Beneath the rhetoric about inflation and deficits, business investment and family farms, tax rates and benefit levels lurks the volatile question of economic redistribution. The government’s attempts to do so spark intense resistance from those who are asked to pay and amorphous skepticism even from those who get through it.

And whether the polls show popular specifics or not, redistribution arouses existential terror among lawmakers who fear that voting for it will jeopardize their careers.

“It’s very difficult to talk about it when you walk into the room,” said Hank Gutman, who previously advised Congress as chief of staff to the Joint Committee on Taxation. “Empirical evidence, solid economic theory – none of it matters.”

The roadblock of the Republican opposition has become obvious. The party has a strong electoral drive to thwart a Democratic president, an ideological aversion to tax and spending increases, and a financial incentive to protect corporate benefactors. While much of the GOP’s white working-class constituency would benefit from economic redistribution, Republican lawmakers are relying on cultural appeals to their fear of displacement by non-whites who would also benefit.

Even overt champions of tax fairness and greater economic opportunity sometimes shy away from these goals. Moderate Democrats fear pro-welfare and anti-business labels. Liberals, too, fear crossing the growing ranks of affluent, socially tolerant, college-educated Democrats. In 2020, the Brookings Institution found, the counties that voted for Biden accounted for 71% of U.S. gross domestic product – in other words, the current account for economic redistribution.

Recent Democratic presidents have reacted with caution.

Through the health system, the Affordable Care Act has effected a large-scale redistribution from the rich to the poor, from the healthy to the sick, from the young to the elderly, from men to women. But the Obama White House has avoided the use of the “loaded word,” as Chief of Staff William Daley once said.

Biden takes the same approach. The White House website shows that his public remarks did not include the word “redistribution,” which he has long despised.

Where he grew up, “We don’t call it ‘redistribution,'” Biden told then-Alaska Governor Sarah Palin during their 2008 vice presidential debate. “We call it l ‘equity. … “

As president, he built his economic plan to minimize the vulnerability of lawmakers and maximize appeal to voters. It includes widely available spending programs while limiting tax increases to corporations and individuals earning more than $ 400,000 per year. Some business models predict increases in hiring and growth; others show only negligible streaks.

Yet the main Democrats are showing reluctance as decision time approaches.

To avoid the specter of welfare, West Virginia Senator Joe Manchin wants working conditions for recipients of expanded tax credits, even though he represents one of the poorest states.
The House Energy and Commerce Committee blocked Biden’s proposal to let Medicare negotiate lower drug prices with the pharmaceutical industry. This would reduce the profits of pharmaceutical companies in order to expand health benefits for beneficiaries.

The Ways and Means Committee reduced Biden’s proposals to increase the corporate tax rate to 28% from 21% and the capital gain rate to 39.6% from 20%. He dropped his call to close the loophole for wealthy heirs to wipe out capital gains taxes on big assets. Lobbyists have warned that the plan will alarm family farmers, even if its provisions protect them.

“This is unacceptable,” said Gutman, who now advises a tax law firm representing large corporations, of the “progressive base” loophole. “Everyone knows that, and they won’t do anything about it.… What stops (the action) is their wealthy constituents who can contact them on a particular issue.”

Yet after watching decades of tax battles, Gutman sees Democratic nervousness as the least part of the story of 2021. The greater part: How far redistributive Democrats stay on track to turning into law.

He began in the Treasury Department in the mid-1970s as Conservative tax reduction goals were gathering momentum. Rising budget deficits shifted political momentum to limited tax hikes in the early 1990s, when he chaired the Joint Committee on Taxation.

Biden’s plan arose out of a fundamentally different economic and political context. The steady rise in wealth and income inequality has hardened the majority view that corporations and the rich don’t pay enough, and many more Americans need help moving forward. .

Even as Democrats back down from some elements of Biden’s plan and bicker over others, Ways and Means last week approved a series of tax hikes on businesses and wealthy Americans exceeding $ 2 trillion in 10 years. The money would fund education, health and social benefits for the middle class, the working class and the poor.

“This is the greatest opportunity we have had to do anything in 30 years,” concluded Gutman. “I think it’s going to happen.”


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