McConnell: ‘Zero’ GOP Support for Biden’s Big Plans

McConnell: ‘Zero’ GOP Support for Biden’s Big Plans

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Plus - US may never hit herd immunity
Monday, May 3, 2021

McConnell Says There’s ‘Zero’ Republican Support for Biden’s Big Plans

As President Joe Biden works to sell his $4.1 trillion plans for infrastructure and safety-net programs — and the tax hikes on corporations and the wealthy that he proposes to help pay for them — Republicans are looking to set the terms for upcoming negotiations.

Senate Minority Leader Mitch McConnell (R-KY) said Monday that Biden isn’t likely to get any Republican support for his current spending proposals.

“I think it's worth talking about but I don't think there will be any Republican support — none, zero — for the $4.1 trillion grab bag that has infrastructure in it but a whole lot of other stuff,” McConnell said at a press conference at the University of Louisville.

Senate Republicans have proposed a $568 billion infrastructure package that Democrats have criticized as providing too little new money. McConnell reportedly said that the GOP proposal isn’t a hard cap, but emphasized that his party wants to limit the scope of the package.

"We're open to doing a roughly $600 billion package which deals with what all of us agree is infrastructure," McConnell said. "If it's going to be about infrastructure, let's make it about infrastructure."

What’s next: White House Chief of Staff Ron Klain said Sunday that Biden would invite several Republicans to the White House this week for talks.

“The White House wants to see counteroffers to Biden's $2.25 trillion infrastructure plan by the middle of this month, and if progress isn't being made by Memorial Day, officials will reassess their strategy of trying to build bipartisan support,” Sahil Kapur and Shannon Pettypiece of NBC News report, citing a person familiar with the negotiations.

The two sides are approaching the negotiations warily, with each worried that the other side isn’t bargaining in good faith.

"Let's decide what are they prepared to consider in terms of what constitutes infrastructure, how much of it, and then we can talk about how to pay for it if we get to the point that we actually have a real number," Biden told reporters last week after a phone call with Sen. Shelley Moore Capito (R-WV), who is heading the GOP’s infrastructure efforts. "If it's like last time — and I don't, I think she's serious — but if, like last time, they come in with one-fourth or one-fifth of what I'm asking and say, 'That's a final offer,' then it's a no-go for me."

The fight over corporate taxes: How to pay for infrastructure spending has always been a sticking point, and the two sides still face fundamental disagreements over the idea of tax increases.

Rep. Kevin Brady (R-TX), the top Republican on the House Ways and Means Committee and a leading architect of the 2017 tax cuts that Biden wants to largely reverse, predicted in an interview with CNBC Monday that “there’s going to be a real fight over these tax increases.”

Brady said that there was room for compromise on infrastructure but suggested that lawmakers should fund any package by first seeking to eliminate waste and fraud from federal tax credit programs and rededicating tax provisions that he said used to fund infrastructure but have suffered what he called “mission creep.” Brady also said the private sector should play a larger role. "U.S. lags the rest of the world in attracting private capital into infrastructure for some reason. That is an area that Congress needs to get serious about because private capital rather than tax dollars can help us fund basic infrastructure," he said.

On the Democratic side, Senate Finance Committee Chair Ron Wyden (D-OR) said he wanted to find common ground but that the Republican position that multinational corporations “should not pay a penny for infrastructure" made it harder to do so. "Pretty hard to make anything bipartisan out of that," he said.

Biden on Monday defended his call for higher corporate taxes. I come from the corporate capital of the world,” he said. “More corporations are incorporated in the state of Delaware than all the rest of the nation combined. And I’m not anti-corporate, but it’s about time they start paying their fair share."

The president also sought to make the case for his plans to raise taxes on the rich. “Do we want to give the wealthiest people in America another tax cut? Or do you want to give every high school graduate the ability to earn a community college degree?” Biden asked. “Is it more important to keep these tax loopholes for millionaires — for good people, not bad folks — or would we rather put $7,200 in the pockets of working moms and dads every year if they have two children?"

The bottom line: Infrastructure has long been described as one policy area where there’s room for bipartisan cooperation. We may find out this month whether there’s any truth to that.

Yellen Makes the Case for Tax Hikes on the Rich

Treasury Secretary Janet Yellen on Sunday defended President Joe Biden’s plan to raise taxes on corporations and the richest 1% of Americans, telling CNN that the benefits of increased spending on education and infrastructure outweigh any negative effects that could be produced by the tax hikes.

“The greatest threat to our economic recovery – and our long-term economic prospects – is not a marginally higher tax rate for large corporations or the top 1% of taxpayers,” Yellen said. “It's a lack of support for America's workers and families.”

Yellen explained that the Biden administration sees taxing and spending as inseparably connected and argued that the combination of policies it was promoting would produce a clear benefit in the form of stronger economic growth.

“Asking 'will these tax increases hurt the economy?' is not the right question,” Yellen said. “The right question is: 'Is trading higher taxes on high-income taxpayers for middle-class tax cuts and major economic investments pro-growth?' And the answer to that question is a resounding yes.”

Republicans stick to their guns: GOP opposition to Biden’s plan portrays the proposed tax increases as something close to an economic disaster. In the Republican response to Biden’s address to Congress last week, Sen. Tim Scott of South Carolina charged that Biden was planning “the biggest job-killing tax hikes in a generation.”

Big business tends to agree. As CNN’s John Harwood reports, 98% of CEOs surveyed by the Business Roundtable said the proposed tax hikes would hurt their firms’ competitiveness, and substantial majorities said the increases would result in reduced hiring and R&D.

Given the Republican insistence on the power of tax cuts to produce economic growth, and its supply-side approach more broadly, this opposition to Biden’s plan comes as no surprise. The problem, Harwood says, is that both the historical data and economic modeling don’t show much support for GOP claims.

The Republican “attacks sound familiar because they echo jibes against tax hikes enacted by the last two Democratic presidents,” Harwood says. “As it happened, Bill Clinton oversaw an economic boom and Barack Obama the longest streak of private sector job growth in American history.”

Estimating the effects: Analyses by right-leaning think tanks show negative economic effects from Biden’s proposed tax increases, but the effects are relatively small. The Tax Foundation estimates that Biden’s plan would result in an economy that is 1.62% smaller in 2050, but Republican economist Doug Holtz-Eakin says it would be just 0.2% smaller, once the growth produced by the associated spending is taken into account.

The American Enterprise Institute found an even smaller effect, estimating that the economy would be 0.16% smaller. "I would not say it is a job-killing disaster," AEI's Kyle Pomerleau told CNN.

Other think tanks have produced more positive results. The Penn-Wharton Budget Model found that Biden’s tax increases would slightly reduce the economy by 2030, relative to the baseline, but then increase it by 2050. Economist Mark Zandi of Moody's found similar results, with the tax producing a short-term drag but then higher growth as the spending kicks in.

Challenging the tax cut faith: While Republicans are sticking with the economic ideology they have embraced for four decades, the Biden administration is trying to revive the idea that taxes can help pay for social investments that eventually produce higher growth.

Washington Post columnist Jennifer Rubin argues Monday that the problem for the GOP is that its faith in its fiscal policies is drifting ever further away from the facts on the ground. “Republicans simply ignore the mountain of evidence disproving the benefits of supply-side tax cuts,” Rubin writes, adding that decades of research suggests that tax policies have little effect on growth and employment.

Yellen argues that the Biden plan marks a turning point in Washington’s approach to taxing and spending. “Since the Reagan years, we've been enduring a particularly potent economic ideology in this country -- one that says tax cuts, as a rule, promote growth while government investment, as a rule, is wasteful,” she told CNN. “This ideology has never made much sense given what we know about the payoffs from government investments in people, infrastructure and R&D.”

Why the US May Never Achieve 'Herd Immunity'

Nearly 45% of Americans have received at least one dose of Covid-19 vaccine and nearly a third are fully vaccinated, according to the Centers for Disease Control and Prevention. As the vaccination total has grown, new infection rates have fallen, with the seven-day average of new cases dropping below 50,000 this weekend for the first time since October.

But as the vaccination rate slows — it averaged 2.4 million a day over the past week, down from 3.4 million a day as of April 13 — many of those left unvaccinated either have difficulty accessing the shots or are hesitant to receive them.

Those challenges and others now have scientists and public experts saying that the United States isn’t likely to reach “herd immunity,” the point at which enough of the population is immune to the virus that its spread becomes less likely and even the unvaccinated have some protection. Apoorva Mandavilli of The New York Times reports:

“[T]here is widespread consensus among scientists and public health experts that the herd immunity threshold is not attainable — at least not in the foreseeable future, and perhaps not ever.

“Instead, they are coming to the conclusion that rather than making a long-promised exit, the virus will most likely become a manageable threat that will continue to circulate in the United States for years to come, still causing hospitalizations and deaths but in much smaller numbers. …

“If the herd immunity threshold is not attainable, what matters most is the rate of hospitalizations and deaths after pandemic restrictions are relaxed, experts believe. …

“Over the long term — a generation or two — the goal is to transition the new coronavirus to become more like its cousins that cause common colds. That would mean the first infection is early in childhood, and subsequent infections are mild because of partial protection, even if immunity wanes.”

Read more at The New York Times.

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