Centrist Dems Demand Infrastructure Bill Include Tax Hikes on Rich

Don’t mess with Tester. Photo: Leigh Vogel-Pool/Getty Images

The first two months of the Biden era have gone pretty well for the Democrats’ left flank. The president has packed his Cabinet with a cornucopia of progressive wonks; antitrust crusaders are taking the helm at the FTC, while full-employment fanatics occupy damn-near every economic post in the White House. Meanwhile, Joe Biden taught Donald Trump’s appointees at the Labor Department a hard lesson about the cruelty of at-will employment, and then delivered the most full-throated endorsement of union organizing that any sitting president has given in U.S. history. And then, last week, Democrats managed to pass the largest anti-poverty program in a generation with a mere 50-vote Senate majority.

But for blue America’s crypto-pinkos, the honeymoon is finally over.

As congressional Democrats turn their attention to Biden’s second major agenda item — a green infrastructure package — the party’s centrist lawmakers warn that they’re done being steamrolled by the left: If Biden is going to ask them to vote for a multitrillion-dollar ecofriendly infrastructure package after already making them back a $1.9 trillion stimulus, well, then he’d better be prepared to throw moderates a bone — by offsetting a portion of the new bill’s costs with new taxes on the wealthy.

As Politico reports:

Even as President Joe Biden and his allies in Congress begin laying the groundwork for an infrastructure package whose price tag could top the $1.9 trillion bill he’ll sign this week, multiple Democratic centrists on both sides of the Capitol are ready to pump the brakes. They want at least some of the next big bill to be paid for, arguing there has to be some limit to Congress’s deficit spending as the nation claws its way out of Covid’s grip.

… Generating new revenue for infrastructure typically involves a debate about raising the federal gas tax, an idea so politically toxic that it’s been stagnant since 1993 and already repudiated by the Biden administration. Other ideas include charging fees based on the number of miles traveled, which raises privacy concerns with some politicians, or perhaps embracing unrelated tax increases on the wealthy to raise money for roads, rails and public transportation.

Okay, the moderates quoted in Politico’s article are more emphatic about limiting the infrastructure package’s impact on the deficit than they are about soaking the rich. But as that last paragraph indicates, raising taxes on the very wealthy has long been the path of least resistance for Democrats’ looking for new sources of revenue. And in a recent interview with Axios, the Senate’s most conservative Democrat, Joe Manchin, made clear that he’s eager to hoover up the excess income of corporate shareholders and high-earners:

Manchin said that with all the debt we’re piling up, he’s worried about “a tremendous deep recession that could lead into a depression if we’re not careful. … We’re just setting ourselves up.”

He talked up an array of tax increases, including raising the corporate tax rate from the current 21% to 25% “at least,” and repealing “a lot of” the Trump tax cuts for the wealthy.

Manchin and a few other moderates have also expressed a desire for the impending infrastructure plan to be bipartisan. But the fact that their own substantive demands would render Biden’s proposal even less palatable to Republicans (ten GOP senators are not voting to raise the corporate tax rate; these people are pushing to slash the estate tax for chrissakes) makes it hard to take their professed desire for bipartisan compromise too seriously. By contrast, the fact that Manchin, Jon Tester, Angus King, and the party’s other moderates voted in lockstep against the Trump tax cuts in 2017 suggests that their contemporary support for progressive taxation is sincere.

The notion that deficit spending is liberal, while pairing public investment with measures that reduce income inequality is moderate, is a bit perplexing at first brush. And if soaking billionaires is the price progressives must pay for securing a green infrastructure policy, they will surely be willing to take that deal.

This said, you can see some sense in this ideological scheme if you squint: Given that moderate Democrats’ appetite for taxation remains far smaller than Bernie Sanders’s, their insistence on offsetting new infrastructure spending could effectively crowd out other items on the progressive agenda. For example, extending the child allowance in the newly passed COVID relief bill for ten years will cost more than $1 trillion. If Democrats take the small subset of tax increases that moderates are comfortable supporting, and spend them on offsetting the costs of infrastructure spending, then securing permanent expansions in America’s social safety net could become politically untenable. Many center-left economists have endorsed financing infrastructure spending with debt, since interest rates are low and capital investments are one-off expenses that plausibly increase long-term growth. Relatively few mainstream economists support deficit-financing permanent social welfare programs, however. Thus, progressives’ best bet for maximizing their gains from the Biden presidency might be to persuade moderate lawmakers to acquiesce to deficit-financed infrastructure investments, thereby preserving a large pool of pain-free revenue raisers for building out the American welfare state.

On the other hand, Biden has previously signaled an intention to adopt a capacious definition of “infrastructure” — one that includes the “care infrastructure” necessary for safeguarding the well-being of America’s elderly, and fostering the gifts of its young people. If the infrastructure package does include permanent forms of welfare spending — and moderates continue to insist that the plan merely be paid for in part — then the tension between their objectives and the Democratic left’s will be considerably reduced.

Notably, there does seem to be some disagreement about the desirability of “paying for” infrastructure spending within the heterogeneous bloc of congressional Democrats known as “moderates.” Some, like Maine senator Angus King, appear to derive their centrist status from an ideological aversion to high deficits. To lawmakers whose moderation is rooted more in concerns about reelection than substantive conviction, however, “don’t-tax-but-spend liberalism” may have considerable appeal: After all, the fact that Biden’s relief bill adds $1.9 trillion to the national debt has not prevented it from earning the approval of 75 percent of Americans.

It’s not too surprising, then, that some of the centrists who spoke with Politico sounded less-than fervent in their commitment to fiscal thrift:

“There are some people who are concerned about rising debt … But at the same time, how long have we been talking about infrastructure?” said Rep. Lou Correa (D-Calif.), a senior member of the centrist Blue Dog Coalition. “I’ve been hearing that a very long time. And this appears to be a time when the stars appear to be aligned.”

Another Blue Dog centrist, Rep. Tom O’Halleran (D-Ariz.), said that “we want to try to see what we’re going to pay for.”

“But in reality,” he added, “we have to get people back to work. And we can’t just keep talking about infrastructure. We have to do it.”

But there is one thing that just about all centrist Democrats do fervently want: for voters to perceive them as staunch adversaries of the “radical” left. So progressives may want to start decrying the income tax as an act of literal violence against people of means — and demanding the cancellation of Joe Manchin for his deeply problematic opposition to the carried interest loophole — so that Blue Dogs can carry on slouching toward social democracy, without worrying that the median voter will mistake them for antifa.

Centrists Demand Green Jobs Bill Include Tax Hikes on Rich