That fine balance fell apart on Wednesday when House Minority Leader Kevin McCarthy (R-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.), after exiting a meeting with President Biden, made clear that they would not budge on items to pay for the infrastructure bill.
The two Republican leaders said they set a “red line” on Biden’s effort to roll back their 2017 tax cuts. Understand that what Biden has proposed is a modest increase in the corporate tax rate from the current 21 percent to 28 percent (still below 35 percent before 2017), along with an increase in the minimum corporate tax and a limit on what companies can write off from overseas assets. That is what Republicans will go to the mat to oppose. It seems they would rather kill an overwhelmingly popular infrastructure bill — or worse, shift the tax burden to ordinary Americans — than accept higher taxes for big corporations, 55 of which paid no federal income tax last year. Alternatively, they might decide deficits really do not matter and agree not to pay for it at all.
If Republicans are to be taken at their word, then the only conclusion is that they oppose any corporate tax increase. That is a more extreme, plutocratic stance than many Republicans took in 2017, when they and their corporate allies were hoping for a 25 percent rate. That’s the rate that the Business Roundtable pleaded for in 2015, as did then-Republican presidential candidate Mitt Romney and House Republicans in 2012. There is nothing magical about 21 percent — other than the false promise that the resulting benefits flowing to corporations would increase jobs, wages and investment.
McCarthy and McConnell’s line in the sand is also more extreme than what their corporate backers think is possible now. Reuters reported last month:
Reuters interviewed more than a dozen corporate and White House officials engaged in the infrastructure push. Most expect the White House and business groups to compromise on a 25% corporate tax rate — a level neither side would have chosen, but both can live with.“We don’t like it, but we expect to be at 25 percent,” a lobbyist at a top U.S. energy firm said, requesting anonymity. “If so, we are going to consider that a win.”
Aside from the economic flaws in favoring corporate tax cuts over investments in infrastructure, the stance from McCarthy and McConnell is unquestionably bad politics. Large majorities of Americans have indicated that they favor an infrastructure bill and that they like it even more when it is funded by tax hikes on corporations. Last month, a Washington Post-ABC News poll found Americans supported the infrastructure bill by a margin of 52 to 35 percent, which increased to a 58-to-36 margin when corporate tax hikes were included. A Morning Consult poll likewise found that 47 percent of voters said they would be more likely to support an infrastructure bill if it included corporate tax hikes.
Why would a party oppose something popular that scrambles their populist messaging ploy? Quite simply, the corporate cash and rich individual donors mean more to the GOP than do the views of voters, even those in their MAGA base. Republicans’ brief tussle over corporate pushback on voting suppression should not obscure the underlying reality: The GOP remains the party of the wealthy and of corporations in everything but phony rhetoric.
Perhaps McCarthy and McConnell are simply posturing. Maybe McConnell, contrary to his admission that he is “100 percent” focused on stopping Biden, actually does want to give his members something to run on in 2022. But don’t bet on it. Republicans seem convinced that their base is so dim that Republican lawmakers can get by on some bumper sticker populist slogans while doubling down on their anti-populist economic agenda. If Democrats do not make clear that Republicans are putting the interests of corporate tax scofflaws over those of ordinary Americans, they just might get away with it.