In the past few weeks, the Biden administration’s domestic agenda has come into sharp focus: a $1 trillion bipartisan Senate bill for “hard” infrastructure projects nearing passage; an executive order aimed at concentrated market power, promoting competition and worker power; a $3.5 trillion budget proposal that represents a historic advancement of the American welfare state, paid for by taxes on the rich and corporations; initiatives to reverse the 60 year decline of US unions in the private sector; fighting the GOP efforts to restrict voting rights for blacks and Latinos; immigration reform; and presidential speeches on behalf of better jobs for Americans in the bottom half of the labour market.
When you add all of this to the $1.9 trillion American Rescue Plan Congress passed in March, it is clear that Biden is using the resources of the federal government to reverse nearly half a century of growing monopoly, plutocracy, and inequality. Regardless of whether this agenda goes far enough, it is clear that the administration is pointing the country in a fundamentally new direction.
During these past five decades, the working class, which once made up the backbone of the Democratic Party, with a narrative of a “fair deal for average folks,” has seen its power battered. Today, workers in the service sector, caregiving jobs, and manufacturing and warehousing, have a kind of second-class status. They suffer not just economic difficulty but also health issues and a kind of cultural invisibility.
But Democratic positions that further economic equality — increasing the minimum wage, challenging corporate power, supporting workplace pensions and investing in education and good jobs—are extremely popular. Biden, like Democrats of an earlier era, uses policy to cast his net as widely as possible—to include rather than divide.
The Democratic budget blueprint
The $3.5 Trillion budget blueprint that the Democrats pushed through the Senate on Aug. 11 and through the House on August 24, encompasses the heart of the Biden policy agenda. It is so ambitious, in fact, that it has sparked a massive (and desperate) corporate PR and lobbying campaign the likes of which Congress hasn’t seen in many decades.
A torrent of political groups representing many of the country’s most powerful corporations — including ExxonMobil, Pfizer and the Walt Disney Company — is currently laying the groundwork for a massive lobbying blitz to stop Congress from enacting significant swaths of Biden’s $3.5 trillion economic agenda.
The emerging corporate opposition to the Biden budget appears to be vast, spanning drug manufacturers, big banks, tech titans, major retailers, and oil and gas giants. In recent weeks, top Washington organizations representing these and other industries have started strategizing behind the scenes, seeking to battle back key elements in the Democrats’ proposed overhaul of federal health care, education and safety net programs.
Among the most active is the U.S. Chamber of Commerce, which is in the early stages of putting together an economywide coalition to coordinate the fight against the still-evolving economic package, including its significant price tag, policy scope and potential for tax increases.
The Chamber-organized effort could encompass traditional lobbying on Capitol Hill as well as advertising campaigns targeting Democratic lawmakers. The group has been in talks with business allies such as the National Association of Manufacturers, whose board includes executives from firms such as Dow, Exxon, Caterpillar and Johnson & Johnson.
Other opponents of the Biden agenda include the Business Roundtable, whose board counts the chief executives from Amazon, Microsoft, Apple and Walmart. The group similarly is preparing to fight new corporate tax increases, which Democrats hope will fund their vast new spending. And the pharmaceutical industry broadly has embarked on its own wide-ranging campaign to combat the Democrats’ drug pricing proposals, another potential revenue source in the bill. Conservative outfits previously backed by the sector’s top trade group, known as PhRMA, have run recent ads claiming lawmakers’ plans would have worsened the coronavirus pandemic.
On Sept. 9, the relevant House Committees began drafting the sections of the bill under their purview.
Perhaps the most important Committee examining sections of the bill is the House Ways and Means Committee It began looking at the spending side last week before moving this week to the more difficult task of tax increases to pay for it. Among the items on its voluminous agenda: providing up to 12 weeks of paid family and medical leave; expanding tax credits to pay for child care and elder care; raising the wages of child care workers; requiring employers to automatically enroll employees in individual retirement accounts or 401(k) plans; and expanding Medicare coverage to include dental, vision and hearing benefits.
The Education and Labor Committee’s portion of the bill, also under consideration this week, would make pre-kindergarten universal for 3- and 4-year-olds; fund two years of tuition-free community college and increase the value of Pell Grants; provide money to rebuild and modernize school buildings; expand job training programs; and extend child nutrition programs bolstered on an emergency basis during the pandemic.
The Committee on Natural Resources, which has partial purview over climate change programs, will try to raise the fees for fossil fuel companies that explore and drill on public lands and waters; expand leasing of offshore sites for wind energy; spend up to $3.5 billion on a new civilian and tribal climate corps; and boost funding for wildfire control, climate resilience and adaptation to a warmer planet.
Massive corporate opposition to Democratic tax changes
Democrats had hoped that the tax side would be more than notations on an accounting ledger. They regard it as an opportunity to fundamentally change the US tax structure to address growing income inequality, reduce incentives for corporations to move jobs and profits overseas, and slow the amassing of huge fortunes that pass through generations untaxed.
But corporate interests, led by the U.S. Chamber of Commerce, the Business Roundtable and Americans for Tax Reform, have mobilized a multifaceted lobbying and advertising blitz to stop the tax increases — or at least mitigate them.
Members of the Senate Finance Committee will meet this week to go over more than two dozen tax proposals. Some of them are well on their way toward inclusion in the measure, which under a complex budget process known as reconciliation, would be able to pass Congress without a single Republican vote.
Lobbyists expect the top individual income tax rate to return to 39.6 percent from the 37 percent rate that President Donald J. Trump’s tax cuts created in 2017. The corporate income tax rate will also rise from the 21 percent in the Trump tax cuts, though not to the 35 percent rate of the Obama years. Lawmakers say a 25 percent rate is more likely.
Many Democrats are determined to tax the wealth of America’s fabulously rich, much of which goes untaxed for decades before being passed along to heirs. Currently, for instance, when large estates are passed on at death, heirs are allowed to value the stocks, real estate and other assets at the price they would fetch at the time of the original owner’s death. They pay taxes only on the gain in value from that point once the assets are sold. If the assets are not sold, they are not taxed at all.
Mr. Biden wants to have heirs to large fortunes pay taxes when the original owner dies. Those taxes would be levied on inherited assets based on the gain in value from when those assets were initially purchased. Even more significantly, the Finance Committee is looking at taxing the accumulated wealth of billionaires, regardless of whether it is sold. Extremely wealthy Americans like the Amazon founder Jeff Bezos would have a decade to pay a one-time tax on the value of assets like stocks that have been accruing value for years. They would then pay taxes each year on the annual gain in value of their stocks, bonds and other assets, much like many Americans pay property taxes on the annually assessed value of their homes.
Another key component is the international tax code. The Biden administration has called for doubling the tax that companies pay on foreign earnings to 21 percent, so the United States complies with an international tax deal that the administration is brokering, which would usher in a global corporate minimum tax of at least 15 percent.
Getting around the filibuster – the reconciliation process
Here is the problem facing Biden and the Democrats. Unlike the U.S. House, the U.S. Senate allows something called a “filibuster” which means that forty Republican senators can block any legislation they want and the only way around the filibuster is with a “reconciliation” bill (a special kind of budget bill) which allows for a straight majoritarian vote with no filibuster allowed. Because there is a 50/50 split in the Senate, the Democrats can only push through a reconciliation bill on a straight party line vote with all Democratic senators voting for the bill (in the U.S. system, Vice-President Kamala Harris breaks a tie in the Senate and would obviously vote with the Democrats).
Leading up to the Aug. 24 House vote that approved the budget blueprint, 10 conservative-leaning House Democrats refused to support the Democratic leadership’s push for the reconciliation process until they extracted a promise from the leadership for a vote on a bi-partisan infrastructure bill by Sept. 27. The agreement came after a pressure campaign by the White House, outside progressive groups and Speaker Nancy Pelosi of California, who maneuvered her way to unanimous Democratic support for the budget.
Why was it so important to the ten conservative-leaning Democrats to vote on the bi-partisan, “hard” (roads, bridges, public transit) infrastructure bill sooner rather than later? Probably because these members wanted to signal to the corporate world that their heart was with tangible things such as roads and bridges that Corporate America and “sensible” Republicans support – as opposed to the “soft” stuff contained in the budget blueprint supported by the Democratic leadership and progressives. Soft stuff such as daycare, Medicare expansion and universal pre-K.
The Aug. 24 House vote was 220 to 212 on party lines to approve the budget plan and allow future votes on both the bi-partisan infrastructure bill and a voting rights measure that the House passed soon after.
While the budget plan does not have the force of law, it allows the Democrats to move forward with the “no filibuster” fast-track reconciliation process. That would enshrine the details of the blueprint in legislation that is shielded from a filibuster, allowing it to pass over the unanimous objections of Republicans.
With the Senate also passing the separate $1 trillion bipartisan infrastructure bill on Aug. 10 along with the $1.9 million American Rescue Plan passed by both houses of Congress (and signed into law by Biden) early in March, the approval of the blueprint could unlock the Democrats’ ability to secure the remainder of President Biden’s $4 trillion economic agenda — all paid for through tax increases on high earners and companies.
The budget blueprint, while nonbinding, calls for a series of key liberal priorities, including ones championed by Senator Bernie Sanders of Vermont, the self described “socialist” independent chairman of the Senate Budget Committee. It calls for an expansion of US Medicare to include dental, hearing and vision benefits, the formation of a Civilian Climate Corps to address climate change, a massive expansion of child care, vastly improved home care, and funding to establish universal pre-K and grant free community college tuition for two years and invest substantial sums toward combating climate change.
Enter the massive corporate lobbying campaign. Again, the Democrats’ reconciliation strategy can only work if the party’s narrow majority can stay united at a time when they have few votes to spare (none in the Senate). The objective of the corporate lobbying campaign is to pry loose a few Democratic moderates on key votes so as to kill those elements of the plan that corporate America most opposes.
“We’re doing it in every way you can imagine,” said Aric Newhouse, the senior vice president for policy at the National Association of Manufacturers, when asked about the group’s lobbying. He added the tax increases Democrats have pursued would mean “manufacturing families will suffer, jobs will be lost.”
In a sign of the obstacles Democrats already face, the U.S. Chamber last week took a firm stand against reconciliation, promising to “do everything we can” to prevent Congress from adopting the package in full. The group’s president, Suzanne Clark, issued the statement hours after the House adopted the $3.5 trillion budget that enabled Democrats to begin crafting tax and spending provisions — an approach, she said, that would “halt America’s fragile economic recovery.”
As congressional Democrats renew their push to pass a sweeping budget reconciliation measure, the Senate parliamentarian heard arguments from both parties on Sept. 10 about whether immigration legislation should be included in the proposed $3.5 trillion package.
Democrats hope the parliamentarian will allow a pathway to permanent residence to stay in the bill, giving Democrats a chance to achieve a longtime priority without being blocked by the filibuster.
Whether the Democrats’ strategy will fly depends on a woman whose name rarely makes headlines: Elizabeth MacDonough, the Senate parliamentarian, who interprets the rules of the upper chamber. MacDonough’s decision remains unknown following September 10’s meetings, and she hasn’t indicated when she will issue her ruling, which itself could have major implications.
If MacDonough signs off on the immigration provisions, which must have a “more than incidental” impact on the federal budget to make the cut, several million undocumented immigrants could be given the opportunity to establish legal residence in the US, a necessary step on the pathway to citizenship.
Here is a brief run down of some other elements of the historically ambitious policy agenda that the Democrats are leaving outside the budget reconciliation process.
Biden’s executive order on corporate power
Perhaps most importantly, there is Biden’s Executive Order on corporate power. Although there is considerable potential for new legislation to eventually be tabled to achieve the executive order’s goals, an executive order, by definition, does not require Congressional action.
The Biden Executive Order is more than anything a re-think of antitrust policy. Antitrust is the main body of law governing market competition in the US, and it has been the object of sustained attack by business interests for more than 50 years. Biden is the first president since Harry Truman to take a strong public anti-monopoly stand, and he has backed it up by appointing ardent anti-monopoly advocates (Tim Wu at the Department of Justice, Lina Khan at the Federal Trade Commission (FTC), etc.) to his government.
The executive order is ambitious in its scope and style. In strongly worded passages, it accuses US businesses of monopolistic and unfair practices in major industries, including technology, agriculture, health care, and telecommunications. It laments the decline of government antitrust enforcement, and identifies numerous harms that have resulted – including economic stagnation and rising inequality. The order also establishes a new bureaucratic organization in the White House to lead the anti-monopoly effort. Demanding a “whole-of-government” approach, it calls on the vast resources of numerous agencies, and not just the two that traditionally oversee antitrust (the Department of Justice and the Federal Trade Commission).
The Biden administration’s antitrust agenda will face significant judicial obstacles. Over the past 40 years, an increasingly business-friendly Supreme Court has gutted US antitrust law. In ruling after ruling, it has weakened the standards used to evaluate anti-competitive behavior; raised the burden of bringing an antitrust case; limited the types of antitrust victims who are allowed to bring cases; allowed businesses to use arbitration clauses to protect themselves from class action lawsuits; and much else.
Still, there are grounds for optimism in the near term, because the executive order has broken new ground with what it says about labour. For the first time ever, a US president has declared that antitrust law should be brought to bear against employers. Unlike the tech, agriculture, and health-care sectors, labour markets received virtually no attention from the federal government until just a few years ago, and only baby steps have been taken since then. But as Biden’s executive order acknowledges, “Consolidation has increased the power of corporate employers, making it harder for workers to bargain for higher wages and better work conditions.” This new focus reflects the influence of recent economic research showing that countless labor markets have become dominated by a handful of employers.
Such concentration is partly the result of mergers and acquisitions and partly the result of the natural growth of large businesses, which often locate plants and warehouses in thinly populated areas where there is little competition for workers. Under these conditions, employers have the upper hand, resulting not only in lower incomes for workers but also in less economic activity and output, higher prices, and greater inequality. Employers have also entered into anti-competitive agreements with one another to fix wages or to refrain from poaching each other’s employees. Back in 2010, Apple, Google, and other major tech firms received a slap on the wrist when it was discovered that they had agreed not to recruit one another’s software engineers. But a spate of more recent cases, including several criminal indictments brought against employers, indicates that the 2010 case was no anomaly.
There is also important new research showing that non-compete clauses that block workers from securing employment with their employers’ competitors have become ubiquitous. Biden’s executive order rightly mentions these clauses, which prevent workers from credibly threatening to quit when bargaining for higher wages. While these agreements supposedly protect trade secrets, that justification beggars belief, given that they also cover unskilled workers who have no access to such information. Moreover, California is one of the few US states where non-compete clauses are illegal, and it hardly lacks for innovation.
Union expansion is back on the US agenda
Just 6.2 percent of private-sector workers in the US were unionized in 2019, the lowest level since the Great Depression, although as in Canada, US union membership rates are somewhat higher in the public sector.
The nation’s largest private-sector employers, including Walmart and Amazon, have proven adept at preventing unions from taking root. Walmart famously closed the meat-cutting departments at all of its stores after the meat cutters at a Texas store voted to create a union. This year, Amazon defeated a unionization drive at an Alabama warehouse using tactics that violated labor laws, a National Labor Relations Board hearing officer concluded last month.
It is not a coincidence that as union membership has declined, employers have been able to pocket a significantly larger share of the nation’s economic output. The coronavirus pandemic has also delivered a harsh reminder that without unions, many workers have little power to press employers for safer working conditions or for paid leave when it is not safe to work.
Progressives and labor groups are pushing for the Democrats to pass the entirety of the Protecting the Right to Organize Act, a measure that passed the Democratic controlled House this spring but is stalled in the Senate in the face of Republican opposition (remember the filibuster?). Perhaps the most significant expansion of labour rights since the New Deal era, the bill would neutralize right-to-work laws in 27 states, protect workers trying to unionize from retribution and empower the government to fine employers who violate workers’ rights. Several moderate Democratic senators, including Mark Warner of Virginia and Kyrsten Sinema of Arizona, do not support the bill in full, however.
They include allocating as much as $1 billion for the National Labor Relations Board to ramp up enforcement of existing labor law after years of budget freezes and the creation of a first-of-its-kind $50,000 penalty to punish companies that commit unfair labor practices.
President Biden has also issued an executive order creating a task force that would aim to make it easier for workers to unionize.
The labour executive order, issued on April 26, directs the task force to examine existing labour policies and issue a series of recommendations within 180 days on how they can be leveraged to “promote worker organizing and collective bargaining in the federal government.” Biden also directed the task force to recommend what new policies should be created.
The effort is led by Vice President Kamala Harris and staffed by more than a dozen Cabinet secretaries, along with various agency heads.
“Since 1935, when the National Labor Relations Act was enacted, the policy of the federal government has been to encourage worker organizing and collective bargaining, not to merely allow or tolerate them,” the administration said in a fact sheet announcing the move. “In the 86 years since the Act was passed, the federal government has never fully implemented this policy.”
The task force will focus in particular on facilitating collective bargaining by the federal workforce; wielding federal policies to pave the way for other workers to organize; aiding workers in “jurisdictions with restrictive labor laws,” along with “marginalized workers” like women and people of color; and increasing union membership.
The voting rights bill that House Democrats approved on Aug. 24 is aimed at protecting the right to vote amid a wave of restrictive new elections laws from Republican-controlled state legislatures. The objective of the restrictive measures is to make it difficult for black and Latino voters (who strongly lean Democratic) to exercise their voting rights.
The bill is named for the Georgia congressman and civil rights leader John Lewis, who died last year.
The bill would strengthen the Voting Rights Act of 1965, which had been weakened by a pair of Supreme Court rulings over the course of the last decade. It would make it more difficult for Republican dominated state legislatures to restrict future voting access.
While the bill passed the House along party lines, with 219 Democrats in favor and all 212 Republicans opposed, it now faces steep GOP opposition in the evenly divided Senate. Republicans have characterized the legislation as a federal overreach into the state’s role in election processes. A voting rights bill is also difficult (although perhaps not impossible) to fold into the budget reconciliation process and avoid a Republican filibuster.
Republicans have already blocked a separate sweeping elections and voting bill known as the For The People Act. That legislation seeks to end gerrymandering of congressional districts, set mandates for early and mail-in voting and increase transparency in campaign financing. Senate Majority Leader Chuck Schumer, D-N.Y., has said that the Senate will turn to voting rights legislation when lawmakers return to Washington, D.C., in September.
Democrats and activists have said that both bills are necessary to protect access to the ballot. President Biden echoed that message on the House’s approval of the bill.
As illustrated by the Biden Administration’s policy agenda detailed above, the Biden agenda, first and foremost represents a challenge to corporate power on behalf of workers and consumers.
Canada is not the US, of course, but we also have a problem with corporate power undermining workers and consumers and more fundamentally undermining equality.
By equality we are not talking about equal outcomes. Resources, money, talent, intelligence, and luck will always be unevenly distributed—nor should their unequal distribution be taken as evidence of inherent inferiority. Equality simply means that everyone’s worth in society is the same, and that everyone must have the ability to participate in political and economic life on an equal basis as a citizen. But extremes of wealth and poverty, of power and powerlessness, hinder that ability, and so equality can’t be indifferent to how much money people make or whether they have a voice in their workplace. A minimum-wage cashier at a dollar store who has to worry all the time about feeding her children and staying in her house, is neither equal nor free.