Late yesterday, 10 conservative senators, half conservative Democrats and half conservative Republicans-- typical DC faux bipartisanship-- decided to follow President Manchin and President McConnell rather than that guy who was elected president. And rather than what every poll shows Americans want (ie- for the wealthy to pay their fair share of taxes). They announced they have reached an agreement on an infrastructure plan, a much smaller one than needed that will be paid for by the working class, not by the wealthy. The ad hoc group's members:
Bill Cassidy (Con-LA)
Susan Collins (Con-ME)
Joe Manchin (Con-WV)
Lisa Murkowski (Con-AK)
Rob Portman (Con-OH)
Mitt Romney (Con-UT)
Jeanne Shaheen (Con-NH)
Kyrsten Sinema (Con-AZ)
Jon Tester (Con-MT)
Mark Warner (Con-VA)
Rob Portman: "Pleased to report our group of 5 Republicans and 5 Democrats have worked in good faith and reached a bipartisan agreement on a compromise framework to modernize our nation’s infrastructure without any tax hikes." One Democratic senator, not part of the group of Cons but briefed on the proposal said $1.2 trillion is good enough but warned that the on pay-fors is not. Normal Democrats aren't going along with making the working class pay for this by hiking gas taxes and other conservative schemes to protect their wealthy campaign contributors.
The Wall Street Journal reported that "people familiar with the agreement said it called for $579 billion above expected future federal spending on infrastructure. The overall proposal would spend $974 billion over five years and $1.2 trillion if it continued over eight years... Republicans said the infrastructure investments wouldn’t be paid for by tax increases, but lawmakers have been tight-lipped about how they fund the package, expected to be the most contentious part of the negotiations. Sen. Mitt Romney (R-UT), another member of the group, said earlier Thursday that the group was looking at indexing the gas tax to inflation. The federal gasoline tax hasn’t been increased since 1993.
The new proposal is also expected to be paid for in part by repurposing funds from previous Covid-aid package... Some [repulsive very right-wing] Democrats are supportive of raising the gas tax, though. Sen Tom Carper (D-DE), the chairman of the Senate Environment and Public Works Committee, tweeted on Thursday that Congress should index the gas tax to inflation. 'Things worth having are worth paying for,' he wrote in a tweet. 'As I’ve said for the last two Congresses, at a minimum we should index the gas tax to inflation to help fund investments in climate-resilient infrastructure.' My favorite response came from Ed Markey: "From my perspective: No climate. No bill. No deal." I wonder how long he'll be able to resist the pressure that will fall on his head like a ton of bricks.
The irony of all this is that it doesn't really have to be a fight over who pays for it, which is something of a smokescreen. We are not really dependent on the billionaire class. The savviest economist in the country, Stephanie Kelton, told me today that "The truth is that Congress can very easily PAY FOR whatever it damn well chooses with or without raising a single tax on anyone. It’s how we did $2.2T in March 2020, $800B in Dec 2020, and $1.9T in March 2021. She explained that very clearly in a guest post for The Intercept in March of last year: As Congress Pushes a $2 Trillion Stimulus Package, the “How Will You Pay For It?” Question Is Tossed in the Trash. "Congress," she wrote at the time, "knows how to spend money when it wants to."
What she told me this morning is that, in short, "VOTES FUND THE SPENDING. That is where the money comes from. If the votes are there, the money will go out, just as it did in every example above. Vote for the CARES Act, and $2.2 trillion goes out the door. You don’t need to 'find the money.' You need to find the votes."
Kelton is realistic about what can be achieved in the Senate. "The votes," she said, "just aren’t there for a slew of tax increases. There are probably 20 Dems in the Senate who will NEVER vote for all of the tax hikes Biden (much less Bernie) are after. So where does that leave you? If you’re committed to only spending what you think you can 'afford' given the limited new revenue you can capture, then we might as well give up on the progressive agenda right now because it is DOA."
And that isn't something Kelton is ready to see happen. She mentioned that "Margaret Thatcher famously quipped, 'There is no public money. There is only taxpayer money.' Bullshit! There is public money. We’ve been using it to support the economy for the last 15 months, and we can use it anytime we damn well please. Jeff Bezos has nothin’ on Uncle Sam if Congress is prepared to flex its fiscal muscle and fund an ambitious agenda. That is NOT to say that we should give up on trying to tax the rich!!! We shouldn’t. Income and wealth inequality are dangerously high. This is bad for the functioning of our economy, and corrosive to the functioning of our democracy. We should elect people who will work to narrow those gaps, and the tax code is one way to make progress on that front. But it is most certainly not the only way. The problem with the rich, from an MMT perspective, is not that they don’t 'pay their fair share,' depriving the federal government of much needed revenue. The federal government can operate just fine with or without more tax revenue. The problem with the rich is that they are taking more than their fair share. That’s why they have so much! It’s not just the tax code. It’s patents/protections, laws that govern trade and labor relations, etc. Robert Reich is exactly right to talk about the need for policies aimed at PRE-distribution. We have to stop them from taking so much in the first place! But we don’t do that because we’re too focused on this other narrative-- Robin Hood RE-distribution-- where we think the challenge is to tax away some of their money and use it to 'pay for' public investments."
She added that we can all see how well that is working out. Progressive congressional candidate Jason Call of northwest Washington sees it the same way. "Stephanie is right, of course," he tolded me last night. The federal government can pay for whatever it wants to pay for. The problem is that we've got a wholly bought off Congress that works for the ultra wealthy to ensure that they get the lion's share of whatever government does spend. The wealthy and corporations simply treat the government as a way to mitigate their externalities. If they can avoid cleaning up their own pollution, if they can exploit labor, if they can squeeze out subsidies, it all goes to their bottom line. Their capacity to do this is the result of the ever increasing wealth gap. It's why taxing the wealthy and corporations heavily is vital to democracy. It's not about whether the federal government can pay for healthcare, education, or subsidize housing and wages, it's that having those social supports available to the average person gives the average person power and freedom that the wealthy don't want us to have. The freedom to walk away from a job without worrying about losing healthcare. The freedom to get an advanced degree without being saddled with tens of thousands of dollars in debt. It's the profit margins of the wealthy that Congress is working for, and the more wealthy the oligarchs become, the more power they have to deny resources to the rest of us. We're living in a feudalistic robber baron state, yet its all completely 'legal' and supported by the majority of our Congress. We come to see that bipartisanship simply means the corporatists in both parties have agreed on how to make their benefactors richer. What we need is elected representatives who will-- as the Constitution actually mandates in Article I, Section 8 (not just the preamble)-- serve the general welfare, that is, the public good. Our current representatives are failing miserably."