Biden’s litmus test
AMERICAN left is showering Biden with praises for his three $6T plus plans.
It is reminiscent of Lilliputians of Gulliver’s Travels awarding medals to each other in Parliament for performing tricks instead of serving their voters.
Sanders praised Biden for $2T US Infrastructure Plan as unprecedented in decades but he should not forget voters rejected him twice.
Other two are $1.9T American Rescue Plan and $2tn for childcare, education and healthcare. Republicans have questioned proposed tax plans to fund USIP.
According to a study, the economic damage for Biden’s tax hikes will outweigh benefits from new spending.
The eight-year plan to build nation’s roads and bridges, as well as transit systems, schools and hospitals will be funded by raising corporate tax rate to 28% from Trump’s 21% and by increasing global tax on US corporations to 21% from 13%.
After taking office, Trump rolled back Democrat’s healthcare program. Now Biden has targeted Republican’s tax cuts but extended his tax plans between 10 and 15 years instead of 8.
Due to such policies of both parties, democracy has failed to serve its voters. Republicans should take up Biden’s offer and bring an alternate tax plan to settle the debate politically.
Otherwise, it will deepen the divide between the lawmakers and voters, which is evident from the Capitol police request for extension of National Guard presence on the Hill.
Biden said that raising taxes will not slow the economy at all. We are asking corporate America to pay their fair share. Biden has staked his 2024 reelection bid on the back of the middle class.
His economic plan is to save middle class to save America. However, spending details reveal big gaps in targets and objectives.
The claims of $7,700 or 35% boost to households earning 25K or less under direct and child support is just for 17% of the total 53% households earning $75K or less.
The challenge is to bridge the gap between rich and poor as top one percent control 50 percent of the country’s total wealth. Democrats new tax plans will add $1750* to the tax of household earning $25k or less.
To put it in perspective, the 2021 Federal Poverty Guidelines for a family of four is $26,500.
The plan in its current form will add more tax to households already below poverty levels and facing Covid economy. Biden will give from one hand and take it back from the other.
The worst part is that these families will have to pay this additional tax for the next 10 years unless restricted to eight.
If 9 million plus unemployed people and 40 million renters saved by eviction moratorium are also counted then government is looking at more inflation, more poverty and more budget deficit.
The current poverty rate is 9.5% and unemployment rate is 6.3%. Almost one million people were unemployed in March 2021.
Democrats should try to speed up the legislation to meet Biden’s new target of 200 million vaccinations so that the economy can open and people can get back to work and lead a normal life.
To attract Trump voters, Biden promised to tax household earning 400K or more. It has to go. Median income in America is $55,000.
If Democrats bring it down to $74,999, the tax of 53% of total households will stay the same.
By expanding the tax base to remaining 47% households with $75,000 and more income, tax rate can be lowered to 22-15%. It can help Biden win support of the Republicans and make America business friendly.
By giving tax break, he can match Trump’s policies of MAGA and bringing back industries and jobs.
Johnson won the last election with strong majority. His plan of “levelling up” or bridging the gap between the rich and poor won him Labour Party or blue-collar voters.
Now government watchdog led by the Bank of England’s chief economist has said Boris Johnson’s plans are unlikely to succeed because they rely too heavily on infrastructure spending and one-off funding schemes controlled from Westminster.
If Biden manages to protect the interests of 50 million poor and bringing down interest rates, he will succeed as a liberal where Johnson is stuck as a conservative.
The essence of politics in pandemic is immediate relief not 8-10 years long mega plans. People need help and they need it fast.
Help can come in parts but it must not stop due to political deadlock. By accepting demands of the Republicans, Biden can keep the initiative with him.
It will allow him to reach out to the Republicans to show America that he is not just president of Democrats.
It is Biden’s litmus test. This is one sure way of making democracy work, end extreme politics and avoid making rangers permanent fixture on Capitol Hill.
—The writer is senior political analyst based in Islamabad.
