The country needs jobs. The country needs to start fixing up its crumbling infrastructure. The country doesn’t need more corporate tax breaks. Guess which of these three is in legislation the House is passing – unfortunately with help from many Democrats. If this keeps up, how will voters be able to decide who to vote for this fall?
Last week the House passed a huge – $156 billion worth of huge – Research and Experimentation Credit tax break for corporations. This is one part of a package of “tax extender” corporate tax breaks that is sneaking through the House. Sixty-Two Democrats joined the Republicans in approving this huge corporate tax break.
This $156 billion corporate tax break was passed by the same House of Representatives that won’t even bring up a vote on restoring unemployment benefits for the long-term unemployed.
While the R&E tax credit is worthwhile, it was wrong for some Democrats to join with Republicans in voting for that research tax credit. Such credits should have been awarded as part of a package that included a full employment program, infrastructure funding, restored long-term unemployment benefits, restoring food stamps and many other things the public needs. Instead of using the corporate desire for this break as leverage – and making a political statement going into the midterm election – 62 Democrats just went ahead and voted for it.
The Country’s Jobs And Infrastructure Needs Go Hand In Hand
The main reason the economy is just sort-of slogging along is “austerity” – all of the cutbacks in government spending. Never mind that the country is not hiring for new construction, etc., in the middle of this jobs emergency we have instead laid off construction workers, teachers, police, Social Security workers, and other public servants. At the very time the economy needed a boost, government cutbacks have cost businesses and suppliers. Cutbacks have meant foreclosures, bankruptcies, people spending less in stores – all acting as dampers on economic growth.
America desperately needs public investment to create jobs and grow the economy. But the country has been deferring spending on maintaining – never mind modernizing – our infrastructure since the Reagan tax-cut years – especially when it comes to transportation. When Reagan came in (with huge oil company backing), the solar panels were removed from the White House roof and many public transit projects were removed from the national agenda.
We need to fix our infrastructure and people need jobs – can our elected officials connect the dots? But instead of voting to help Americans by maintaining (never mind modernizing) our infrastructure the House – with 62 Democrats joining in – voted for a huge, $156 billion corporate tax break. So now there is even less money to use to hire people to fix up the infrastructure.
Example: Congress Needs To Act On The Highway Trust Fund
Next up before Congress, the Highway Trust Fund is running out of money and the current surface transportation bill expires in September – just before the election. This threatens 6,000 projects and 700,000 jobs. (Yes, “government spending” really does bring a lot of jobs.) Congress has to either raise the gas tax against oil company opposition – and Congress doesn’t do anything against the interests of oil companies – or find other sources of funding.
The Senate Finance Committee recently reported, “According to the National Surface Transportation Infrastructure Financing Commission, just maintaining the existing conditions and performance of U.S. roads and transit infrastructure would require a 50 percent increase in current funding levels.”
Again: just maintaining the infrastructure at current miserable levels (never mind modernizing) requires a 50 percent increase in funding. Democrats and progressives should be for that. This is public investment that pays for itself over time. There is no reason to “offset” this with cutbacks elsewhere.
The Republican Strategy Is Obstruction Coupled With Unprecedented Election Spending
This is happening because the Republican strategy for the fall elections is to do everything they can to deny people jobs and keep wages, benefits and the economy down – and then campaign blaming Obama and Democrats for the bad economy, lack of jobs and low wages. Republicans are obstructing everything that might help working people, while handing the treasury over to the billionaires and their giant corporations – especially oil companies. (The Koch Brothers are rich because they inherited one of those oil companies.)
This strategy could work unless Democrats expose it and offer sharp contrasts – all in ways that will reach the public. And reaching the public will be difficult. The Koch brothers’ Americans for Prosperity have stated they will be putting up at least another $125 million to elect Republicans – on top of the more than $35 million they have already spent to defeat Democrats in this year’s elections. This is just the one Republican organization, along with all the other spending coming this year by billionaires and corporations to elect Republicans.
Elite Frustration With Obstruction
The country’s elites understand that nothing is getting through the Congress, even as they do not tell voters who to blame. A recent Bloomberg news editorial, Creative Ways to Fill the Nation’s Potholes, expresses the national frustration with the gridlock. They say we need “creative thinking” to get important things funded and offer up with a scheme to bribe giant corporations. They write, “In a perfect world, the money for this essential work would be appropriated in a straightforward and transparent way. You’re right to laugh: That won’t happen.”
After not explaining to readers why “that won’t happen” – it is Republican obstruction – they offer some “creative thinking,” namely a huge bribe to corporations. They cite New York Democratic Rep. Steve Israel’s proposal “allowing companies holding large cash stockpiles abroad for tax reasons to bring their profits home at a preferential rate – on the condition that they spend about 10 percent of the repatriated income on a new kind of infrastructure bond.” (Because just telling these companies to pay their taxes is off the table.) Even Bloomberg admits, “A repatriation tax break worsens the convolution of a corporate tax code that is already far too tangled.”
Similarly, Norm Ornstein writes at the Atlantic:
Among the most embarrassing and unconscionable failures of the 113th Congress has been the inability to act in any way to help the economy through an infrastructure initiative, including but not limited to energy. The country’s infrastructure is crumbling, and the energy infrastructure is outmoded. Among the long-term unemployed, there are huge numbers of construction workers and skilled tradespeople who could be given a new lease on life, while energizing a continuing sluggish economy. And the money to pay for a major infrastructure initiative can be borrowed now at the lowest rates imaginable.
Ornstein also understands that nothing is going to get through Congress without bribing the giant multinationals. He also suggests letting companies off the hook for taxes on offshore profits if they use some of their cash to invest in infrastructure. He refers to bills before Congress that would “create a fund that would be capitalized with $50 billion in infrastructure bonds with 50-year terms paying a fixed interest rate of 1 percent. Corporations could repatriate a substantial amount of the profits they have accumulated overseas tax-free if they buy the bonds.”
Later, on another proposal, “The Green Bank would use a model that would incentivize companies to repatriate some of their profits abroad in return for investing in the bank as well.”
Again, this is just a bribe to the people Ornstein understands now control the Congress. Instead of Congress just making these companies pay their taxes and using that money to fund infrastructure, these are bribes to let them off the hook on their taxes if they would please let us fix the infrastructure a bit and thereby hire a few unemployed workers.
Draw A Contrast For The Election
The Republican strategy is simple and effective: Block everything, make everything feel worse for regular people, and then spend unprecedented amounts campaigning that nothing is getting done and everything feels worse under Obama and the Democrats. This will work, as long as the public feels everything getting worse without understanding that Democrats are trying to make things better but are being obstructed.
The only way to fight this obstructionist strategy is expose it and draw sharp contrasts between where conservatives want to take us and where a progressive populist economic agenda would take us. And these contrasts have to be sharp and clear enough to reach the public in ways that sink in.
Democrats should draw that contrast for voters in the coming elections and not confuse voters about what they are for and not for. Democrats should resolve to support only bills and deals that fix our infrastructure and create jobs. At the same time Democrats should say no to these tax giveaways to corporations. Democrats have to be seen fighting for jobs and being blocked. They have to be seen as trying to stop the corporate giveaways, not voting for huge corporate tax cuts.
In 2013, the cost of tax breaks was equal to the entire U.S. discretionary budget. However, the discretionary budget is subject to an annual appropriations process, where Congress debates the proposed spending. Tax breaks, on the other hand, remain on the books until lawmakers modify them. As a result, over a trillion dollars a year in lost revenue – more than 1.6 times the 2013 budget deficit – goes largely unnoticed.