Opinion by Jeffrey D. Sachs | CNN.com
May 7, 2021
Editor's Note: Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University and president of the United Nations Sustainable Development Solutions Network. His most recent book is "The Ages of Globalization" (Columbia University Press, 2020). The opinions expressed in this commentary are those of the author; view more opinion on CNN
(CNN) - The April jobs report, released Friday and with slower-than-expected employment-growth gains, reminds us that America's jobs future still hangs in the balance. President Joe Biden's American Jobs Plan, a first step to address this issue, calls for building infrastructure to modernize the economy -- paid for with higher taxes on companies and the rich. Yet, Republican Senate Minority Leader Mitch McConnell is pledging "100% of his focus on stopping this new administration," rejecting any new taxes on the wealthy.
We are at a moment of truth. America needs economic modernization to create good jobs and a safe environment, and the most effective way to pay for this modernization is to tax those who have benefited the most from the country's lax tax policies.
Of course, raising taxes isn't the only mechanism to pay for new federal spending. Congress could cut military spending, especially as the Biden administration ends the war in Afghanistan, or clamp down on medical costs, including drug prices, which could reduce government health care outlays. Yet as crucial and promising as those cost-saving measures are, they are not enough.
McConnell's record, alas, is clear: he will favor the wealthy over the needs of the country at large. In November 2017, McConnell brazenly abused the public trust by shoving through a huge and unaffordable tax cut for corporations over the strong opposition of the American public.
McConnell used legislative trickery to pass the tax cut, withholding much of the GOP Senate plan until the final hours before a late night vote. His action was brazen, and the tax cut remained deeply unpopular years after, even as the legislative manipulation faded from memory.
Why would McConnell and the Republican Party pass legislation when so many Americans opposed it? The answer is obvious: to serve the interests of corporate donors and the richest Americans who keep him and his colleagues in office.
The McConnell-aligned SuperPAC, the Senate Leadership Fund, raised an astounding $446 million from corporations and rich individuals in the 2020 election, which it used to target Democratic opponents. Of those donors, about $120 million came from the finance industry and $37 from gambling and casinos. McConnell himself raised over $65 million from America's wealthiest companies and individuals in the last election cycle.
So, here we go again. Biden wants to pay for new infrastructure to ensure that Americans have the renewable energy, advanced manufacturing capacity and 5G connectivity needed to ensure well-paying jobs in the future. He is proposing that the richest Americans and biggest companies pitch in this time -- and he is attempting to do so in a bipartisan manner.
To secure broad support -- both from the American people and the two parties -- Biden is not seeking to undo all the 2017 corporate tax cuts. Instead, he is proposing to cut only half of them. Before 2017, the corporate statutory tax rate was 35%. McConnell's middle-of-the-night Senate vote slashed the statutory rate to 21%, and Biden is proposing to reset it at 28%. He is also proposing a minimum tax on corporations to stop them from abusing overseas tax havens. And he is proposing to crack down on massive tax cheating by revving up tax audits on the largest companies and richest taxpayers.
Yet, McConnell and many of his Republican colleagues have flatly rejected any higher taxes whatsoever. In doing so, they have made clear they would rather that Americans do without a modern economy and decent jobs than have the biggest corporations forgo any of the 2017 tax-cut boondoggle. Even when Republicans proposed a laughably small spending package, roughly one-fourth the size of Biden's, they insisted that there would be no corporate or international tax increases to pay for it.
The contest between Biden and McConnell comes down to a test of whether the American government is governed by a few wealthy, overwhelmingly White men, or by and for a diverse nation with great potential and pressing economic needs.
McConnell is unlikely to budge, but Biden will continue to sell his package -- and he will do so knowing that a large majority of the American people support him. In an April Quinnipiac survey, 62% of respondents supported raising taxes on corporations (31% did not). Public support is even stronger for raising taxes on rich individuals earning more than $400,000 per year -- 64% in favor, 31% opposed.
Not surprisingly, in the same Quinnipiac poll, only 27% said they approve of the way that the Republicans in Congress are handling their job. Since Republicans do not have public opinion on their side, they are increasingly betting their future on voter suppression laws at the state level and the use of the filibuster in the Senate at the national level to block any major legislation.
So, where does this leave Americans? Public opinion alone cannot overcome McConnell's dark cynicism, but Biden can use the budget reconciliation process, which allows certain legislation, related to spending, taxes and debt, to pass with a simple majority -- thereby bypassing any threat of a filibuster. In today's Senate, that would mean a 50-50 party-line vote, with Vice President Kamala Harris casting the tiebreaking vote.
While Democratic Sen. Joe Manchin of West Virginia has so far held out for a bipartisan infrastructure bill with a slightly smaller corporate tax hike, Republicans' utter intransigence on raising corporate taxes -- as well as the huge boon of the jobs planned for the state of West Virginia under the bill -- will likely bring us to a party-line victory for Biden's popular legislation.
In contrasting Biden's job plan and McConnell's unrelenting focus on defeating it, White House press secretary Jen Psaki put it best: "Well, I guess the contrast for people to consider is 100% of our focus is on delivering relief to the American people, on getting the pandemic under control, and putting people back to work, and we welcome and support engagement and work with the Republicans on that."