The Biden Package
Published in El Economista
(Mexico) on 19 August 2022
by Vidal Llerenas Morales (link to original)
(Mexico) on 19 August 2022
by Vidal Llerenas Morales (link to original)
Translated from
by Stephen Routledge.
Edited by Wes Vanderburgh.
The Democratic plan, clearly progressive, is particularly interesting in the sense that anti-climate change policies can also be aimed at improving economic support for families.
After months of negotiation with two rebellious senators, Democrats managed to pass a tax and spending package in both houses of Congress. They called it something like the "law to reduce inflation,"* although it has little to do with that. But they did at least try to sow the idea that the new taxes and investment will not generate price increases.
One point that can help, if only to increase the purchasing power of marginalized sectors, is that of establishing limits on expenses paid for medicines related to chronic diseases for those over 65 who are covered by public insurance. For the first time, negotiations with pharmaceutical companies on this point were successful. These companies must now reduce their prices and assume part of the costs of this measure.
Another part of the package reversed Donald Trump's reductions on corporate taxes by imposing a minimum tax of 15% on the profits of companies with revenues over $100 billion in addition to taxing company profits from the repurchase of their own shares. These measures would raise an additional $80 billion. This is intended to send the message that an increase in spending will not necessarily increase the public deficit but will be financed by new taxes on large companies that evade taxation. This further corresponds to the discussion in the U.S. that corporations still pay less in taxes than they should.
The other part of the package includes tax credits to individuals and businesses to finance investment, such as installing solar panels or buying electric cars.
The gains for American society in terms of the environment, poverty reduction and improved public finances are obvious. Furthermore, the Democrats' ability to turn their campaign promises into legislation will help them have a less adverse outcome than is anticipated in the upcoming midterm elections. But in addition, as New York Times congressional correspondent Emily Cochrane noted, the legislative package sets an agenda that defines the Democratic Party as one that gives the government responsibility for reducing social inequality, taxing big profits and supporting companies and individuals to take action that reduces their carbon footprint regardless of the election outcome.
The message is that if society wants more of this kind of policy, it must elect more Democratic legislators; and that if the plan was limited, it was only because in the face of that party's very slim majority in the Senate, two centrist senators managed to contain it.
The Democratic plan, clearly progressive, is particularly interesting in the sense that anti-climate change policies can also be aimed at improving economic support for families; for example, economic support to buy cars that will consume less or will not require gas, which implies savings, or financing for the installation of solar panels, which will be reflected in lower electricity bills.
The financing would come, fundamentally, from preventing tax evasion by large corporations. This is a proper alignment of both climate objectives and society's equalizers.
*Editor's Note: The bill's title is the Inflation Reduction Act of 2022.
After months of negotiation with two rebellious senators, Democrats managed to pass a tax and spending package in both houses of Congress. They called it something like the "law to reduce inflation,"* although it has little to do with that. But they did at least try to sow the idea that the new taxes and investment will not generate price increases.
One point that can help, if only to increase the purchasing power of marginalized sectors, is that of establishing limits on expenses paid for medicines related to chronic diseases for those over 65 who are covered by public insurance. For the first time, negotiations with pharmaceutical companies on this point were successful. These companies must now reduce their prices and assume part of the costs of this measure.
Another part of the package reversed Donald Trump's reductions on corporate taxes by imposing a minimum tax of 15% on the profits of companies with revenues over $100 billion in addition to taxing company profits from the repurchase of their own shares. These measures would raise an additional $80 billion. This is intended to send the message that an increase in spending will not necessarily increase the public deficit but will be financed by new taxes on large companies that evade taxation. This further corresponds to the discussion in the U.S. that corporations still pay less in taxes than they should.
The other part of the package includes tax credits to individuals and businesses to finance investment, such as installing solar panels or buying electric cars.
The gains for American society in terms of the environment, poverty reduction and improved public finances are obvious. Furthermore, the Democrats' ability to turn their campaign promises into legislation will help them have a less adverse outcome than is anticipated in the upcoming midterm elections. But in addition, as New York Times congressional correspondent Emily Cochrane noted, the legislative package sets an agenda that defines the Democratic Party as one that gives the government responsibility for reducing social inequality, taxing big profits and supporting companies and individuals to take action that reduces their carbon footprint regardless of the election outcome.
The message is that if society wants more of this kind of policy, it must elect more Democratic legislators; and that if the plan was limited, it was only because in the face of that party's very slim majority in the Senate, two centrist senators managed to contain it.
The Democratic plan, clearly progressive, is particularly interesting in the sense that anti-climate change policies can also be aimed at improving economic support for families; for example, economic support to buy cars that will consume less or will not require gas, which implies savings, or financing for the installation of solar panels, which will be reflected in lower electricity bills.
The financing would come, fundamentally, from preventing tax evasion by large corporations. This is a proper alignment of both climate objectives and society's equalizers.
*Editor's Note: The bill's title is the Inflation Reduction Act of 2022.
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