, as Insider’s Aria Bendix reported, essentially akin to basic income, and most children in the United States are set to benefit from then.
Low-earning Americans will also see an income boost from the expanded Earned Income Tax Credit, which subsidizes wages. According to an analysis from the left-leaning Center on Budget Policy and Priorities, over 17 million adults will now be eligible for an expanded subsidy.
As Politico reported, lobbyists and executives think that they’ll be able to kill off many of the tax hikes that the president is putting forward. That could put some of Biden’s promises in jeopardy.
So while it’s not clear what, exactly, taxes will look like on the other side of all of this, they’re already in the spotlight – and they’ll probably only become a hotter topic as the temperature goes up this summer.
President Joe Biden wants to establish universal pre-K as part of his infrastructure package, proposing a $200 billion investment. The White House estimates the program could benefit 5 million children, and save the average family $13,000.
But it could have a bigger impact: A new study finds that kids who attended universal pre-K are more likely to graduate from high school and attend college.
The study, conducted by researchers from University of Chicago, MIT, and UC Berkeley, looked at 4,000 public preschool applicants in Boston; they compared the outcomes of students randomly selected by lottery for the program versus those whose numbers were not called.
Attending that universal pre-K did not have a “detectable” impact on standardized test scores. It did, however, have notable impacts elsewhere: The students that enrolled in preschool were 6% more likely to graduate from high school. They were also likely to enroll in the SAT, and to enroll in college.
In the short term, too, students fared better behaviorally: The likelihood of juvenile incarceration went down, along with the total number of high-school suspensions. Benefits were widespread. Students across races and incomes felt benefits similarly, with boys seeing a slightly impact.
“Notwithstanding the gender difference, this study suggests that all students – regardless of race or income – are likely to benefit from a universal preschool program,” the researchers wrote in a brief.
Universal pre-K and affordable childcare could also have a big impact on parents
The American Families Plan contains several childcare-centered provisions, with universal pre-K as one of its planks. Biden has also proposed $225 billion in funding for affordable childcare. An analysis from the National Women’s Law Center and Columbia University found that access to affordable childcare doesn’t just benefit children; it could boost lifetime earnings for women with two children by $94,000.
Additionally, access to universal childcare options would also boost the number of women – especially mothers – in the workforce, an issue that’s come into stark relief with the surprisingly dismal April jobs report.
According to the NWLC and Columbia, expanding childcare access could increase the number of women with young children working full-time by 17%.
Biden has proposed increasing income tax rates for the wealthiest Americans and upping capital gains rate – along with closing some potential loopholes and cracking down on tax enforcement – to offset the costs of his childcare proposals.
“We can take … this money and pay for universal pre-K for every three- and four-year-old in America,” Biden said in remarks on the American Families Plan. He added that it’s a choice:
“[Is it] more important to shield millionaires from paying their fair share? Or is it more important that every child gets a real opportunity to succeed from an early age and ease the burden on working families?”
In some ways, the April jobs report resembled an optical illusion, with people making differing observations from a dataset that didn’t fit into a clean narrative.
In this case, Democrats and Republicans came to opposite conclusions about the report and what it means for the way forward in healing an economy battered by the pandemic.
The Friday report showed the economy recovered 266,000 jobs, a smaller amount defying expectations of a massive job surge on the back of government stimulus dollars, increased vaccinations, and easing restrictions. Economists had forecasted at least 1 million regained jobs.
In response, the GOP is demanding to end parts of President Joe Biden’s stimulus and calling for the government to slam the brakes on its spending. Democrats instead urged the passage of Biden’s $4 trillion infrastructure plans, viewing the lackluster report as another pillar in their argument that more spending, in part on childcare, would accelerate the recovery.
It sets the stage between the parties for a multitrillion-dollar fight on infrastructure, jobs, and families that will take up much of the White House’s time over the next few months.
The president argued for patience with his economic agenda on Friday. He said “more help is needed” and mounted a robust defense of his $1.9 trillion stimulus, which provided $1,400 direct payments and a $300-per-week federal unemployment benefit.
“When we passed the American Rescue Plan, I want to remind everybody, it was designed to help us over the course of a year – not 60 days – a year,” Biden said. “We never thought that after the first 50 or 60 days, everything would be fine.”
He flatly rejected the argument from Republicans and business groups that federal jobless aid has been sidelining people from the workforce, saying that was “nothing measurable.”
“We’re still digging out of an economic collapse that cost us 22 million jobs,” Biden said. “Let’s keep our eye on the ball.”
“The evidence is clear that the economy demands urgent action, and Congress will not be deterred or delayed from delivering transformational investments,” she said in a statement.
Republicans had already lined up against Biden’s plans, criticizing the proposed tax hikes on large firms and wealthy Americans as a future anchor on the economy. They pounced on the report in a fresh sign of their hardening resistance.
The GOP swung at Biden’s handling of the economy, arguing that the jobless aid was disincentivizing people from searching for a new job.
“This is a stunning economic setback, and unequivocal proof that President Biden is sabotaging our jobs recovery with promises of higher taxes and regulation on local businesses that discourage hiring and drive jobs overseas,” Rep. Kevin Brady, ranking Republican on the House Ways and Means Committee, said in a statement.
He also contended that jobless aid was disincentivizing people from returning to work. The argument mirrored one made by the Chamber of Commerce, an influential business group which on Friday called for an end to the $300 federal unemployment benefit.
Many economists have long disputed that federal jobless aid has kept people from returning to work. Unemployment claims has steadily fallen over the past month. They tend to cite other factors like the lack of available childcare and school closures.
Those burdens have fallen more on women, causing 2 million women to leave the workforce in the past year. Still, experts say the US will regain its economic footing eventually, though the nation faces a rocky path ahead.
“We’re gonna see pockets of strength, pockets of weakness, areas of overheating, areas where it is uncool – it’s going to be complicated and messy,” Jason Furman, a former top economist to President Barack Obama, told Insider in an interview. “But I think hopefully all moving in the right direction.”
While answering questions after a Wednesday address on the impact of the American Rescue Plan, President Joe Biden doubled down on his tax proposals and the need for wealthier Americans and corporations to pay their fair share – and took aim at prior Republican tax cuts.
“My Republican friends had no problem voting to pass a tax proposal – it expires in 2025 – that costs $2 trillion,” Biden said, adding that none of that was paid for. In fact, he said, it “gave the overwhelming percentage of those tax breaks to people who didn’t need it. The top one tenth of 1% didn’t need it.”
As for the argument Republicans gave in 2017, that it would generate a “great economic surge and growth,” Biden said “everyone from the Heritage Foundation on has pointed out it hadn’t done that.”
Then he turned to his plans to hike taxes.
“The biggest 35 or 30 corporations didn’t pay a single solitary penny last year, and they’re Fortune 500 companies,” Biden said. “They made $400 billion. They paid no taxes. How can that make any sense?”
Biden said sometime in the 2000s – he’d have his staff supply the exact date – the average CEO of a Fortune 500 company made about 36 times what the average employee of that corporation made.
“It’s over 450 times as much now. As my mother would say, who died and left them boss?” he said before raising his voice while questioning how it can benefit the economy to have CEOs make so much more than workers. “No, seriously, what rationale, tell me what benefit flows from that?”
“We’re not going to deprive” any executive “of their second or third home” or traveling privately by jet, he said.
“It’s not going to affect your standard of living at all. Not a little tiny bit,” Biden said, raising his voice, “while I can affect the standard of living of people I grew up with.”
Biden has proposed a slew of tax measures to offset the proposed spending in his two-pronged infrastructure package. Those include raising the income tax rate for the wealthiest Americans to 39.6%, bringing up the capital gains rate to the same level, and increasing the corporate tax rate from 21% to 28%. The corporate tax rate was one measure that was slashed under Trump’s tax package, falling from 35% to 21%.
Biden said he was open to compromising on the corporate tax rate – some Democrats have floated an increase to 25%, instead of 28% – but said he still wants to offset spending.
“I’m willing to compromise, but I’m not willing to not pay for what we’re talking about,” he said.
Inequality expert Sarah Anderson has testified in front of the Senate Budget Committee that the yearly gap between CEO pay and the pay of average workers is about 350 to 1.
Overall, the tax burden of Biden’s proposal would fall squarely on the top 1% of American tax filers, who would pay an average additional $100,000 per year. Biden addressed his proposal to raise the income tax rate to 39.6% for Americans making over $400,000, which he noted was a return to the Bush-era level.
“Just raise it back to what it was before. It raises enough money from that savings to put every single person in community college who wants to go,” he said. On that topic, he posed a question: “What’s going to grow America more?” The options, he said, are “the super wealthy having to pay 3.9% less tax” or an entire generation “of Americans having associate degrees.”
In closing, Biden said: “This is about making the average multimillionaire pay just a fair share. It’s not going to affect their standard of living” – pausing to whisper – “a little bit.”