Corporate America has loudly complained for years about the crumbling state of the U.S. infrastructure and demanded that Washington invest heavily to catch up to the rest of the developed world.
But now that President Joe Biden has proposed a massive $2 trillion-plus spending package, the collective response from big business is basically: “No thanks, try again.”
Groups like the Chamber of Commerce and the Business Roundtable have largely rejected the plan, saying the tax hikes that Biden is proposing to pay for it would crush American competitiveness.
Top executives of companies who in the past have given speeches about the need for infrastructure spending are mostly silent, opting to complain privately that Biden’s plan is too expensive, too partisan, too laden with unrelated social policy and not at all what they had in mind. Jeff Bezos, CEO of online retailing behemoth Amazon, put out a statement on Tuesday that seemed at first glance like an endorsement of Biden’s plan.
Except it wasn’t.
Bezos, like other CEOs, nodded toward acceptance of a higher top corporate tax rate — though he actually put his name behind it. But he stopped well short of explicitly backing Biden’s infrastructure proposal and instead called for a “balanced solution” to boost U.S. competitiveness. Underneath the surface, the corporate world generally despises Biden’s plan in its current form and is fixated on its defeat.
“This plan would make America less competitive, which would mean less U.S. economic growth and less job creation,” said Neil Bradley, chief policy officer at the Chamber of Commerce. “The benefits of infrastructure would be offset by punitive tax increases. And if they move ahead with only Democratic votes, the concept of doing anything on a bipartisan basis would be over and it would just reinforce the kind of gridlock that has prevented progress on every other issue.”
Executives at some of America’s largest companies complain much more bitterly in private about the White House approach, arguing that raising the top corporate rate to 28 percent from 21 percent — without restoring deductions eliminated in then-President Donald Trump’s 2017 tax cut bill — would damage hiring and the economy.
And they say instituting a global minimum tax that other countries may not adopt would drive more jobs and profits out of the U.S. They also complain about a lack of sufficient outreach to the business community before the infrastructure plan was rolled out and worry that Biden is forsaking his campaign promises to work on a bipartisan basis on such sweeping legislation.
Executives often say they could live with a corporate tax rate of around 25 percent — which groups like the Business Roundtable previously supported — but only with deductions restored and without much of the international reform.
“I didn’t think 21 percent was the right number when we did tax reform. And 25 percent is a spot where you could probably get a lot of consensus,” the CEO of one of the world’s largest financial firms said on condition that they not be named. “It’s not the rate, it’s all the other stuff that would make us less competitive around the world. And jobs will go if we do this stuff.”
The CEO added that the business community generally won’t get behind any bill being pushed with only Democratic support through the budget reconciliation process — a maneuver that allows legislation to clear the Senate with a simple majority — that the White House used to pass its $1.9 trillion stimulus bill.
“It really does matter if this is totally partisan. It sounds cliché but business people really do want to sit in the middle and get behind stuff that has bipartisan support,” the CEO said. “Biden made a lot of promises to do this stuff differently. But while it has a shinier veneer, a lot of it seems just like Trump doing everything his way.”
A leading executive at a Fortune 100 technology company said it’s easy for Amazon and other companies to nod at their willingness to pay a higher overall corporate rate. But the executive said the corporate world would fight much of the rest of the proposal.
“None of these guys can realistically with a straight face oppose a 25 percent rate,” the executive said. “That’s not where the fight is. At all.”
Both executives say that outside of a couple of hastily arranged conference calls shortly before Biden introduced his “American Jobs Plan,” there has not been much outreach to the business community, a complaint that dogged former President Barack Obama throughout his two terms.
The White House largely rejects these complaints. Administration officials note that many executives including JPMorgan Chase CEO Jamie Dimon previously backed a top corporate rate of 25 percent, only slightly shy of the 28 percent Biden is proposing.
They also say that 2012 GOP presidential nominee Mitt Romney ran on a platform including a 25 percent top rate and that Trump’s National Economic Council Director Larry Kudlow mostly praised the Romney plan.
On engagement, administration officials say White House advisers Cedric Richmond, who heads the Office of Public Engagement, and Brian Deese, the National Economic Council director, met with the heads of Bank of America, State Street, Wells Fargo and Goldman Sachs on the infrastructure plan in a session organized by the Financial Services Forum.
They also say Richmond and Deese briefed 25 CEO members of the Business Roundtable. And other officials spoke to trade groups like the National Association of Manufacturers and the Aerospace Industries Association along with executives from leading internet broadband companies and agricultural representatives.
More broadly, White House officials say that while Biden is committed to covering much of the cost of the $2.5 trillion plan, he recognizes that a conversation over exactly how to do that is just beginning.
The White House still hopes to eventually craft a bipartisan deal even if all signals right now suggest Biden is willing to sign a bill with only Democratic support.
“We want to work across the aisle with briefings and discussion with GOP lawmakers,” said deputy NEC director David Kamin. “When it comes to corporate tax reform, the president put this forward and this is his idea of how it could be paid for, but he’s really willing to hear other ideas.”
Kamin added that “if others have ideas they want to put forward, then those should be part of the discussion.”
Perhaps the biggest fear in corporate America right now centers on the idea of a 21 percent minimum tax on U.S. companies’ foreign income, something executives and conservative economists say would put American firms at a distinct disadvantage and could lead U.S. companies to once again seek corporate “inversions” in which they take up overseas addresses.
Treasury Secretary Janet Yellen on Monday pressed developed countries to adopt a global minimum tax as a way to reduce possible anti-competitive disadvantages that could arise from Biden’s proposal.
But business groups say discussions over a global minimum tax have been going on for years and there is no guarantee any agreement will be reached soon. “Sure it would be great if we had a system where all the advanced countries worked in harmony,” said a tax expert working with businesses opposed to Biden’s plan in its current form. “But we’ve been talking about this for years and tax competitiveness and the right to set your own rates has always been a big issue of national sovereignty for other governments.”
The White House, in turn, says its plan encourages but does not rely on an international tax agreement. “We address that with a reform that if you are a foreign company based in a country that does not adopt a minimum tax then you would face denial of deductions,” Kamin said. “That means we are really in fact leveling the playing field.”
While the White House criticizes business leaders who previously talked up infrastructure spending and are now balking at how to pay for it, executives suggest that the administration should reduce the price tag and find other mechanisms to pay for the plan, including fees on the users of new infrastructure.
And they worry that if a bill is jammed through on a partisan basis, the next time the GOP controls the levers of government, much of the change will get wiped away.
“They are risking repeating what Republicans did when they went it alone,” said Bradley. “And if they do, Republicans could just return the favor and we would have no long-term changes.”