The corporate media hoopla attendant to President Joseph Biden’s announced $2.5 trillion infrastructure proposal aims at putting Biden in the Franklin Delano Roosevelt New Deal-era crowd of “progressive” capitalist social reformers. The “centrist” Biden has been instantly converted to a “man of the people” whose legislative proposals are claimed to far exceed his “moderate” pre-election promises. Biden is said to be aiming his fire at the super rich, who he claims game the system to avoid paying taxes. The NYT portrays Biden’s new proposals as representing the greatest social advances in the modern era. The truth lies elsewhere.
Biden’s instant media conversion is no accident or change of heart but rather a corporate recognition that past Democratic Party administration policies had significantly alienated the party’s traditional working class base, opening the door wide to either potentially broad independent working class fightback or to the emergence of a Trump-type reactionary populism that has the potential of undermining the nation’s image and operation as a stable bourgeois democracy. President Barack Obama’s bailing out the corporate elite and banking institutions to the tune of unprecedented $trillions following the 2008-9 recession while millions of working class families lost their homes has taken a toll on the Democrat’s credibility. Massive plant closures accompanied by a generalized de-industrialization policy that sent millions of high-paying jobs overseas to low wage countries further alienated working people and fed into Trump’s “anti-establishment” appeal. In the electoral arena, Hillary Clinton was the first to pay the price.
Ruling class closes ranks against Trump
But it was only when Trump openly threatened to challenge the 2020 election results and forcibly impose himself as president that the vast majority of capitalism’s ruling class closed ranks. In a matter of months, Trump’s top Pentagon generals, his Secretaries of State and Defense, his Justice Department head, the entire judicial system, even the Republican-dominated state legislatures, and the heads of the FBI and CIA all joined with the billionaire corporate elite to leave Trump isolated and defeated. His coup plans to use all of the above to retain the presidency came crashing down, ending in the pathetic January 6 events where his supporters were reduced to a riotous mob of Proud Boy fascist thugs and their ilk with perhaps the timid complicity of some bullied Capitol Police and a few National Guard tops, who consciously vacated the Capitol area to allow some 1,000 nut cases to take the building for a few hours.
It is in this context that Biden’s instant shift in focus can best be understood. His outlined spending proposals, hyped to the high heavens by his staff, designated cabinet level sales promoters and “liberals” across the country – none of which have been concretized in specific legislation – include $billions in investments in highways to upgrade and raise their levels in anticipation of climate catastrophe and funding for mass transit and electric vehicle charging systems. Upgrades to poisonous lead water pipes, expansion of the electric grid and big funds for veterans’ hospitals are accompanied by proposed major increases in federal funds for research and development spending to make U.S. corporations more competitive on world markets. These are paired with proposals to provide home-based care to older and disabled people. Biden’s inclusion of “human infrastructure” language aims at posing his Democrats as breaking with the formal limited “physical” definition, that is, upgrading bridges, roads, ports and transportation systems. His proposals include aid to the poor, paid leave for workers and measures aimed at reducing the cost of childcare to help women to work and earn more.
Taxing the rich?
And all this is to be paid for by supposedly taxing the corporate establishment and the super rich. Janet Yellen’s Treasury Department released some details of Biden’s proposed tax changes aimed at raising a projected $2.5 trillion over 15 years. These include raising the corporate tax rate to 28 percent from the present 21 percent. Former President Trump’s 2017 tax bill had cut the corporate rate to 21 percent from 35 percent. Apparently, Biden’s team declined to propose restoring the previous 35 percent rate. Biden’s new plan would supposedly impose a “strict new minimum tax” on global profits aimed at corporations that offshore profits to Cayman Island-type tax havens around the world. But nothing in the president’s proposals is cast in stone, said Biden, “Debate is welcome. Compromise is inevitable. Changes are certain… But inaction is not an option.”
The Democrats hope to pass their eventual financial proposals in a 50-50 deadlocked U.S. Senate via a parliamentary maneuver called budget reconciliation, allowing them to bypass the 60-vote requirement to overcome a likley Republican filibuster with a simple majority, that is, their own 50 votes plus one more from V.P. Kamala Harris, who presides over the Senate and is allowed to cast a deciding vote in the event of a tie. But the Democrats have no guarantee of their own 50 votes, with West Virginia congressman Joseph Manchin III, for example, as well as other Democrats, politely defined as “centrists” or “moderates,” already indicating that their votes were far from assured. Indeed, Biden’s originally announced $2.5 trillion infrastructure package, one week later was described as a $2.3 trillion proposal, if not a $2 trillion proposal. It apparently took less than a week for Biden’s pressured team to eliminate some $200 billion, or perhaps $500 billion from their original blueprint proposal.
The casino capitalism stock market
As with Biden’s recent $1.9 trillion COVID-19 stimulus plan, his “$2.5 trillion” infrastructure proposals are to be funded today by deficit spending, that is, paid for by revving up Washington’s printing presses and printing money/bonds with abandon as was the case with the Trump and Obama administrations. Most of that printed money was pocketed by the corporate elite and/or pumped back into the stock market and/or related speculative ventures that today define the nation’s “casino capitalism” operations. In today’s crisis-ridden capitalist world where average profit rates are ever declining, few serious U.S. corporate enterprises invest in new U.S plants when fierce global competition and near-slave labor workers toiling at super modern factories owned by multi-national behemoths in far off places bring in profits far beyond any new U.S.-based factory. Better to invest the government’s near zero interest “loans” in the sky-high stock market and pocket the capital gains profits with virtually no tax liability! This “financialization” of capital, wherein unprecedented amounts of diminishing capitalist profits are invested in speculated financial ventures rather than in upgrading or expanding capitalist plants defines a key element of the system’s present crisis.
Corporations paying zero in taxes
Over the next 15 years, according to Biden’s plan, those who have for decades or generations been “legally” exempted from paying taxes will now be slated to foot the bill! In truth, few if any U.S. corporations today pay a federal corporate tax rate at 28 percent, not to mention the previous rate of 35 percent or Trump’s revised rate of 21 percent. Armed with endless “deductions” imbedded in the tax codes by the favored “lobbyists” of the corporate elite, Biden, who knows better than most who pays what in taxes, blurted out that many profitable corporations can afford to pay a tax rate higher than zero given that many paid no taxes at all over the past several years.
“You have 51 or 52 corporations of the Fortune 500 that haven’t paid a single penny in taxes for three years,” said Biden. “Come on, man. Let’s get real,” he added.
But just what is “real” regarding corporate tax rates in the U.S. today? According to a 2018 study by the Institute on Taxation and Economic Policy, of the 379 companies from the Fortune 500 list that were profitable in 2018, 91 paid an effective federal tax rate of ZERO percent or less – “less” meaning that these profitable corporations received a government rebate in some form. Included among these profitable Fortune 500 corporations that paid zero percent or less in federal taxes were Amazon, Chevron, Dow-Dupont, U.S. Steel, Eli Lilly, Goodyear Tire & Rubber and General Motors.
General Electric, Boeing, Priceline.com, Verizon and 22 other profitable Fortune 500 firms paid no federal income taxes from 2008 through 2012, according to Citizens for Tax Justice.
While Trump’s tax law lowered the statutory corporate tax rate to 21 percent, the 379 Fortune 500 corporations studied paid an average rate of 11.3 percent. Worse still, a recent report from the congressional Joint Committee on Taxation documented that multinational corporations, that is, U.S.-dominated corporations that operate in other countries, paid an average U.S. tax rate of less than 8 percent on their income in 2018, down from 16 percent in 2017.
Today, Biden proposes to remedy this situation by imposing a tax rate of 15 percent on corporations based on the profits they report to their investors – “book income” – and not the profits or lack of they report to the Treasury Department. Here we have a classic example of two sets of books, both ”legal” under the tax law. But Biden’s proposed 15 percent corporate tax would apply only to 45 corporations, that is, only those whose annual earnings are $2 billion or more. Apparently Biden’s team forgot his 2020 election campaign pledge to impose the 15 percent mandatory tax on corporations with annual profits of $100 million!
U.S. has lowest corporate tax rates
Treasury Secretary Yellen touted Biden’s corporate tax hike proposals stating, “Our tax revenues are already at their lowest level in generations. If they continue to drop lower, we will have less money to invest in roads, bridges, broadband and R&D.” Yellen neglected to note that as a share of the economy U.S. corporate tax levels are at the lowest level since World War II. The Organization for Economic Cooperation and Development reports that the U.S. raises less corporate tax revenue as a share of its GDP than almost all other advanced economies.
Yellen’s pipedream plan, with no specifics for sure, includes using U.S. financial leverage worldwide to press for a global minimum corporate taxation system. Here’s a recent New York Times description of Yellen’s proposal. “The tax plan emphasizes that the Treasury Department will continue to push for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters. Such a global tax could help prevent the type of ‘race to the bottom’ that has been underway, Treasury Secretary Janet Yellen has said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.” Yellen’s “race to the bottom” language here refers to the worldwide capitalist problem, inherent in the functioning of the system itself, of an ever-declining average rate of corporate profit. Capitalism’s remedy for this inherent defect has been to make workers pay via every mechanism available. These include lowering wages, cutting pensions and fringe benefits, workplace speedup, union busting, and offshoring jobs to low wage nations. This is the real meaning to tens of millions of working people the world over who are ever pressed in the real “race to the bottom.” Yet Yellen appropriates the term to decry the dilemma facing the billionaire corporate elite, the capitalist exploiters.
Needless to say, Yellen fully understands that while the formal U.S. corporate tax rate is already among the lowest on earth among the developed nations, few if any corporations pay at this rate, given the innumerable loopholes, deductions, and exclusions readily available. There is little or nothing in the present U.S. tax code that prevents giant corporations like Apple, which employs some 1.2 million workers in China at wages less than one-third the U.S. minimum hourly wage of $7.25, from avoiding U.S. taxes outright, not to mention the countless other corporations that have “relocated” via the “inversion” scenario, their corporate headquarters to far off places to do the same. Treasury Department officials estimate that Biden’s proposed tax code changes restricting offshore tax evasion would raise some $700 billion over 10 years – a pittance slap on the writ when compared to the overall untaxed earnings. We will soon see if there is a slip between the government’s proverbial cup and its lip, that is, whether even this figure is whittled down to further insignificance.
Gone from Biden’s tax proposals are any serious measures to combat the ongoing and catastrophic consequences of fossil fuel induced climate change. The president’s plan would cut back government subsidies for oil, gas and other fossil fuels over a period of ten years and supposedly replace them with incentives for clean energy in a promised transition to “100 percent carbon pollution-free electricity” by 2035.” The estimated ten-year “savings” from ending some of these subsidies to the fossil fuel corporations is $35 billion! I used an exclamation mark here to note that previous and inadequate “Green New Deal” proposals presented by Bernie Sanders and again by the AOC gang were estimated at $15 trillion over the same period or an average yearly expenditure of $1.5 trillion. By comparison, Biden’s 10-year climate infrastructure proposal, including funds for research and development of battery storage and power transmission lines to address the impending climate horrors, comes to close to nothing. Incredibly, Biden’s proposal does address the issue of resurfacing and raising the level of some roads to build them up to three feet higher in anticipation of a rise in sea levels! “While Rome burns, Biden-Nero fiddles!”
Biden’s history of “infrastructure” hype
President Biden is no newcomer to the legislative game of bait and switch. In September 2009, then-Vice President, Biden visited a closed General Motors plant near his hometown, Wilmington, Delaware, where he announced a $528.7 million government loan to Fisker Automotive to manufacture hybrid and electric cars. The funding was to come from President Obama’s American Recovery and Reinvestment Act, a $787 billion “economic stimulus” plan touted to lift the nation out of the Great Recession, in part by creating “green jobs” with $90 billion for wind and solar energy, a “smart” power grid, weatherized homes and the electric vehicle industry. Four years later Fisker declared bankruptcy without producing a single car. The government’s $526.7 loan disappeared into the pockets of its grantee corporate recipients.
Similarly V.P. Biden touted a $535 million loan guarantee to Solyndra, a would-be California solar panel company that went bankrupt, claining that Chinese competitors were undercutting its proposed price structure for solar panels. And again, in 2012, A123 Systems, an advanced battery-making corporation, declared bankruptcy after receiving an Obama stimulus loan of $249 million. In essence, the Obama-Biden administration’s stimulus plans ended up contributing near nothing to improving the nation’s infrastructure, not to mention fostering new jobs and a “green economy.”
$Trillions for corporate bailouts
Instead, Obama-Biden pioneered a “quantitative easing” stimulus system wherein the nation’s failing banks and major corporations were bailed out to the tune of unprecedented $trillions while unprecedented millions of working people lost their homes to record foreclosures. The Obama-Biden “quantitative easing” program consisted in the Federal Reserve making available monthly $billions in “loans” to the corporate elite at near-zero interest rates to be used for so-called new job-creating manufacturing industries. Instead the elite invested this near free money in unprecedented stock market speculation that raised the various indexes to unprecedented heights in the middle of an unprecedented recession/depression.
Biden’s third economic stimulus package
No matter, in early April, Biden’s team announced yet another $multi-trillion economic package, this one to focus more exclusively on aid to working people. No doubt, the game of insider negotiations, maneuver, hype and camouflage will ensue as the ruling rich decide once again, how and how much to make working people pay. The combination of all Biden’s touted programs have their base largely in “trickle down” economics, that is, the notion that the capitalist economy prospers, and along with it working people, if federal funds are first granted to the corporate elite on top who will then, supposedly, invest in new plants that create new jobs for workers. In short, the vast proportion of Biden’s proposed expenditures are aimed at funding the capitalist elite, not working people. Had the latter been the case, Biden’s proposals would have begun with fulfilling his campaign pledge to raise the federal hourly minimum wage to $15.00, a broken promise that reflects the reality of capitalism’s limited capacity for serious reforms – for any serious gains “trickling down” to the working class. Biden has similarly rejected all Single Payer health care proposals, not to mention proposals for a nationalized free health care system for all working people akin to what exists in most advanced capitalist nations.
The realities of life in capitalist America today includes a real labor participation rate of just 60 percent – 40 percent of the working people who are available to work have no jobs. Sixty percent of the presently unemployed are not eligible for unemployment insurance and some 50 million face eviction.
The Biden team hopes to placate those who increasingly see the Democrats as co-equal practitioners with the Republicans of anti-working class politics. Yet their margin for maneuver is limited by the increasing weakness of U.S. capitalism and hence its continuing drive to resolve its contradictions at the expense of working people at home, not to mention the endless resource extraction wars perpetrated on poor and oppressed nations around the world. Imperialist war, based in the U.S. on the most highly monopolized industries, is the most profitable of all capitalist enterprises! The maxim, “War is good for profits,” has never been more accurate. Biden proposes not a cent decrease in the U.S. $trillion annual war budget! Indeed, the Democrats, when Trump held the presidency, never failed to propose boosting the military budget beyond Trump’s requests.
The coming months and years ahead portent massive working class mobilizations, as was the case with the 20 million who joined in solidarity with the Black Lives Matter movement last summer. In the absence of a serious alternative, however, that movement was momentarily corralled by its BLM NGO-type misleaders and associated Democratic Party-dependent “reformers” into the reactionary electoral apparatus of the “graveyard of social movements” – again, the Democratic Party. The fight to organize future mobilizations via independent and fighting organizations of the oppressed and exploited stands as the most critical task facing serious social and political activists today. The same with the need to break the present “business union” labor movement from functioning as a virtual appendage of the Democratic Party. The road to class struggle class unionism includes not only the democratization and qualitative expansion of the present movement but the interconnected formation of an independent fighting labor party in alliance with all the oppressed. To achieve these fundamental objectives, the construction of a mass revolutionary socialist party with deep roots in every fight where workers take the field of action is critical.