China stands to be one of the major beneficiaries if President Joe Biden and the Democrats’ so-called $3.5 trillion human infrastructure bill passes.
One of the main reasons is that the reconciliation bill, as it is also known, will weaken the U.S. economy vis-à-vis China by raising taxes significantly on American businesses.
Big-ticket item social welfare programs contained in the legislation include taxpayer-funded universal pre-K, rental assistance payments, tuition-free community college, paid family and sick leave, expanded health care benefits, as well as “Green New Deal” climate initiatives.
In the name of paying at least some of the cost of these new programs, Democrats have proposed raising the corporate tax rate from 21 percent to 26.5 percent.
When combined with state corporate taxes, the U.S. would have an average combined rate of 30.9 percent, the third-highest among Organisation for Economic Co-operation and Development countries.
— Tax Foundation (@TaxFoundation) September 22, 2021
The Tax Cuts and Jobs Act of 2017, signed into law by then-President Donald Trump, brought the federal rate down from 35 percent — the highest in the industrialized world at the time — to 21 percent. In other words, the Republicans wanted America to be competitive again on the world stage.
Under Biden’s plan, the combined corporate tax rate would go from slightly above China’s 25 percent to well above it.
In a Fox News opinion piece in May, former Vice President Mike Pence labeled the Democrats’ plan “China first.”
Mike Pence: Biden’s China-first tax plan – Americans come last in president’s jobs plan | Fox News https://t.co/Y3oDO6lpfz
— Mike Pence (@Mike_Pence) May 17, 2021
Pence noted that the Trump tax cuts were a resounding success.
“Within months, our economy took off like a rocket,” he recounted. “America gained more than 7 million new jobs, unemployment plummeted to the lowest rate in 50 years, and more than 10 million people were lifted off of welfare — the largest reduction in poverty in modern history.”
As the old adage goes: “The best anti-poverty program remains a job.”
“Cutting taxes on American employers was a central part of our efforts to bring jobs and factories back home to the United States — and it worked,” Pence explained.
“After losing 60,000 factories under the previous two administrations, America gained 12,000 new factories, because employers were no longer driven away by an exorbitant tax burden.”
If the Democrat’s tax hikes pass, Pence predicted, “Job growth will trickle to a standstill.”
“Capital investments will be canceled. Fewer products will be Made in the USA. Manufacturers will pack up and head overseas, leaving a hole in the heart of blue-collar communities,” he added.
“Worse yet, China stands to become one of the biggest beneficiaries of the Biden tax hikes,” Pence argued.
The Heritage Foundation’s James Carafano and Heritage Action’s Jessica Anderson contended in an August Washington Examiner piece that the one-two punch of the infrastructure and reconciliation bills will put America on an unsustainable path of deficit spending.
“China’s communist masters must be exchanging high-fives as they watch the twin disasters of the infrastructure bill and the budget reconciliation package advance in Congress,” they wrote.
Infrastructure and reconciliation bills undermine competition with China https://t.co/6lEJG6hYuB
— Heritage Foundation (@Heritage) August 12, 2021
“The Biden-approved infrastructure and budget reconciliation bills moving through Congress will saddle the economy with unprecedented debt. The Congressional Budget Office projects that the trillion-dollar infrastructure bill alone will add $256 billion to the debt,” they added.
“Layer on the spending and tax increases in the $3.5 trillion budget reconciliation measure, and even Beijing could not have envisioned a better initiative to slow U.S. economic growth. Diminishing the paychecks of the average person with inflation and weak growth will only advance the Chinese narrative that they are outpacing the U.S. free enterprise system.”
The Committee for a Responsible Federal Government estimated the true cost of the reconciliation bill to be $5 trillion or more over the next ten years, because some programs are only partially funded in the proposed legislation.
Carafano and Anderson concluded overseas friends and allies will recognize both pieces of legislation for what they are: “’progressive leaders’ surrendering to China in order to drive a radical domestic political agenda.”
Both bills should be rejected, and the Trump tax cuts should remain in place, so America can remain the world’s top economic power.