On Friday morning, the House of Representatives passed its version of President Joe Biden’s $ 1.75 trillion “Build Better” version of President Joe Biden’s social protection and climate bill. As expected, the measure was approved in a party line vote, with 220 Democrats voting “Yes” and 212 Republicans voting “No”. A Democrat, Jared Golden of Maine, a former Tory Marine who served tour in Iraq and Afghanistan, broke ranks and voted against the bill.
Golden had announced that he would oppose the bill because it included massive tax relief for the rich. The result of months of internal Democratic Party bickering has been Biden’s White House and party leadership decision to remove the bill from all major tax hikes opposed by big business and cut it in half. Social programs and climate protection revenues from $ 3.25 trillion to $ 1.75 trillion over 10 years.
This, however, has not satisfied Wall Street and the interests of the corporations that dictate government policy and control the two main parties. Earlier this month, House Speaker Nancy Pelosi incorporated into the bill a measure demanded by wealthy donors in high-tax states such as New York, New Jersey and California. This involved the lifting of a $ 10,000 cap on federal income tax deductions to offset state and local taxes. The cap was imposed as part of the Trump tax bill passed in December 2017, which cut taxes on corporations and the wealthy.
Until then, there had been no limit on the amount of federal tax deductions for state and local taxes that wealthy in generally pro-Democratic high-tax states could claim when detailing their federal tax returns. By imposing the limit, Trump and the Republicans were targeting states that historically vote “blue” in federal elections.
This infuriated wealthy Democrat supporters, who demanded that the Biden budget bill increase the limit on so-called SALT (state and local taxes) deductions. Democrats joined by adding a provision to the bill raising the limit to $ 80,000 for each of the next nine years.
The Congressional Budget Office estimates that this tax windfall for the rich will cost the federal government $ 285 billion over the 10-year period covered by the bill, making it the second costliest piece of legislation. It’s only complemented by a combined $ 390 billion for universal preschool education for three and four-year-olds and limited childcare subsidies.
It is considerably higher than the clean energy and climate resilience allowance ($ 220 billion), four weeks of paid family and medical leave ($ 195 billion), clean energy tax credits and electricity ($ 190 billion), affordable housing ($ 170 billion), Medicaid home and community services ($ 150 billion), a one-year extension of the expanded child tax credit (130 billion) and tax credits for health insurance premiums under Obamacare ($ 125 billion).
It would help pay for programs that have been severely cut or removed from the bill under pressure from big business and its more open spokespersons in the Democratic Party, such as West Virginia Senators Joe Manchin. and Kyrsten Sinema from Arizona. These include a free community college (eliminated); Medicare’s ability to negotiate drug prices with the pharmaceutical industry, thereby reducing their costs (reduced to a fictitious program affecting only a handful of drugs and not even starting until 2024); and Medicare coverage for dental, hearing and vision care (reduced to limited subsidies for hearing aids).
According to an analysis by the Tax Policy Center, the SALT tax provision will massively benefit the top 10 percent of earners, with virtually nothing for the remaining 90 percent – the working class and lower middle class. The measure will particularly benefit the richest 1%, those who earn more than $ 867,000 per year. They will benefit from a tax reduction of several tens of thousands of dollars.
“Anything you do to eliminate the SALT cap will be regressive, because much of this tax is paid by very high income earners,” said Howard Gleckman of the Tax Policy Center. “Whatever you do to reduce this tax doesn’t matter to most people. “
The Committee for a Responsible Federal Budget (CRFB) reported that a family of four in Washington DC earning $ 1 million a year would see 10 times the tax break next year by expanding national tax deductions and local than a middle-class family. an expansion of the child tax credit. The CRFB said two-thirds of households earning more than $ 1 million per year would benefit from a tax cut under the legislation due to the increased state tax deduction and the local property tax.
Highlighting the cheeky hypocrisy of Biden and the Democratic Party, Marx Goldwein, senior policy director at CRFB, said: credit, while giving upper-class families $ 10,000 or more through SALT. It goes against everything the Democrats have said about Build Back Better and everything they have said about Trump’s tax cuts. ”
Raising the SALT cap would more than offset other tax increases for the wealthy in 2022 included in the House bill, according to a Tax Foundation report. These include a minimum corporate tax of 15%, a tax of 1% on share buybacks, an increase in taxes on foreign profits of US corporations and a surtax of 5% on those with adjusted gross income over $ 10 million and 8% on those earning more than $ 25. million.
In a column of Financial Time On Thursday, Edward Luce alluded to Democrats’ obsession with identity politics and linked it to the Build Back Better bill:
The result is a bill that best speaks to the most powerful, the very wealthy, the very wealthy of Americans. They can rest easy now that the deferred interest loophole, which allows private equity partners to be taxed at lower than regular rates of income – as Warren Buffett pointed out, they pay a tax rate. lower than that of their secretaries – is probably safe. As it stands, the bill will also offer wealthy Americans a bigger tax cut than they got thanks to Trump’s big tax bill in 2017.
Even this miserable parody of social reform will be further gutted if not outright blocked in the Senate, where passage will require the support of the 50 Democrats. Neither Manchin nor Sinema signed the bill, the former saying they were opposed to even totally insufficient paid four-week leave, while calling for means-tested and working conditions for others. social Security benefits.
The so-called “progressives” – Bernie Sanders, Elizabeth Warren in the Senate, the Progressive caucus of more than 100 House members – have capitulated to the demand by Biden and the more right-wing factions of the Democratic caucuses to move on. $ 1,000 billion bipartisan. bill on infrastructure. This bill was supported by virtually all business lobby groups, without obtaining the agreement of Manchin and Sinema to support the Senate’s passage of the broader “Build Back Better” social spending bill. , against which the companies waged a massive lobbying campaign.
Sanders, for his part, has denounced the inclusion of the SALT provision in the House bill but supports an amended version in the Senate bill, whereby eligibility for expanded tax deductions would be limited to those earning less than $ 400,000 per year. On the flip side, Senate Majority Leader Chuck Schumer, widely known as “Senator for Wall Street,” argues an even larger inference than the House intended.
He announced that he would be talking about the National Defense Authorization Act, which allocates $ 778 billion to the military in a single year (almost half of the Build Back Better budget over 10 years) and the anti-China United States Innovation and Competition Act before taking the social / climate measure voted by the House. This could delay the review of Build Back Better until next year, which Manchin hinted at, which would likely kill the legislation.
All the so-called “progressives” promoted by the pseudo-left, including members of the Democratic Socialists of America (DSA) Alexandria Ocasio-Cortez, Jamaal Bowman, Ilhan Omar and Cori Bush, voted for the Bill on Friday. the House, thus demonstrating the DSA’s willingness to act as an armed wing of one of the two main parties of US imperialism.
In the 2020 Democratic primaries, every candidate pledged to repeal the Trump tax cut for the rich. Biden has repeatedly called his national program a “blue collar” program. While declaring to satiety that “I am a capitalist”, who has nothing against people who become billionaires, he called on Wall Street to “pay their fair share”.
Now it is perfectly clear what this really means. Under conditions where Democrats control the White House and both houses of Congress, they have abandoned any attempt to raise corporate or personal tax rates for the rich. The only significant change Biden and the Democrats seek to make to Trump’s multibillion-dollar tax gift to the oligarchy is to increase its scale.
It is a devastating exposure of the fraudulent claims by the DSA and similar upper middle class organizations that gradual change is possible under the two-party capitalist system and that the Democratic Party can serve as an instrument of change. social.