President Joe Biden speaks after a tour of Tidewater Community College in Norfolk, Virginia on May 3, 2021.
Almond Ngan | AFP | Getty Images
WASHINGTON – The looming battle for tax hikes to fund President Joe Biden’s economic recovery laws threatens to undermine emerging post-Trump efforts by the Republican Party to rename itself a working class party.
Over the past decade, the percentage of Americans with only high school education who identify as Republicans has increased more than 10 points, from 34% to 45%, according to polls by NBC News / Wall Street Journal.
Many of these voters were originally drawn to the GOP because of cultural rather than financial issues. But Trump brought economic populism to the party platform. In the 2020 election, despite losing the presidency, he won white men without college by 42 percentage points and white women without college by 27 points.
Last year, Republicans joined Democrats in voting for massive Covid relief laws that strengthened the social safety net through cash payments and improved unemployment benefits – two things Republicans rarely vote for.
Since Biden took office in January, several GOP senators have released new policy plans to increase the incomes of working families and defy the traditional, conservative, laissez-faire economy.
GOP Sens. Marco Rubio of Florida and Mike Lee of Utah suggested raising the child tax credit in Biden’s coronavirus bill even higher than the Democrats originally set.
Utah Senator Mitt Romney has released a plan that grants families a monthly cash benefit of $ 350 for each child under 6 years of age and $ 250 per month for children 6 to 17 years old.
And Missouri Senator Josh Hawley, a staunch Trump supporter, announced legislation to provide a tax credit in the form of a quarterly check from the IRS to anyone earning less than the average hourly wage of $ 16.50.
Senator Josh Hawley, R-MO, speaks during a Senate Justice Committee hearing on the January 6 riot at the Hart Senate Office building on Capitol Hill in Washington, DC on March 2, 2021.
Graeme Jennings | Pool | Reuters
“Before Trump, the GOP plan was to unburden the economy,” said Henry Olsen, a senior fellow at the Conservative Ethics and Public Policy Center. “But Trump’s victories and the fact that he mobilized large-scale support and increased labor elections for Republicans changed all of that.”
In the House of Representatives, Indiana Rep. Jim Banks, chairman of the Conservative Republican Studies Committee, wrote a memo last month arguing that the Republican Party could only gain control of Congress by “enthusiastically rebranding and reorienting itself as the Party.” Working class.”
“For too long the Republican Party has worked its way into the narrative and perception that the Republican Party is the party of big business or the party of Wall Street,” Banks wrote.
Read more about CNBC’s political coverage:
All of these initiatives reflect a party that is “trying to catch up with the people who support them,” said John Russo, co-editor of Working-Class Perspectives and visiting scholar at the Kalmanovitz Labor Initiative and Working Poor at Georgetown University.
“Trump has turned it upside down, especially when it comes to deficit spending. The GOP is trying to attract and retain the voters he won,” he said.
But Biden’s stimulus package now threatens to wedge a wedge between Republicans and working class voters they want to hold onto by forcing the GOP to choose between protecting corporate tax cuts or creating more jobs.
Russo noted that there are many ways to define “working class”. For the purposes of this story, this means people with no college education.
The Biden Factor
The Biden recovery plan is broken down into two massive investment bills: the infrastructure-focused American employment plan and the American family plan, which expands educational and childcare assistance.
The combined price of the plans is north of $ 4 trillion, but Biden wants to avoid increasing the federal deficit in part by increasing taxes on corporations and the very wealthy to pay for the programs. The main beneficiaries of the plans will be undeveloped Americans and low-income workers.
For Republicans, however, the prospect of the bills begins and ends with the tax hikes.
U.S. Senate Majority Leader Mitch McConnell (R-KY) speaks at a press conference at the U.S. Capitol in Washington, United States on December 15, 2020.
Nicholas Comb | Reuters
Four years after the largest tax cut of a generation in 2017, Senate minority leader Mitch McConnell said this week that any increase in tax rates enshrined in 2017 law would be a red line for Republicans.
Describing the cuts as one of the major domestic gains of Trump’s presidency, the Kentucky Republican said, “We’re not going to review 2017 tax laws.”
He accused the Democrats of “wanting to increase the corporate rate to the highest level in the world,” although Biden suggests raising it to just 28%, which is still 7 points lower than the pre-2017 rate of 35%.
Banks and the Republican Study Committee were equally outraged by the proposed tax hikes for the rich and corporate.
“The attack by the Biden and Congressional Democrats on American jobs and American taxpayers is simply incomprehensible,” the committee said in a statement on the proposed tax increases.
The 2017 tax cuts didn’t convince many Americans, however, as reflected in a variety of surveys both during and after the bill was passed in late 2017. This is not surprising, however, as multiple analyzes of the law’s impact have found that by far the greatest beneficiaries of the change have been the wealthiest Americans and corporations.
After the law was implemented, most voters said they saw no significant changes in their own circumstances.
In contrast, the first part of Biden’s package, the American Jobs Plan, is aimed directly at voters without a college degree: three out of four infrastructure jobs created by the plan only require a high school diploma.
Biden has called the employment plan a “blueprint for building America” and is widely believed to be more likely to become law in a Congress where Democrats have wafer-thin majorities in both houses.
The second part of Biden’s agenda, the American Families Plan, faces a narrower path to become law, and there are competing estimates of how much it would actually cost, public education, childcare subsidies, and unemployment benefits all substantial to expand. Like the infrastructure bill, this also depends on changes to the 2017 tax bill.
But not all Republicans agree with McConnell’s staunch refusal to reconsider the 2017 tax cuts.
An opportunity for the GOP
Most of all, according to Olsen, maintaining tax cuts reflects a kind of conservative economic thinking that is increasingly out of date.
“When it comes to respect, Senator McConnell is usually not satisfied with being a political entrepreneur, so it is natural for him to defend the tax cut,” said Olsen. “But in the future it shouldn’t be the Republican approach to economic policy.”
Instead, conservative economists like Olsen see the influx of non-graduate voters into the GOP as an opportunity for the party to advocate new types of economic policy that appeal to working class people because they really benefit working class people.
Senator Mitt Romney, R-Utah speaks as non-partisan Senate and House members gather to announce a framework for new laws to fight coronavirus at a press conference on Capitol Hill on December 1, 2020.
Kevin Lemarque | Reuters
Oren Cass, executive director of the conservative economic group American Compass, sees this as “a great opportunity for conservatives to tell voters what they want to do, not just reject Biden’s plan.”
Cass said the proposals that Republican senators like Romney and Hawley made this spring prove the party has fresh thoughts on economic policy.
“When you look at these proposals, there is a real interest in providing benefits to working-class families,” he said.
“Hopefully the battle to get more working family benefits is not over this summer as both parties will support it. It will be how to do it,” said Cass.